# EDGAR Filing Document

**Accession Number:** 0001879001
**File Stem:** 0001641172-25-017609
**Filing Date:** 2025-7
**Character Count:** 421355
**Document Hash:** 0a5f51f74047d7f0e912c473c1f00a15
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001641172-25-017609.hdr.sgml**: 20250702

**ACCESSION NUMBER**: 0001641172-25-017609

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 19

**CONFORMED PERIOD OF REPORT**: 20250701

**ITEM INFORMATION**: Other Events

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20250702

**DATE AS OF CHANGE**: 20250702

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Verses AI Inc.
- **CENTRAL INDEX KEY:** 0001879001
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 000000000
- **STATE OF INCORPORATION:** A1
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-56692
- **FILM NUMBER:** 251102621

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 595 HOWE STREET
- **STREET 2:** 10TH FLOOR
- **CITY:** VANCOUVER
- **PROVINCE COUNTRY:** A1
- **ZIP:** V6C2T5
- **BUSINESS PHONE:** (310) 988-1944

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 595 HOWE STREET
- **STREET 2:** 10TH FLOOR
- **CITY:** VANCOUVER
- **PROVINCE COUNTRY:** A1
- **ZIP:** V6C2T5

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Verses Technologies Inc.
- **DATE OF NAME CHANGE:** 20210818

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d)**

**of the Securities Exchange Act of 1934**

Date of Report (Date of earliest event reported): July 1, 2025

**VERSES AI INC.**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **British Columbia, Canada** | **000-56692** | **88-2921736** |
| (State or other jurisdiction<br> of incorporation) | (Commission<br> File Number) | (I.R.S. Employer<br> Identification No.) |

---

**2121 Avenue of the Stars, 8th Floor**

**Los Angeles, CA 90067**

(Address of Principal Executive Offices and Zip Code)

Registrant's telephone number, including area code: **(310) 988-1944**

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (*see* General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

**Item 8.01 Other Events.**

On July 1, 2025, Verses AI Inc. (the "Company") filed: (i) audited annual consolidated financial statements for the year ended March 31, 2025 (the "Annual Financial Statements"); (ii) related Management's Discussion and Analysis (the "MD&A"); and (iii) its annual information form (the "AIF") with the securities regulators in each Canadian jurisdiction in which is it is a reporting issuer on its SEDAR+ profile. The Annual Financial Statements were audited by the Company's independent registered public accounting firm. Copies of the Annual Financial Statements, MD&A and AIF are attached as Exhibits 99.1, 99.2 and 99.3 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference.

The information furnished in this Form 8-K, including the exhibits hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

**Item 9.01 Financial Statements and Exhibits.**

(d) Exhibits.

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [Audited annual consolidated financial statements for the year ended March 31, 2025](ex99-1.htm) |
| 99.2 | [Management's discussion and analysis of audited annual consolidated financial statements for the year ended March 31, 2025](ex99-2.htm) |
| 99.3 | [Annual Information Form for the year ended March 31, 2025](ex99-3.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **VERSES AI INC.** | **VERSES AI INC.** |
| Dated: July 2, 2025 | By: | */s/ James Christodoulou* |
|  | Name: | James Christodoulou |
|  | Title: | Chief Financial Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

**VERSES AI INC.**

**CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE YEARS ENDED MARCH 31, 2025 and 2024**

*(Expressed in United States dollars)*

![](ex99-1_001.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Stockholders of Verses AI, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Verses AI, Inc. and subsidiaries (the Company) as of March 31, 2025 and 2024 and the related consolidated statements of operations, comprehensive loss, shareholders' deficiency, and cash flows for each of the two years in the period ended March 31, 2025 and the related notes (collectively referred to as the " consolidated financial statements"). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

**Going Concern**

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has recurring net losses, a large accumulated deficit, and negative cash flows from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our audits provide a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated, or required to be communicated, to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Going Concern

Due to the recurring net losses and negative cash flows from operations for the year, the Company evaluated the need for a going concern as listed in Note 1.

Auditing management's evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates on future revenues and expenses which are not able to be substantiated.

To evaluate the appropriateness of the going concern, we examined and evaluated the financial information along with management's plans to mitigate the going concern and management's disclosure on going concern.

/s/M&K CPAS, PLLC

We have served as the Company's auditor since 2024

The Woodlands, Texas

June 30, 2025

**VERSES AI INC.**

Consolidated Balance Sheets

*(Expressed in United States dollars)*

---

| | | | |
|:---|:---|:---|:---|
| **As of March 31,** | **Notes** | **2025** | **2024** |
| **ASSETS** |  |  |  |
| **CURRENT** |  |  |  |
| Cash and restricted cash | 3 | $4816906 | $892727 |
| Accounts receivable |  |  | 100000 |
| Deferred financing costs |  | 118546 | 80993 |
| Unbilled revenue | 4, 5 |  | 1252076 |
| Work in progress |  | 6654 |  |
| Tax receivable |  | 604912 | 374964 |
| Prepaid expenses | 14 | 636064 | 794351 |
|  |  | 6183082 | 3495111 |
| Due from related parties | 9, 17 | 68080 | 64936 |
| Equipment | 7, 15 | 125413 | 267259 |
| **TOTAL ASSETS** |  | $6376575 | $3827306 |
| **LIABILITIES** |  |  |  |
| **CURRENT** |  |  |  |
| Accounts payable | 9 | $2036916 | $2782502 |
| Accrued liabilities |  | 41736 | 82500 |
| Deferred grant | 3 | 67732 |  |
| Deferred revenue |  | 100000 |  |
| Promissory notes | 16 |  | 2000000 |
| Provision for legal claim | 22 | 8948085 | 9921298 |
| Restricted share unit liability | 8 | 3911823 | 576214 |
|  |  | 15106292 | 15362514 |
| Loans payable | 7 | 139039 | 140904 |
| **TOTAL LIABILITIES** |  | 15245331 | 15503418 |
| **SHAREHOLDERS' DEFICIENCY** |  |  |  |
| Class A Subordinate Voting Shares, without par value: unlimited authorized; 7,825,571 and 3,205,319 issued and outstanding, respectively | 11 | 105477150 | 62472187 |
| Class B Proportionate Voting Shares, without par value: unlimited authorized; Nil and 370,370 issued and outstanding, respectively | 11 |  |  |
| Additional paid-in capital | 8, 9, 12 | 15891737 | 13342560 |
| Accumulated other comprehensive loss |  | (675018) | (920958) |
| Deficit |  | (129562625) | (86569901) |
| **TOTAL SHAREHOLDERS' DEFICIENCY** |  | (8868756) | (11676112) |
| **TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY** |  | $6376575 | $3827306 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**VERSES AI INC.**

Consolidated Statements of Operations

For the years ended March 31,

*(Expressed in United States dollars)*

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| **REVENUE** | $155000 | $1966731 |
| **COST OF REVENUE** | (631691) | (1699170) |
| **NET REVENUE** | (476691) | 267561 |
| **Operating expenses:** |  |  |
| Selling, general and administrative expenses | (41301237) | (40407718) |
| **OPERATING INCOME (EXPENSE)** | (41777928) | (40140157) |
| Other income/(expense), net | (1214796) | (11950989) |
| **LOSS BEFORE INCOME TAXES** | (42992724) | (52091146) |
| Income Taxes |  | (2513) |
| **NET LOSS** | **(42992724)** | **(52093659)** |
| **Loss Per Class A Subordinate Voting Shares - Basic and Diluted** | $**(5.49)** | $**(9.44)** |
| **Loss Per Class B Proportionate Voting Shares - Basic and Diluted** | $**Nil** | $**(22.50)** |
| **Class A Subordinate Voting Shares Shares used in computing earnings per share - Basic and Diluted** | **7825570** | **3205324** |
| **Class B Proportionate Voting Shares Shares used in computing earnings per share - Basic and Diluted** | **-** | **370370** |

---

The accompanying notes are an integral part of these consolidated financial statements.

**VERSES AI INC.**

Consolidated Statements of Comprehensive Loss

For the years ended March 31,

*(Expressed in United States dollars)*

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| **Net Loss** | (42992724) | (52093659) |
| Change in foreign currency translation | 245940 | (284431) |
| **NET COMPREHENSIVE LOSS** | $**(42746784)** | $**(52378090)** |

---

The accompanying notes are an integral part of these consolidated financial statements.

**VERSES AI INC.**

Consolidated Statements of Shareholders' Deficiency

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Number of Class B Proportionate Voting Shares** | **Number of Class A Subordinate Voting Shares** | **Share Capital** | **Additional paid-in capital** | **Obligation to Issue Shares** | **Accumulated Other Comprehensive Loss** | **Deficit** | **Total<br> Shareholders' Deficiency** |
| **Balance, March 31, 2023** | **370370** | **2066887** | $**30264179** | $**5606507** | $**83456** | $**(636527)** | $**(34476242)** | $**841373** |
| Exercise of options and warrants |  | 516635 | 11042575 | (1119662) | (83456) |  |  | 9839457 |
| Issuance of Units for cash (net) |  | 182520 | 5898785 | 697807 |  |  |  | 6596592 |
| Conversion of convertible debentures (net) |  | 161950 | 5601372 |  |  |  |  | 5601372 |
| Shares issued for services |  | 1852 | 61049 |  |  |  |  | 61049 |
| Stock options granted |  |  |  | 6934678 |  |  |  | 6934678 |
| Modification of finders' warrants |  |  |  | 440604 |  |  |  | 440604 |
| Special warrants converted to shares (net) |  | 243068 | 8380426 | 782626 |  |  |  | 9163052 |
| Issuance of shares for settlement |  | 7407 | 198801 |  |  |  |  | 198801 |
| SAFE conversion to shares |  | 25000 | 1025000 |  |  |  |  | 1025000 |
| Foreign exchange difference |  |  |  |  |  | (284431) |  | (284431) |
| Net loss | - | - | - | - | - | - | (52093659) | (52093659) |
| **Balance, March 31, 2024** | **370370** | **3205319** | $**62472187** | $**13342560** | $**-** | $**(920958)** | $**(86569901)** | $**(11676112)** |
| Exercise of options and warrants |  | 174246 | 4039332 | (1075242) |  |  |  | 2964090 |
| Stock options granted |  |  |  | 2221908 |  |  |  | 2221908 |
| Conversion of Class B Proportionate Voting shares into Class A Subordinate Voting shares | (370370) | 2314815 |  |  |  |  |  |  |
| Shares issued for services |  | 1852 | 49714 |  |  |  |  | 49714 |
| Special warrants converted to shares (net) |  | 503704 | 7886149 | 239684 |  |  |  | 8125833 |
| Issuance of Units for cash (net) |  | 1013413 | 17791738 | 1162827 |  |  |  | 18954565 |
| Conversion of convertible debentures (net) |  | 510370 | 11126864 |  |  |  |  | 11126864 |
| RSU settlement |  | 101852 | 2111166 |  |  |  |  | 2111166 |
| Net loss | - | - | - | - | - | 245940 | (42992724) | (42746784) |
| **Balance, March 31, 2025** | **-** | **7825571** | $**105477150** | $**15891737** | $**-** | $**(675018)** | $**(129562625)** | $**(8868756)** |

---

The accompanying notes are an integral part of these consolidated financial statements.

**VERSES AI INC.**

Consolidated Statements of Cash Flows

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

---

| | | |
|:---|:---|:---|
| **For the year ended** | **2025** | **2024** |
| Cash provided by (used in): |  |  |
| **OPERATING ACTIVITIES** |  |  |
| Net loss | $(42992724) | $(52093659) |
| **Adjustments to reconcile net losses to net cash used in operating activities:** |  |  |
| Depreciation | 172425 | 261747 |
| Interest due from related parties loan | (3144) |  |
| Provision for legal claim | (848213) | 9921298 |
| Provision for contract settlement | 1252076 |  |
| Provision for losses on related party transactions | 479808 | 1872334 |
| Accretion expense |  | 203918 |
| Interest expense | 1953499 | 348441 |
| Issuance of advisory Units and warrants for services | 49714 | 61049 |
| Share based payments | 7679205 | 7850119 |
| **Changes in operating assets and liabilities:** |  |  |
| Accounts receivable | 100000 | (65000) |
| Contract assets and unbilled revenue | (6654) | 98359 |
| Tax receivable | (229948) | (170149) |
| Prepaid expenses | 158287 | 648326 |
| Deferred financing costs | (37553) | (80993) |
| Legal claim payments | (125000) |  |
| Accounts payable and accrued liabilities | (792865) | 1615703 |
| Deferred revenue | 100000 | (65000) |
| **Net cash used in operating activities** | (33091087) | (29593507) |
| **INVESTING ACTIVITIES** |  |  |
| Due from related parties | (479808) | (1070582) |
| Investment in equipment | (30579) | (185155) |
| **Net cash used in investing activities** | (510387) | (1255737) |
| **FINANCING ACTIVITIES** |  |  |
| Deferred grant | 67732 |  |
| Repayments of loans | (2007106) | (7752) |
| Proceeds from issuance of promissory notes |  | 2000000 |
| Proceeds from issuance of equity instruments | 2951695 | 9839457 |
| Proceeds from issuance of Units | 29272271 | 17518269 |
| Private placement issuance costs | (2179478) | (1697576) |
| Proceeds from issuance of convertible debentures | 10000000 |  |
| Convertible debentures issuance costs | (446682) |  |
| Lease payments | - | (113978) |
| **Net cash provided by financing activities** | 37658432 | 27538420 |
| Foreign exchange effect on cash | (132779) | (193730) |
| Net change in cash during the year | 3924179 | (3504554) |
| **Cash, beginning of the year** | 892727 | 4397281 |
| **Cash, end of the year** | $4816906 | $892727 |

---

Supplemental cash flow information (Note 19).

The accompanying notes are an integral part of these consolidated financial statements.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**1.** **NATURE OF BUSINESS AND GOING CONCERN** 

Chromos Capital Corp. was incorporated under the Business Corporations Act (British Columbia) on November 19, 2020. On June 17, 2021, Chromos Capital Corp. changed its name to Verses Technologies Inc. On March 31, 2023, Verses Technologies Inc. changed its name to Verses AI Inc. ("VAI", "VERSES" or the "Company").

VERSES is a cognitive computing company specializing in next generation intelligence software systems. We are primarily focused on developing an intelligence-as-a-service smart software platform, Genius. Our business is based on the vision of the "Spatial Web" – an open, hyper-connected, context-aware, governance-based network of humans, machines and intelligent agents. Our ambition is to build tools that enable the Spatial Web and to become a leader in the transition from the information age to the intelligence age.

On June 28, 2022, the Subordinate Class A shares of the Company were listed and started trading on the NEO Exchange in Canada ("NEO") ("Listing") under the symbol "VERS".

On October 4, 2022, the Company announced that the Company's Class A shares have commenced trading on the OTCQX® Best Market, an over-the-counter public market in the United States, under the ticker symbol "VRSSF". VERSES will continue to trade on the NEO Exchange in Canada, as its primary listing.

On July 20, 2023, the Company was downgraded from the OTCQX and started trading on OTCQB® Venture Market under the same ticker symbol "VRSSF".

The Company's head office and registered and records office is located at 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, V6E 2J3, Canada.

For the year ended March 31, 2025, the Company incurred a net loss of $42,992,724 (2024 - $52,093,659) which was primarily funded by the issuance of Units, convertible debenture, special warrants, and exercises of options and warrants. As of March 31, 2025, the Company has an accumulated deficit of $129,562,625 (2024 - $86,569,901). The Company's ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs and working capital deficit.

The ability of the Company to raise additional sufficient capital to carry operations are conditional, in part, on the progress of its technology development and continued investor support. The material uncertainty of these items and conditions raise substantial doubt about the Company's ability to continue as a going concern. These consolidated financial statements do not give effect to any adjustments, which would be necessary should the Company be unable to raise additional capital to continue as a going concern. In such circumstances, the Company would be required to realize its assets and discharge its liabilities outside of the normal course of business, and the amounts realized could differ materially from those reflected in these consolidated financial statements.

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

&nbsp;&nbsp;&nbsp;&nbsp;a) Basis
 of presentation

The consolidated financial statements include the accounts of VERSES AI Inc. and its wholly owned subsidiaries ("Subsidiaries") (collectively "VERSES" or the "Company") have been prepared in accordance with U.S generally accepted accounting principles ("GAAP") as defined by the Financial Accounting Standards Board (FASB).

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;b) Consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned Subsidiaries. The results of the Subsidiaries will continue to be included in the consolidated financial statements of the Company until the date that the Company's control over the Subsidiaries ceases. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All intercompany transactions are eliminated on these consolidated financial statements.

Details of the Company's Subsidiaries at March 31, 2025 and March 31, 2024 are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Name** | **Place of Incorporation** | ***March 31, 2025***<br> ***Interest*** | ***March 31, 2024***<br> ***Interest*** |
| Verses Technologies USA, Inc. <br>(formerly Verses Labs Inc.) ("VTU") | Wyoming, USA | 100% | 100% |
| Verses Operations Canada Inc. ("VOC") | British Columbia, CA | 100% | 100% |
| Verses Logistics Inc. ("VLOG") | Wyoming, USA | 100% | 100% |
| Verses Realities Inc. ("VRI") | Wyoming, USA | 100% | 100% |
| Verses Inc. ("VINC") | Wyoming, USA | 100% | 100% |
| Verses Health Inc. ("VHE") | Wyoming, USA | 100% | 100% |
| Verses Global BV ("VBV") | Netherlands | 100% | 100% |
| Verses Solutions Inc ("VSI") | Wyoming, USA | 100% | Nil |

---

&nbsp;&nbsp;&nbsp;&nbsp;c) Significant
 accounting estimates and judgments

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. These consolidated financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes could differ from these estimates.

Significant assumptions about the future that management has made and other sources of estimation uncertainty at the reporting date, which could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to the following:

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

 

&nbsp;&nbsp;&nbsp;&nbsp;c) Significant
 accounting estimates and judgments (continued)

 

*Critical accounting estimates*

● Equipment – The Company reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected remaining uselful life of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utilization of equipment.

● Recoverability of accounts receivable, contracts assets, and unbilled revenues, and allowance for credit loss – The Company provides an allowance for expected credit losses based on an assessment of the recoverability of accounts receivable. Allowances are applied to accounts receivable at initial recognition based on the probability of default. Management analyzes its debts, customer concentrations, customer creditworthiness, current economic trends, and changes in customer payment terms when making a judgment to evaluate the adequacy of the allowance for expected credit losses. Where the expectation is different from the original estimate, such difference will impact the carrying value of accounts receivable.

● Functional currency – The determination of the functional currency of each entity within the Company requires management judgment in determining the currency that mainly influences the sale price of services and costs of providing services.

● Revenue recognition – When the Company enters into an agreement for software development which is longer in nature (longer than 1 year), the Company records a contract asset which is representative of receivables from the agreements not yet billed to the customer. Significant judgment is made to determine the performance obligations and whether each performance obligation is satisfied at a point in time or over the term of the contracts.

● Going concern – The assessment of the Company's ability to continue as a going concern. The determination that the Company will be able to continue as a going concern is subject to critical judgments of management with respect to assumptions surrounding the short and long-term operating budget and financing activities. Should these judgments prove to be inaccurate, management's continued use of the going concern assumption may be inappropriate.

&nbsp;&nbsp;&nbsp;&nbsp;d) Cash
 and cash equivalents

Cash include cash on hand, demand deposits with financial institutions, and other short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of change in value.

&nbsp;&nbsp;&nbsp;&nbsp;e) Foreign
 currency translation

The accompanying consolidated financial statements are presented in United States dollars ("$"), unless otherwise indicated.

The functional currency is the currency of the primary economic environment in which an entity operates and may differ from the currency in which the entity enters transactions. The functional currency of VAI and VOC is the Canadian dollar ("CAD") ("CAD$"). The functional currency of VTU, VLOG, VRI, VINC, VHE, and VSOL is the United States dollar ("USD") ("$"). The functional currency of VBV is the Euro ("€").

Transactions in currencies other than the functional currency are translated to the functional currency at exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities that are denominated in currencies other than the functional currency are translated to the functional currency using the exchange rate prevailing on the date of the consolidated statement of financial position, while non-monetary assets and liabilities are translated at historical rates.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

&nbsp;&nbsp;&nbsp;&nbsp;e) Foreign
 currency translation (continued)

Exchange gains and losses arising from the translation of foreign currency-denominated transactions or balances are recorded as a component of profit or loss in the period in which they occur.

The results of operations and financial position of each subsidiary where the functional currency is different from the presentation currency are translated as follows: assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the date of that consolidated statement of financial position, expenses are translated at the average exchange rate each month, all resulting exchange differences are recognized in accumulated other comprehensive income (loss).

&nbsp;&nbsp;&nbsp;&nbsp;f) Income
 taxes

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss, except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the year, calculated using tax rates enacted at year-end, adjusted for amendments to tax payable with regard to previous years.

Deferred tax is determined using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amounts of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date applicable to the period of expected realization or settlement.

Deferred tax asset is recognized only to the extent that it is more likely than not that future taxable profits will be available against which the asset can be utilized. Where appropriate, the Company records a valuation allowance with respect to a future tax benefit.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

&nbsp;&nbsp;&nbsp;&nbsp;g) Share
 capital

Equity instruments are contracts that give a residual interest in the net assets of the Company. Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial asset or financial liability. The Company's Subordinate Voting Shares and share purchase warrants are classified as equity instruments. Incremental costs directly attributable to the issue of new shares or warrants are shown in equity as a deduction, net of tax, from the proceeds.

Proceeds from the exercise of warrants are recorded as share capital in the amount for which the warrant enabled the holder to purchase a share in the Company. Any previously recorded share-based payment included in the additional paid-in capital account is transferred to share capital upon the exercise of warrants. Share capital issued for non-monetary consideration is valued at the closing CBOE Canada (Canadian stock exchange) market price at the date of issuance. The proceeds from the issuance of Units are allocated between Subordinate Voting Shares and warrants using the relative fair value method. Under this approach, the total proceeds are allocated to each component based on their relative fair values at the time of the financing. The fair value of the Subordinate Voting Shares and the fair value of the warrants are determined independently, and the proceeds are then proportionally allocated to share capital and warrants reserve accordingly.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;g) Share
 capital (continued)

Upon expiration, any value attributed to warrants and stock options remains in the additional paid-in capital.

Amounts recorded to obligation to issue shares are from contracts that give rise to a commitment for the Company to issue shares such as subscriptions received in advance for a specific private placement and special warrants that convert into shares.

&nbsp;&nbsp;&nbsp;&nbsp;h) Share-based
 payments

The Company has an omnibus equity incentive plan for stock options, restricted share Units ("RSUs"), performance share Units ("PSUs"), and deferred share Units ("DSUs"), which are described in note 8. The Company grants equity-settled share-based awards to directors, officers, employees, and consultants.

Share-based payments to employees and others providing similar services are measured at the estimated fair value of the instruments issued on the grant date and expensed over the vesting periods. The fair value of equity-settled share options granted to employees is recognized as an expense over the vesting period with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee, including directors of the Company.

Amounts recorded to additional paid-in capital represent the value of equity-based transactions other than share capital, and include stock options, warrants, and the equity component of convertible debt.

For share-based payment awards granted to employees, we estimate the fair value of stock options on the grant date using the Black-Scholes option-pricing model, applying standard assumptions for expected volatility, expected term, risk-free interest rate, and expected dividends. We use the "plain vanilla" model and compensation expense is recognized on a graded vesting basis over the vesting period of the award. The amount of expense recognized reflects the number of awards that are expected to vest. We revise our estimates of forfeitures, if necessary, in subsequent periods and recognize the cumulative effect of any changes in the current period.

The fair value of share-based payments to non-employees are based on the fair value of the goods or services received. If the Company cannot reliably estimate the fair value of the goods or services received, the Company measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted at the date the Company receives the goods or services.

&nbsp;&nbsp;&nbsp;&nbsp;i) Loss
 per share

Basic loss per share is computed by dividing net loss attributable to Subordinate Voting Shares shareholders by the number of Subordinate Voting Shares outstanding during the period. Diluted earnings per share is computed similar to basic loss per share, except that the number of shares outstanding is increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive. The Company applies the treasury stock method in calculating diluted earnings per share, which assumes that outstanding stock options and warrants were exercised and that the proceeds from such exercises were used to acquire Subordinate Voting Shares at the average market price during the reporting periods. Diluted loss per share excludes all dilutive potential Subordinate Voting Shares, as their effect would be anti-dilutive.

For the year ended March 31, 2025, 2,095,224 (2024 - 878,061) warrants, 770,995 stock options (2024 - 542,454), and 685,373 (2024 - 24,075) RSUs were not included in the calculation of diluted earnings per share as their inclusion was anti-dilutive.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;j) Related
 party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources, services, or obligations between related parties.

&nbsp;&nbsp;&nbsp;&nbsp;k) Financial
 instruments

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Impairment
 of financial assets at amortized cost

The Company recognizes an allowance for credit losses on financial assets carried at amortized cost. The allowance is based on management's estimate of current expected credit losses (CECL) over the contractual term of the asset, considering historical experience, current conditions, and reasonable and supportable forecasts. The Company evaluates the allowance at each reporting date and records any necessary adjustments through earnings as a credit loss expense. Changes in expected credit losses, including both increases and reversals, are recognized in the income statement in the period in which they occur. The full lifetime expected credit loss is recorded upon initial recognition of the financial asset and reassessed regularly based on changes in credit risk and economic outlook.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Derecognition

*Financial assets*

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are recognized in profit or loss.

*Financial liabilities*

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.

The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different. In this case, a new financial liability based on the modified terms is recognized at fair value.

&nbsp;&nbsp;&nbsp;&nbsp;l) Government
 assistance

Government assistance consists of grants received under the Horizon Europe program, administered under the authority of the European Commission.

In accordance with U.S. GAAP, the Company accounts for government grants by analogy to ASC 958-605 (Not-for-Profit Entities – Revenue Recognition), as there is no specific guidance for business entities. Under this approach, government assistance is recognized when the related conditions have been substantially met and receipt of the funds is reasonably assured.

The grant is intended to compensate for specific operating expenses, the assistance is recognized as other income on a systematic basis in the same period in which the related expenses are incurred.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;m) Research
 and development

The Company incurs costs on activities that relate to research and development of new and existing products. The Company expenses all research and development costs as incurred. Development costs of the Company's products are subject to capitalization beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers.

&nbsp;&nbsp;&nbsp;&nbsp;n) Revenue
 recognition

The Company's revenue is primarily derived from licensing its applications to customers, providing customization to its core software and performing ongoing maintenance and consulting services.

The Company recognizes revenue in accordance with ASC 606, "Revenue From Contracts With Customers," which follows a five-step model to assess each contract of a contract with a customer: (i) identify the legally binding contract, (ii) identify the performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price, and (v) determine whether revenue will be recognized at a point in time or over time. Revenue is recognized when a performance obligation is satisfied and the customer obtains control of promised goods and services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services.

The Company's performance obligations are satisfied over time or at a point in time depending on the transfer of control to the customer.

**Software arrangements**

Revenue from software arrangements that provide the Company's customers with the right to use the software without any significant development or integration work is recognized at the time of delivery. Revenue from fixed-price software arrangements and software customization contracts that require significant production, modification, or customization of software is recognized over time using the cost input method as the services are rendered from time and materials contracts. If cost input method is not used, the Company recognizes the module customization revenue upon final installation of the modules and acceptance by the customers.

Revenue from Software as a service ("SaaS") arrangements provide the Company's customers with the right to access a cloud-based environment that the Company provides and manages and the right to receive support and to use the software; however, the customer does not have the right to take possession of the software. Revenue from SaaS arrangements are generally recognized ratably over the contract term, using the time elapsed output method, commencing on the date an executed contract exists and the customer has the right-to-use and access to the software. Substantially, all of the Company's subscription service arrangements are non-cancellable and do not contain refund-type provisions.

**Contract balances**

The timing of revenue recognition, billing, and cash collections results in accounts receivable, contract assets, unbilled revenue, and deferred revenue on the consolidated statement of financial position.

Unbilled revenues are recognized when revenue is recognized in excess of billings or when the Company has a right to consideration and that right is conditional to something other than the passage of time. Contract assets are subsequently transferred to accounts receivable when the right to payment becomes unconditional.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;o) Deferred
 revenue

Deferred revenue is recognized when payments received from customers are in excess of revenue recognized. Deferred revenue is subsequently recognized in revenue when the Company satisfies its performance obligations. Contract assets and deferred revenue are reported in a net position on a contract-by-contract basis at the end of each reporting period.

&nbsp;&nbsp;&nbsp;&nbsp;p) Cost
 of revenue

Cost of revenue includes expenses incurred for development of applications and consists of labour costs of technical staff, other direct costs, and hosting services, but excludes depreciation costs.

&nbsp;&nbsp;&nbsp;&nbsp;q) Impairment
 of long-lived assets

The Company periodically assesses potential impairments of its long-lived assets in accordance with the provisions of ASC 360, Accounting for the Impairment or Disposal of Long-lived Assets.

An impairment review is performed whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

The Company groups its assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. The Company has determined that the lowest level for which identifiable cash flows are available is the operating segment level.

Factors considered by the Company include, but are not limited to, significant underperformance relative to historical or projected operating results; significant changes in the manner of use of the acquired assets or the strategy for the overall business; and significant negative industry or economic trends. When the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company estimates the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future undiscounted cash flows and eventual disposition is less than the carrying amount of the asset, the Company recognizes an impairment loss. An impairment loss is reflected as the amount by which the carrying amount of the asset exceeds the fair value of the asset, based on the fair value if available, or discounted cash flows, if fair value is not available.

The Company assessed potential impairments of its long-lived assets as of March 31, 2025 and concluded that there was no impairment to be recorded during the year ended March 31, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;r) Equipment

Equipment is measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

Any gain or loss on disposal of an item of equipment is recognized in profit or loss.

Depreciation is calculated to write off the cost of items of equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss. The estimated useful lives of equipment is three years. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.

Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**3.** **DEFERRED GRANT** 

The Company's subsidiary, VBV, entered into a grant agreement (alongside other beneficiaries) with the Horizon Europe, which is delegated under the European Commission, to provide technical expertise on artificial intelligence.

Under the grant agreement, VBV received $226,877 (€209,056) on July 24, 2024, upon the execution of the agreement. The funds under this agreement are to reimburse the Company for amounts spent on the project. The Company is required to submit their costs incurred related to the project and only approved expenses under the project are reimbursed.

Of the expenses incurred, $17,944 (2024 - $Nil) are outstanding in accounts payable and accrued liabilities, with $67,732 (2024 - $Nil) remaining in restricted cash. Grant income of $156,885 (2024 - $154,709) was recognized for the year ended March 31, 2025.

---

| | | |
|:---|:---|:---|
|  | March 31, 2025 | March 31, 2024 |
| Balance, beginning of the year | $- | $- |
| Grant received | 226877 | 154709 |
| Expenses on the project | (156885) | (154709) |
| Exchange difference | (2260) | - |
| Balance, end of the year | $67732 | $- |

---

**4.** **REVENUE** 

The Company recognized revenues from contracts with customers in accordance with the following timing under ASC 606 *Revenue from Contracts with Customers*.

---

| | | |
|:---|:---|:---|
|  | Year ended | Year ended |
|  | March 31, | March 31, |
|  | 2025 | 2024 |
| Recognized at a point in time (1) | $155000 | $218600 |
| Recognized over the duration of contracts (2) | - | 1748131 |
| Total | $155000 | $1966731 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes revenues from completed Proof of Concept contracts ("POCs") and software implementation services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Includes revenue from Software as a Service ("SaaS").

On August 14, 2024, the Company announced the existing SaaS contract with its customer was terminated by both parties. As a result, the Company has not recognized any revenues related to SaaS services in the current year, and has recorded a provision for the contract settlement for $1,252,076 (Note 5).

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**5.** **UNBILLED REVENUE** 

The Company's contract assets and unbilled revenues are summarized as follows:

---

| | |
|:---|:---|
|  | Unbilled revenue |
| Balance, March 31, 2023 | $1193945 |
| Additions | 1108131 |
| Invoiced | (1050000) |
| Costs recognized | - |
| Balance, March 31, 2024 | $1252076 |
| Additions |  |
| Provision for contract settlement (Note 4) | (1252076) |
| Balance, March 31, 2025 | $- |

---

**6.** **COST OF REVENUE** 

The Company's cost of revenue is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Year ended | Year ended |
|  | March 31, | March 31, |
|  | 2025 | 2024 |
| Cost of Revenue from POCs and software implementation | $145000 | $714458 |
| Cost of Revenue from SaaS |  | 984712 |
| Provision for estimated loss on contract | 486691 | - |
|  | $631691 | $1699170 |

---

Included in accrued liabilities is a provision of $486,691 related to the estimated loss under the Analog – VERSES Framework Agreement. The provision reflects management's best estimate of the expected loss as of the reporting date, based on currently available information. The Company will continue to monitor this obligation and adjust the provision as necessary if further information becomes available or conditions change.

**7.** **LOANS PAYABLE** 

Loan activity consisted of the following:

---

| | | |
|:---|:---|:---|
| For the year ended | March 31, 2025 | March 31, 2024 |
| Balance, beginning of the year | $140904 | $143331 |
| Repayment | (7106) | (7752) |
| Interest expense | 5241 | 5325 |
| Balance, end of the year | $139039 | $140904 |

---

On June 5, 2020, the Company received a $142,400 loan from the U.S. Small Business Administration. The loan is secured by all tangible and intangible personal property of VTU, and bears interest of 3.75% per annum and requires monthly payments of $646 starting in June 2021 with a maturity of 30 years.

In the year ended March 31 2025, the Company incurred and additional interest expenses of $6,515 (March 31, 2024 - $nil) regarding the financing of the Directors and Officers insurance payment ("D&O").

In the year ended March 31 2025, the Company did not incur ay interest expenses (March 31, 2024 - $5,105) regarding the lease payments.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**8.** **SHARE BASED PAYMENTS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Stock Options

The Company has an Omnibus Equity Incentive Plan (the "Plan") available to employees, directors, officers, and consultants with grants under the Plan approved from time to time by the Board of Directors. Under the Plan, the Company is authorized to issue options to purchase an aggregate of up to 25% of the Company's issued and outstanding Subordinate Voting Shares. Each option can be exercised to acquire one Subordinate Voting Share of the Company. The exercise price for an option granted under the Plan may not be less than the market price at the date of grant.

Options to purchase Subordinate Voting Shares have been granted to directors, employees, and consultants as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Expiry date | Weighted Average Remaining Contractual Life in Years | Exercise Price (CAD$) | *Exercise Price*<br> *(USD$ equivalent) (1)* | Outstanding |
| June 16, 2027 | 2.21 | 21.60 | 15.02 | 103703 |
| September 16, 2027 | 2.46 | 27.00 | 18.78 | 19072 |
| April 28, 2028 | 3.08 | 44.55 | 30.99 | 3703 |
| December 15, 2028 | 3.71 | 32.91 | 22.89 | 352615 |
| December 23, 2028 | 3.73 | 30.51 | 21.22 | 136290 |
| April 15, 2029 | 4.04 | 30.78 | 21.41 | 9071 |
| July 3, 2029 | 4.26 | 29.01 | 20.18 | 146430 |
|  | 3.59 | 30.09 | 20.93 | 770884 |

---

<sup>(1)</sup> Converted at balance sheet rate.

A summary of the Company's stock options as at March 31, 2025, and changes for the years then ended is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Number of stock options | Weighted Average Exercise Price (CAD$) | *Weighted Average*<br> *Exercise Price*<br> *(USD$ equivalent) (1)* |
| Outstanding, March 31, 2023 | 258516 | 21.68 | 15.08 |
| Granted | 370365 | 36.53 | 25.41 |
| Exercised | (86547) | 19.94 | 13.87 |
| Outstanding, March 31, 2024 | 542334 | $32.09 | $22.32 |
| Granted | 364099 | 27.39 | 19.05 |
| Exercised | (51235) | 23.22 | 16.15 |
| Cancelled | (84314) | 35.37 | 24.60 |
| Outstanding, March 31, 2025 | 770884 | 30.10 | 20.94 |
| Exercisable, March 31, 2025 | 511487 | $29.92 | $20.81 |

---

<sup>(1)</sup> Converted at balance sheet rate.

During the year ended March 31, 2025:

---

| |
|:---|
| 27,954 stock options at an average exercise price of CAD$33.24 ($23.12 at balance sheet rate) belonging to inactive employees were cancelled according to the Plan. The original fair value of these stock options of $274,005 was reclassified from additional paid-in capital to share based payments upon cancellation. |
| 56,360 options at an exercise price of CAD$36.45 ($25.35 at balance sheet rate) belonging to an employee were cancelled. The original fair value of these stock options of $1,142,294 was reclassified from additional paid-in capital to share based payments upon cancellation. |

---

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**8.** **SHARE BASED PAYMENTS (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Stock Options (continued)

On December 23, 2024, the Company granted 49,444 stock options to employees and independent contractors of the Company with an exercise price of CAD$30.51($21.22 at balance sheet rate), expiring in 5 years, with 25% vesting on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter. The stock options were fair valued at $792,184, of which $269,359 is recognized in the current year using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at grant date | $30.51 | $21.20 |
| Risk-free interest rate | 3.04% | 3.04% |
| Expected life | 5 years | 5 years |
| Expected volatility | 100% | 100% |
| Expected forfeitures | 0% | 0% |
| Expected dividends | Nil | Nil |
| Grant date fair value per option | $23.06 | $16.02 |

---

<u>On December 23, 2024</u>, the Company granted 59,259 stock options to strategic consultants of the Company with an exercise price of CAD$30.51 ($21.22 at balance sheet rate), expiring in 5 years, where 33.33% of the stock options vested on the grant date and 33.33% will vest every 6 months after the grant date. The Company also granted 27,593 stock options to strategic consultants of the Company with an exercise price of CAD$30.51 ($21.22 at balance sheet rate), expiring in 5 years, where 25% vests on the date that is one (1) year from the Vesting Start Date and 6.25% vests at the end of each full quarter thereafter.

The stock options were fair revalued at $1,141,535, of which $602,371 is recognized in the current year using the Black-Scholes option pricing model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at revaluation date | $23.25 | $16.16 |
| Risk-free interest rate | 2.61% | 2.61% |
| Expected life | 5 years | 5 years |
| Expected volatility | 121.6% | 122% |
| Expected forfeitures | 0% | 0% |
| Expected dividends | Nil | Nil |
| Revaluation date fair value per option | $18.91 | $13.14 |

---

On October 9, 2024, the Company granted 56,361 stock options to an employee with an exercise price of CAD$14.31 ($9.95 at balance sheet rate), expiring in December 2028, where 100% vested on the grant date. The stock options were fair valued at $420,029, which is recognized in the current year using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at grant date | $14.31 | $10.45 |
| Risk-free interest rate | 3.07% | 3.07% |
| Expected life | 4.2 years | 4.2 years |
| Expected volatility | 100.0% | 100% |
| Expected forfeitures | 0% | 0% |
| Expected dividends | Nil | Nil |
| Grant date fair value per option | $10.20 | $7.45 |

---

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**8.** **SHARE BASED PAYMENTS (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Stock Options (continued)

On July 3, 2024, the Company granted 85,682 stock options to employees and independent contractors of the Company with a weighted average exercise price of CAD$29.10 ($20.24 at balance sheet rate), expiring in 5 years, with 25% vesting on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter. The stock options were fair valued at $1,376,157, of which $629,973 is recognized in the current year using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at grant date | $28.89 | $21.19 |
| Risk-free interest rate | 3.57% | 3.57% |
| Expected life | 5 years | 5 years |
| Expected volatility | 100.0% | 100% |
| Expected forfeitures | 0% | 0% |
| Expected dividends | Nil | Nil |
| Weighted average grant date fair value per option | $21.87 | $16.04 |

---

On July 3, 2024, the Company granted 74,073 stock options to strategic consultants of the Company with an exercise price of CAD$28.89 ($20.10 at balance sheet rate), expiring in 5 years, where 33.33% stock options vested on the grant date and 33.33% will vest every 6 months after the grant date. The stock options were fair revalued at $870,657, of which $912,939 is recognized in the current year using the Black-Scholes option pricing model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at revaluation date | $23.25 | $16.17 |
| Risk-free interest rate | 2.47% | 2.47% |
| Expected life | 5 years | 5 years |
| Expected volatility | 121.6% | 121.6% |
| Expected forfeitures | 0% | 0% |
| Expected dividends | Nil | Nil |
| Revaluation date fair value per option | $16.90 | $11.75 |

---

On April 15, 2024, the Company granted 4,260 stock options to employees and independent contractors of the Company with a weighted average exercise price of CAD$33.86 ($23.55 at balance sheet rate), expiring in 5 years, with 25% vesting on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter. The stock options were fair valued at $72,423, of which $34,349 is recognized in the current year using the Black-Scholes option pricing model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at grant date | $30.78 | $22.36 |
| Risk-free interest rate | 3.77% | 3.77% |
| Expected life | 5 years | 5 years |
| Expected volatility | 100% | 100% |
| Expected forfeitures | 0% | 0% |
| Expected dividends | Nil | Nil |
| Grant date fair value per option | $23.13 | $16.81 |

---

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**8.** **SHARE BASED PAYMENTS (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a) Stock Options (continued)

<u>On April 15, 2024</u>, the Company granted 7,427 stock options to strategic consultants with an average exercise price of CAD$30.80 ($21.42 at balance sheet rate) and expiration in 5 years. Of these, 1,859 vested on the grant date, 555 on May 1, 2024, and 555 at the beginning of every calendar month thereafter. The remaining 21 stock options will vest 33.33% every 6 months after the grant date.

For the year ended March 31, 2025, the Company recognized $93,938 as share-based payment for stock options granted in April 2024 for strategic consultants of the Company. The fair value of stock options is estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at revaluation date | $23.25 | $16.17 |
| Risk-free interest rate | 2.47% | 2.47% |
| Expected life | 4.3 years | 4.3 years |
| Expected volatility | 121.6% | 121.6% |
| Expected forfeitures | 0% | 0% |
| Expected dividends | Nil | Nil |
| Revaluation date fair value per option | $17.54 | $12.20 |

---

<u>On December 15, 2023</u>, the Company granted 347,952 stock options to employees and strategic consultants of the Company with an exercise price of CAD$36.45 ($25.35 at balance sheet rate), expiring in 5 years, where 173,186 stock options are vested on the grant date, based on previous commitments, and 6.25% every subsequent quarter.

For the year ended March 31, 2025, the Company recognized $722,860 as share-based payment for stock options granted in December 2023 using the graded vesting method over the vesting period.

<u>On December 15, 2023</u>, the Company granted 18,716 stock options to strategic consultants with an exercise price of CAD$36.45 ($25.35 at balance sheet rate). The options expire in 5 years, and 33.33% vested on December 30, 2024, and 33.33% every 6 months thereafter.

For the year ended March 31, 2025, the Company derecognized $16,979 as share-based payment for stock options granted in December 2023. The fair value of stock options is estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at revaluation date | $23.25 | $16.17 |
| Risk-free interest rate | 2.47% | 2.47% |
| Expected life | 3.7 years | 3.7 years |
| Expected volatility | 121.6% | 121.6% |
| Expected forfeitures | 0% | 0% |
| Expected dividends | Nil | Nil |
| Revaluation date fair value per option | $16.57 | $11.53 |

---

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**8.** **SHARE BASED PAYMENTS (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a) Stock Options (continued)

<u>On April 28, 2023</u>, the Company granted 3,704 stock options to a strategic consultant with an exercise price of CAD$44.55 ($30.99 at balance sheet rate). The options expire in 5 years, with 1,852 vesting 6 months after the grant date and 1,852 vesting 12 months after the grant date.

For the year ended March 31, 2025, the Company derecognized $30,631 as share-based payment for stock options granted in April 2023 for strategic consultants of the Company. The fair value of stock options is estimated using the Black-Scholes option pricing model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at revaluation date | $23.25 | $16.17 |
| Risk-free interest rate | 2.47% | 2.47% |
| Expected life | 3.1 years | 3.1 years |
| Expected volatility | 121.6% | 121.6% |
| Expected forfeitures | 0% | 0% |
| Expected dividends | Nil | Nil |
| Revaluation date fair value per option | $14.65 | $10.19 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; b) Restricted Shares Units

Included in the Plan, the Company may grant RSUs to employees, directors, officers, and consultants. The RSUs can be settled at the election of the holder for Subordinate Voting Shares, cash, or a combination of Subordinate Voting Shares and cash. The RSUs were determined to be a liability instrument, and the fair value will be recognized as an expense using the graded vesting method over the vesting period.

<u>At March 31, 2025,</u> the balance of 6,173 RSUs granted in the year ended March 31, 2023, were revalued based on the market price of one Subordinate Voting Share on the revaluation date, and the Company derecognized $163,211 as share-based payment for RSUs in the year.

<u>On March 04, 2025</u>, 80,247 of the RSUs granted in December 2024, were settled into Subordinate Voting Shares (Note 11).

<u>On February 25, 2025</u>, 9,259 of the RSUs granted in December 2024, were settled into Subordinate Voting Shares (Note 11).

<u>On December 27, 2024</u>, 12,346 of the RSUs granted in the year ended March 31, 2023, were settled into Subordinate Voting Shares (Note 11).

<u>On December 23, 2024</u>, the Company granted 296,296 RSUs to strategic consultants of the Company with no exercise price, expiry date of 10 years from the grant date, where 89,506 vested on the grant date, 46,297 will vest in July 2025, 46,297 will vest in July 2026, 1,850 will vest monthly for 48 months, 12,345 will vest 50% every 6 months after the grant date, 7,408 will vest 33.33% after 1 year of the grant date and 33,33% every year afterwards, and 92,593 will vest according to the completion of specific milestones.

For the year ended March 31, 2025, the Company revalued the RSUs granted on December 23, 2024 based on the market price of one Subordinate Voting Share on the revaluation date. The Company recognized $2,621,935 as share-based payment for RSUs in the year.

<u>On October 9, 2024</u>, the Company cancelled 5,926 RSUs belonging to an employee. The original fair value of these RSUs of $12,717 was reclassified from RSU liability to share based payments upon cancellation.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**8.** **SHARE BASED PAYMENTS (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; b) Restricted Shares Units (continued)

<u>On September 13, 2024</u>, the Company granted 74,074 RSUs a director of the Company (Note 9), with no exercise price, expiry date of 10 years from the grant date, vesting 24,691 within one year of the grant date and 8.33% every three months afterwards.

For the year ended March 31, 2025, the Company revalued the RSUs granted on September 13, 2024 based on the market price of one Subordinate Voting Share on the revaluation date. The Company recognized $439,973 as share-based payment for RSUs in the year.

<u>On July 3, 2024</u>, the Company granted 359,817 RSUs to a strategic consultant (1,852), directors (16,668) (Note 9), and employees (341,297). The RSUs have no exercise price, expire 10 years from the grant date, and vest 33.33% within one year of the grant date and 33.33% every year thereafter.

For the year ended March 31, 2025, the Company revalued the RSUs granted on July 3, 2024 based on the market price of one Subordinate Voting Share on the revaluation date. The Company recognized $2,609,543 as share-based payment for RSUs in the year.

<u>On June 20, 2024</u>, the Company granted 37,037 RSUs to a strategic investor of the Company, with no exercise price, expiry date of 10 years from the grant date, vesting equal installments of 370 RSUs for every CAD$100,000 ($69,560 at balance sheet rate) in revenue derived by the Company from commercial agreements it enters into with affiliates of the strategic investor. No value was attributed to these RSUs, as the vesting is still uncertain.

<u>On April 15, 2024</u>, the Company granted 1,852 RSUs to a strategic consultant. The RSUs have no exercise price, expire 10 years from the grant date, and vest 100% on the grant date.

For the year ended March 31, 2025, the Company revalued the RSUs granted on April 15, 2024 based on the market price of one Subordinate Voting Share on the revaluation date. The Company recognized $29,948 as share-based payment for RSUs in the year.

<u>On November 15, 2023</u>, the Company granted 5,556 RSUs to a strategic consultant of the Company, with no exercise price, expiry date of 10 years from the grant date, vesting 33.33% on the grant date, 33.33% on December 28, 2023, and 33.33% on March 28, 2024.

For the year ended March 31, 2025, the Company revalued the RSUs granted on <u>November 15, 2023</u> based on the market price of one Subordinate Voting Share on the revaluation date. The Company derecognized $68,175 as share-based payment for RSUs in the year.

<u>During the year ended March 31, 2023</u>, 18,519 RSUs were granted to a director of the Company (Note 9). They have no exercise price, expire 10 years from the grant date, and vest 1/3 on the first anniversary of the Listing and 1/3 each subsequent anniversary thereafter (Note 8).

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**8.** **SHARE BASED PAYMENTS (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; b) Restricted Shares Units (continued)

A summary of the Company's restricted shares units as at March 31, 2025, and changes for the years then ended is as follows:

---

| | |
|:---|:---|
|  | **Number of RSUs** |
| Balance, March 31, 2023 | 18519 |
| Issued, November 15, 2023 | 5556 |
| Balance, March 31, 2024 | 24075 |
| Issued, April 15, 2024 | 1852 |
| Issued, June 20, 2024 | 37037 |
| Issued, July 3, 2024 | 359817 |
| Issued, September 13, 2024 | 74074 |
| Issued, December 23, 2024 | 296296 |
| Cancelled | (5926) |
| Converted | (101852) |
| Balance, March 31, 2025 | 685373 |
| Exercisable, March 31, 2025 | 7639 |

---

A reconciliation of share based payments is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Share based payments** | Stock Options | RSUs | Modification of broker's warrants | Settlement agreement | Total |
| Previous year graded vesting | 473109 |  |  |  | 473109 |
| New grants Q1 2023 | 70925 |  |  |  | 70925 |
| New grants Q3 2023 | 6390644 | 127400 |  |  | 6518044 |
| Modification of broker's warrants |  |  | 440604 |  | 440604 |
| Revaluation RSUs |  | 148636 |  |  | 148636 |
| Settlement agreement | - | - | - | 198801 | 198801 |
| Balance, March 31, 2024 | $6934678 | $276036 | $440604 | $198801 | $7850119 |
| Previous years graded vesting | 675250 |  |  |  | 675250 |
| Previous years RSUs revaluation |  | (231386) |  |  | (231386) |
| New grants Q1 2024 | 128287 | 29948 |  |  | 158235 |
| New grants Q2 2024 | 1542912 | 3049516 |  |  | 4592428 |
| New grants Q3 2024 | 1291759 | 2621935 |  |  | 3913694 |
| Cancelled options / RSUs | (1416299) | (12717) | - | - | (1429016) |
| Balance, March 31, 2025 | $2221909 | $5457296 | $- | $- | $7679205 |

---

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**9.** **RELATED PARTY TRANSACTIONS AND BALANCES** 

The Company's related parties consist of the directors, executive officers and key management personnel, who have authority and responsibility for planning, directing, and controlling the Company's activity and companies controlled by them. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources, services, or obligations between related parties.

Transactions are measured at the exchange amount, which is the amount agreed to by the parties.

Key management personnel include those with authority and responsibility for planning, directing, and controlling the company's activities. The Company has determined that key management personnel consist of executive and non-executive members of its Board of Directors and senior officers.

During the years ended March 31, 2025 and 2024, related party transactions were as follows:

---

| | | |
|:---|:---|:---|
|  | 2025 | 2024 |
| Management fees | $146666 | $41067 |
| Management salaries and benefits included in personnel expenses | 1719195 | 1338762 |
| Share-based payments (Note 8) | 655145 | 720222 |
|  | $2521007 | $2100051 |

---

Included in accounts payable and accrued liabilities at March 31, 2025, were amounts totaling $105,799 (March 31, 2024 – $nil) due to James Hendrickson, the Chief Operating Officer ($83,500), Michael Blum, the Chairman ($20,000), and Kevin Wilson, the Chief Accounting Officer ($2,299).

Also included in the due from related parties is an unsecured loan of $68,080 (March 31, 2024 - $64,936) to a key member of the management team. The loan has an annual interest rate of 5% and requires principal and interest to be paid in full by May 1, 2033 (Note 22). No repayments were made in the year ended March 31, 2025.

<u>On December 23, 2024</u>, the Company granted 7,407 stock options to James Hendrickson, its Chief Operating Officer with an exercise price of CAD$30.51 ($21.22 at balance sheet rate), expiring in 5 years, where 25% will within one year of the grant date, and 6.25% every subsequent quarter. The stock options were fair valued at $118,679, of which $40,354 is recognized in the year ended March 31, 2025, using the Black-Scholes option pricing model (Note 8).

<u>On September 13, 2024</u>, the Company granted 74,074 RSUs to Michael Blum, a director of the Company with no exercise price, expiry date of 10 years from the grant date, vesting 24,691 within one year of the grant date and 8.33% every three months afterwards. For the year ended March 31, 2025, the Company revalued the RSUs based on the market price of one Subordinate Voting Share on the revaluation date. The Company recognized $439,973 as share-based payment for RSUs in the year (Note 8).

<u>On July 3, 2024</u>, the Company granted 3,704 stock options to James Hendrickson, the Chief Operating Officer and 1,852 to Kevin Wilson, the Chief Accounting Officer. The Options have an exercise price of CAD$28.89 ($20.10 at balance sheet rate) and expire in 5 years. 25% of the options will vest within one year of the grant date and 6.25% every subsequent quarter. The stock options were fair valued at $89,355, of which $41,095 is recognized in the year ended March 31, 2025, using the Black-Scholes option pricing model (Note 8).

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**9.** **RELATED PARTY TRANSACTIONS AND BALANCES (continued)** 

<u>On July 3, 2024</u>, the Company granted 1,852 RSUs to Kevin Wilson, the Chief Accounting Officer and 16,665 to the three independent directors of the Company, 5,555 to Gordon Scott Paterson, 5,555 to Jonhatan de Vos, and 5,555 to Jay Samit. The RSUs have no exercise price and expire in 10 years. They vest 33.33% within one year of the grant date and 33.33% yearly thereafter. The Company revalued the RSUs based on the market price of one Subordinate Voting Share on the revaluation date. The Company recognized $122,299 as share-based payment for RSUs in the year ended March 31, 2025 (Note 8).

<u>On December 23, 2023</u>, the Company granted 16,278 stock options to Kevin Wilson, the Chief Accounting Officer and 1,852 stock options to James Hendrickson, its Chief Operating Officer with an exercise price of CAD$36.45 ($22.57 at balance sheet rate), expiring in 5 years, where 16,278 vested on the grant date and 1,852 will vest 25% within one year of the grant date, and 6.25% every subsequent quarter. The stock options were fair valued at $374,011, of which $9,913 is recognized in the year ended March 31, 2025, using the Black-Scholes option pricing model (Note 8).

On March 31, 2025, the remaining 6,172 RSUs granted to Gordon Scott Paterson, a director of the Company, in the <u>year ended March 31, 2023</u>, were valued based on the market price of one Subordinate Voting Share on the revaluation date, of which $12,078 is derecognized in the year ended March 31, 2025 (Note 8).

**10.** **COMMITMENTS** 

The Company has an obligation to pay royalties to Cyberlab, LLC ("Cyberlab") (a company controlled by Dan Mapes, a director and officer). Cyberlab shall be entitled to receive a share of the gross revenue derived from the sales, licensing, and other commercial activities involving Spatial Domain Names, pursuant to the following schedule:

---

| |
|:---|
| Years 1 through 10 of the Spatial Domain Program: Cyberlab shall be entitled to retain Five Percent (5%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Five Percent (95%) to allocate between itself and other Spatial Domain Program stakeholders (e.g., registries, registrars, etc.) as it sees fit. |
| Years 11 through 14 of the Spatial Domain Program: Cyberlab shall be entitled to retain Four Percent (4%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Six Percent (96%). |
| Years 15 through 17 of the Spatial Domain Program: Cyberlab shall be entitled to retain Three Percent (3%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Seven Percent (97%). |
| Years 18 and 19 of the Spatial Domain Program: Cyberlab shall be entitled to retain Two Percent (2%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Eight Percent (98%). |
| Years 20 to 25 of the Spatial Domain Program: Cyberlab shall be entitled to retain One Percent (1%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Nine Percent (99%). |

---

As of March 31, 2025, no amounts are payable under the royalty agreement.

The Company is obligated to grant stock options ("Options"), deferred share units ("DSU"), or restricted stock units ("RSU") to qualifying consultants and employees based on their respective contracts, to be determined at the grant date based on the market price of the Company's shares. As at March 31, 2025, the outstanding commitment balance is nil (March 31, 2024 – 320,069) to be granted as options, RSUs or DSUs.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**10.** **COMMITMENTS (continued)** 

The Company has entered into severance agreements with Gabriel Rene (Chief Executive Officer and Director), Dan Mapes (President Emeritus and Global Ambassador and Director), James Christodoulou, Chief Financial Officer), Donald Moody (General Counsel and Chief Legal Officer), Capm Petersen (Chief Innovation Officer), Steven Swanson (Chief Experience Officer), and Michael Wadden (Chief Commercial Officer). In the case of involuntary termination or a change in control, the executives are entitled to a monetary payment equal to 12 month's worth of base salary, continuation for 12 months of medical and dental insurance, and immediate, accelerated vesting of all stock options, equity, and related compensation.

The Company has entered into a severance agreement with Kevin Wilson, its Chief Accounting Officer. In the case of involuntary termination or a change in control, the Chief Accounting Officer is entitled to a monetary payment equal to 36 months of base salary, continuation for 36 months of medical and dental insurance, and immediate, accelerated vesting of all stock options, equity, and related compensation.

**11.** **SHARE CAPITAL** 

&nbsp;&nbsp;&nbsp;&nbsp;a) Authorized
 shares

Effective July 20, 2021, the Company amended its Articles to create an unlimited number of Class A Subordinate Voting Shares and unlimited number of Class B Proportionate Voting Shares. Each Subordinate Voting Share shall entitle the holder thereof to one vote. Each Class B share shall entitle the holder thereof to 6.25 votes and such proportionate dividends and liquidation rights. Each Class B share is convertible, at the holder's option, into 6.25 Subordinate Voting Shares.

On May 30, 2024, all Class B Proportionate Voting Shares (370,370) were converted into 2,314,815 Subordinate Voting Shares.

&nbsp;&nbsp;&nbsp;&nbsp;b) Issued

In the year ended March 31, 2025, the following equity instruments were exercised for gross proceeds of $2,951,695:

---

| | | | |
|:---|:---|:---|:---|
| Quantity | Description | *Exercise Price*<br> *(CAD$)* | *Exercise Price*<br> *(USD$ equivalent) <sup>(1)</sup>* |
| 36248 | Warrants | 21.60 | 15.02 |
| 25555 | Warrants | 18.90 | 13.15 |
| 57041 | Warrants | 27.00 | 18.78 |
| 1389 | Warrants | 32.40 | 22.54 |
| 2778 | Warrants | 40.50 | 28.17 |
| 37037 | Stock Options | 21.60 | 15.02 |
| 12964 | Stock Options | 27.00 | 18.78 |
| 1234 | Stock Options | 28.89 | 20.10 |

---

<sup>(1)</sup> Converted at balance sheet rate.

The reclassification from additional paid-in capital from the exercises of warrants and stock options was $1,075,242.

<u>On March 9, 2025</u>, the Company converted 133,333 Special Warrants Units into 133,333 Subordinate Voting Shares and 66,667 warrants (Note 12).

<u>On March 4, 2025</u>, 80,247 of the RSUs granted in December, 2024 were settled into Subordinate Voting Shares with a value of $1,615,018 based on the share price and exchange rate on the settlement date.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**11.** **SHARE CAPITAL (continued)** 

<u>On February 25, 2025</u>, in connection with the conversion of the convertible debentures, the Company issued 510,370 Subordinate Voting Shares and 257,312 warrants.

<u>On February 25, 2025</u>, 9,259 of the RSUs granted in December, 2024 were settled into Subordinate Voting Shares with a value of $211,731 based on the share price and exchange rate on the settlement date.

<u>On January 9, 2025</u>, the Company closed an offering by way of prospectus supplement (the "Offering"). Pursuant to the Offering, the Company issued 471,809 Units of the Company (the "Units") at a price of $29.55 (CAD$42.39) per Unit for gross proceeds of approximately $13,947,001 (CAD$20,000,000). Each Unit is comprised of one Class A Subordinate Voting Share of the Company (a "Share") and one-half of one Share purchase warrant (each whole Share purchase warrant, a "Warrant"). Each Warrant shall entitle the holder to purchase one Share of the Company (a "Warrant Share") at an exercise price of CAD$52.92 ($36.81 at balance sheet rate) per Warrant Share at any time until January 9, 2028, subject to adjustment in certain events. The Offering was completed pursuant to an agency agreement dated January 9, 2025 between the Company and A.G.P. Canada Investments ULC ("A.G.P. Canada").

In connection with the Offering, the Company paid the A.G.P. Canada a cash commission equal to 8% of the gross proceeds of the Offering and issued to the A.G.P. Canada or such selling agents 26,420 compensation warrants as is equal to an aggregate of 8% of the number of Units sold pursuant to the Offering (the "Compensation Warrants"). Each Compensation Warrant is exercisable into a Unit at an exercise price of CAD$42.39 ($29.49 at balance sheet rate) per Unit until January 9, 2028. The cash commission and the number of Compensation Warrants was reduced to 2.0% in respect to the portion of aggregate gross proceeds of the Offering attributable to subscribers identified by the Company.

<u>On December 27, 2024</u>, 12,346 of the RSUs granted in the year ended March 31, 2023 were settled into Subordinate Voting Shares with a value of $284,417 based on the share price and exchange rate on the settlement date.

<u>In November and December 2024</u>, the Company closed the 3 additional tranches of the LIFE offering of 310,122 Units (the "Units") of the Company, for gross proceeds of $3,004,340 (the "LIFE Offering").

Each Unit was sold at a price of $9.69 (CAD$13.50) and consists of one Class A Subordinate Voting share of the Company (a "Share") and one-half of one share purchase warrant. Each Warrant will entitle the holder thereof to acquire one Share at an exercise price of CAD$18.90 ($13.15 at balance sheet rate) per Share, subject to adjustment in certain circumstances, for a period of 36 months from the closing date.

In connection with the Offering, the Company: (i) paid to certain finders and advisors an aggregate cash commission of $174,113; (ii) issued to certain finders and advisors an aggregate of 13,615 compensation warrants (the "Compensation Warrants"), and (iii) incurred in legal fees of $63,347. Each Compensation Warrant will be exercisable into one Unit at the Offering Price for a period of 36 months following the closing date into one unit at a price of CAD$13.50 ($9.39 at balance sheet rate).

<u>On September 26, 2024</u>, the Company closed the first tranche offering of 231,480 Units (the "Units") of the Company, for gross proceeds of $3,686,000 (the "LIFE Offering").

Each Unit was sold at a price of $15.93 (CAD$21.60) and of one Class A Subordinate Voting share of the Company (a "Share") and one-half of one Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will entitle the holder thereof to acquire one Share (each, a "Warrant Share") at an exercise price of CAD$32.40 ($22.54 at balance sheet rate) per Share, subject to adjustment in certain circumstances, for a period of 36 months from September 26, 2024.

In connection with the Offering, the Company: (i) paid to certain finders and advisors an aggregate cash commission of $278,772; (ii) issued to certain finders and advisors an aggregate of 10,562 compensation warrants (the "Compensation Warrants"), and (iii) incurred in legal fees of $41,257. Each Compensation Warrant will be exercisable into one Unit at the Offering Price for a period of 36 months following the Closing Date.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**11.** **SHARE CAPITAL (continued)** 

<u>In July and August 2024</u>, the Company converted 370,370 Special Warrants Units into 370,370 Subordinate Voting Shares and 185,181 warrants (Note 12).

<u>On April 9, 2024</u>, 1,852 shares were issued to a strategic consultant of the Company. The shares were fair valued at $49,714 considering the share price of $26.85 (CAD$36.45) stated in the consulting agreement.

**12.** **WARRANTS** 

<u>On March 9, 2025</u>, the Company converted 133,333 Special Warrants Units into 133,333 Subordinate Voting Shares and 66,667 warrants.

<u>On February 2025</u>, the Company issued 257,312 warrants in connection with the conversion of the convertible debenture (Note 13). Each warrant is exercisable into one Subordinate Voting Share at a price of CAD$52.92 ($36.81 at balance sheet rate) per warrant.

<u>On January 9, 2025</u>, in connection with the Prospectus Supplement offering closed, the Company issued 235,904 warrants and 26,420 Compensation Warrants (Note 11).

The total fair value of the compensation warrants was $920,786, estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Share price at grant date | $46.17 | $32.20 |
| Risk-free interest rate | 2.88% | 2.88% |
| Expected life | 3 years | 3 years |
| Expected volatility | 121.6% | 121.6% |
| Expected dividends | Nil | Nil |
| Grant date fair value per warrant | $33.31 | $23.23 |

---

<u>On January 8, 2025</u>, 28 broker warrants were issued in connection with the exercise of broker Units.

<u>In November and December 2024</u>, in connection with the issuance of Life Offering, the Company issued 129,508 warrants and 13,615 Compensation Warrants (Note 11).

The total fair value of the broker warrants was $165,518, estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Weighted average share price at grant date | $12.35 | $8.87 |
| Weighted average risk-free interest rate | 3.01% | 3.01% |
| Expected life | 3 years | 3 years |
| Expected volatility | 100% | 100% |
| Expected dividends | Nil | Nil |
| Weighted average grant date fair value per warrant | $7.32 | $5.25 |

---

<u>On November 8, 2024</u>, the Company closed a non-brokered private placement of special warrants ("Special Warrants") for gross proceeds of up to $1,251,000 (CAD$1,800,000) through the sale of 133,333 Special Warrants at a price of $9.39 (CAD$13.50) per Special Warrant.

Each Special Warrant shall convert into one Unit of the Company (a "Unit") at no additional cost four months and a day after date of issuance of the Special Warrants.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**12.** **WARRANTS (continued)** 

Each Unit is comprised of one Subordinate Voting Share (a "Unit Share"), and one-half of one Class A Subordinate Voting Share purchase warrant (each full warrant, a "Unit Warrant"). Each Unit Warrant shall be exercisable into one Subordinate Voting Share (a "Unit Warrant Share") at a price of CAD$18.90 ($13.15 at balance sheet rate) per Unit Warrant Share for a period of three (3) years from the date of issue of the Unit Warrants.

In connection with the issuance of the Special Warrant, the Company issued 6,765 Compensation Warrants, which warrants are exercisable into one unit at CAD$13.50 ($9.39 at balance sheet rate) for a period of 36 months following the closing.

The total fair value of the broker warrants was $58,290, estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Weighted average share price at grant date | $13.23 | $9.49 |
| Weighted average risk-free interest rate | 3.05% | 3.05% |
| Expected life | 3 years | 3 years |
| Expected volatility | 100% | 100% |
| Expected dividends | Nil | Nil |
| Weighted average grant date fair value per warrant | $8.01 | $5.74 |

---

<u>In September 2024</u>, in connection with the issuance of Life Offering, the Company issued 115,739 warrants and 10,562 Compensation Warrants (Note 11).

The total fair value of the broker warrants was $134,813, estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Weighted average share price at grant date | $19.71 | $14.53 |
| Weighted average risk-free interest rate | 2.90% | 2.90% |
| Expected life | 3 years | 3 years |
| Expected volatility | 100% | 100% |
| Expected dividends | Nil | Nil |
| Weighted average grant date fair value per warrant | $11.54 | $8.51 |

---

<u>On April 18, 2024</u>, the Company announced a non-brokered private placement of special warrants ("Special Warrants") for gross proceeds of up to $7,306,000 (CAD$10,000,000) through the sale of 370,370 Special Warrants at a price of $19.74 (CAD$27.00) per Special Warrant.

Each Special Warrant shall convert into one Unit of the Company (a "Unit") at no additional cost upon the earlier of: (i) the Company obtaining a receipt from the applicable securities commission(s) in Canada for the final prospectus qualifying the distribution of the Units to be issued upon exercise or deemed exercise of the Special Warrants; and (ii) the date that is four months and a day after date of issuance of the Special Warrants.

Each Unit is comprised of one Subordinate Voting Share (a "Unit Share"), and one-half of one Class A Subordinate Voting Share purchase warrant (each full warrant, a "Unit Warrant"). Each Unit Warrant shall be exercisable into one Subordinate Voting Share (a "Unit Warrant Share") at a price of CAD$40.50 ($28.17 at balance sheet rate) per Unit Warrant Share for a period of two (2) years from the date of issue of the Unit Warrants.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**12.** **WARRANTS (continued)** 

The Company completed the issuance of 370,370 Units for gross proceeds of $7,306,000 (CAD$10,000,000) and paid fees to eligible finders consisting of: (i) $234,087 (CAD$320,404); and (ii) 11,720 finder warrants (the "Finder Warrants"). Each Finders Warrant will be exercisable into one unit (a "Finder Unit") at a price of CAD$27.00 ($18.78 at balance sheet rate) per Finder Unit until the date that is two (2) years from the date of issue of the Finder Warrants, which Finder Unit will be comprised of a Subordinate Voting Share and one-half of one Subordinate Voting Share purchase warrant (each, whole warrant, a "Finder Unit Warrant"). Each Finder Unit Warrant shall be exercisable into one Subordinate Voting Share (a "Finder Unit Warrant Share") at a price of CAD$40.50 ($28.17 at balance sheet rate) per Finder Unit Warrant Share for a period of two (2) years from the date of issue of the Finder Unit Warrants.

The total fair value of the broker warrants was $181,394, estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | CAD$ | $ |
| Weighted average share price at grant date | $27.54 | $19.97 |
| Weighted average risk-free interest rate | 4.25% | 4.25% |
| Expected life | 2 years | 2 years |
| Expected volatility | 100% | 100% |
| Expected dividends | Nil | Nil |
| Weighted average grant date fair value per warrant | $14.12 | $10.32 |

---

In July and August 2024, the Company converted 370,370 Special Warrants Units into 370,370 Subordinate Voting Shares and 185,181 warrants (Note 11). Each warrant is exercisable at CAD$40.50 ($28.17 at balance sheet rate) within 2 years of the issuance date.

<u>On June 20, 2024</u>, in connection with the issuance of convertible debenture (Note 13) the Company issued 255,185 warrants.

Warrants outstanding as at March 31, 2025 are summarized below:

---

| | | | |
|:---|:---|:---|:---|
|  | Number of warrants | Weighted Average Exercise Price (CAD$) | *Exercise Price*<br> *(USD$ equivalent) <sup>(1)</sup>* |
| Balance, March 31, 2023 | 969941 | $26.73 | $18.59 |
| Issued | 338319 | 75.03 | 52.19 |
| Exercised | (430199) | 35.38 | 24.61 |
| Balance, March 31, 2024 | 878061 | $41.10 | $28.59 |
| Issued | 1340158 | 40.16 | 27.93 |
| Exercised | (122993) | 24.09 | 16.76 |
| Expired | (2) | 21.60 | 15.02 |
| Balance, March 31, 2025 | 2095224 | $41.50 | $28.86 |

---

<sup>(1)</sup> Converted at balance sheet rate.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**12.** **WARRANTS (continued)** 

As of March 31, 2025, the Company's outstanding share purchase warrants expire as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Expiry date | Weighted Average Remaining Contractual Life in Years | Exercise Price (CAD$) | *Exercise Price*<br> *(USD$ equivalent) <sup>(1)</sup>* | Outstanding |
| April 3, 2025 | 0.01 | 32.40 | 22.54 | 117 |
| April 20, 2025 | 0.05 | 32.40 | 22.54 | 194 |
| June 2, 2025 | 0.17 | 32.40 | 22.54 | 1149 |
| June 16, 2025 | 0.21 | 32.40 | 22.54 | 1017 |
| July 10, 2025 | 0.28 | 32.40 | 22.54 | 98 |
| August 15, 2025 | 0.38 | 32.40 | 22.54 | 8279 |
| August 15, 2025 | 0.38 | 21.60 | 15.02 | 42663 |
| August 15, 2025 <sup>(2)</sup> | 0.38 | 27.00 | 18.78 | 360098 |
| August 25, 2025 | 0.40 | 32.40 | 22.54 | 184 |
| April 15, 2026 | 1.04 | 10.80 | 7.51 | 46296 |
| April 17, 2026 | 1.05 | 27.00 | 18.78 | 3348 |
| April 29, 2026 | 1.08 | 27.00 | 18.78 | 6618 |
| May 16, 2026 | 1.13 | 27.00 | 18.78 | 1702 |
| July 6, 2026 | 1.27 | 55.35 | 38.50 | 29227 |
| July 6, 2026 <sup>(3)</sup> | 1.27 | 68.85 | 47.89 | 294694 |
| August 17, 2026 | 1.38 | 40.50 | 28.17 | 126853 |
| August 30, 2026 | 1.42 | 40.50 | 28.17 | 43062 |
| September 17, 2026 | 1.47 | 40.50 | 28.17 | 12494 |
| December 22, 2026 | 1.73 | 32.40 | 22.54 | 809 |
| January 8, 2027 | 1.78 | 40.50 | 28.17 | 28 |
| June 20, 2027 | 2.22 | 40.50 | 28.17 | 255185 |
| September 26, 2027 | 2.49 | 21.60 | 15.02 | 10562 |
| September 26, 2027 | 2.49 | 32.40 | 22.54 | 114354 |
| November 8, 2027 | 2.61 | 13.50 | 9.39 | 14444 |
| November 8, 2027 | 2.61 | 18.90 | 13.15 | 85699 |
| November 15, 2027 | 2.63 | 13.50 | 9.39 | 2229 |
| November 15, 2027 | 2.63 | 18.90 | 13.15 | 15290 |
| December 9, 2027 | 2.69 | 13.50 | 9.39 | 3707 |
| December 9, 2027 | 2.69 | 18.90 | 13.15 | 28519 |
| January 9, 2028 | 2.78 | 52.92 | 36.81 | 235906 |
| January 9, 2028 | 2.78 | 42.39 | 29.49 | 26420 |
| February 25, 2028 | 2.91 | 52.92 | 36.81 | 257312 |
| March 9, 2028 | 2.94 | 18.90 | 13.15 | 66667 |
|  | 1.83 | $41.50 | 28.86 | 2095224 |

---

Notes:

---

| | |
|:---|:---|
| <sup>(1)</sup> | Converted at balance sheet rate. |
| |  |
| <sup>(2)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrants expiring August 15, 2025:<br>Pre-Consolidation exercise terms: 1 warrant + CAD$1.00 ($0.6956 at balance sheet rate) = 1 Class A Subordinate Voting share.<br> Post-Consolidation Exercise Terms: 27 Warrants + CAD$27.00 ($18.78 at balance sheet rate) = 1 New Class A Subordinate Voting share.<br> For presentation purposes, the Company divided the total outstanding warrants by 27 to reflect 1 warrant + CAD$27.00 ($18.78 at balance sheet rate) = 1 New Class A Subordinate Voting share. |
| |  |
| <sup>(3)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Warrants expiring July 6, 2026<br>Pre-Consolidation Exercise Terms: 1 Warrant + CAD$2.55 ($1.77 at balance sheet rate) = 1 Class A Subordinate Voting share.<br> Post-Consolidation Exercise Terms: 27 Warrants + CAD$68.85 (47.89 at balance sheet rate) = 1 New Class A Subordinate Voting share.<br> For presentation purposes, the Company divided the total outstanding warrants by 27 to reflect 1 warrant + CAD$68.85 (47.89 at balance sheet rate) = 1 New Class A Subordinate Voting share. |

---

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**13.** **CONVERTIBLE DEBENTURE** 

On June 20, 2024 the Company entered into a funding agreement with Group 42 Holding Ltd ("G42"), a leading UAE-based AI technology group (the "Strategic Investment").

Pursuant to the Strategic Investment, G42 has invested $10,000,000 via a private placement of unsecured convertible debenture units of VERSES (the "Units"). Each Unit will consist of: (i) CAD$1,000 ($696 at balance sheet rate) in principal amount of unsecured convertible debenture ("Convertible Debenture"); and (ii) 18 detachable share purchase warrants (the "Warrants") to purchase Subordinate Voting Shares. The Convertible Debenture shall bear interest at a rate of 10% per annum and mature on June 20, 2026 (the "Maturity Date").

The principal amount of the Convertible Debenture (the "Principal Amount"), together with all accrued interest (collectively, the "Convertible Amount"), shall be convertible, for no additional consideration, on the earliest to occur of: (A) the date on which the Company completes an equity financing, in one or more tranches, for aggregate gross proceeds of at least CAD$15,000,000 ($10,434,000 at balance sheet rate) at a price per Subordinate Voting Share of not less than CAD$27.00 ($18.78 at balance sheet rate) (an "Equity Financing"), or (B) the date on which G42 elects to convert the Convertible Debenture, or (C) the Maturity Date.

In the event of a conversion of the Convertible Debenture: (i) on the Maturity Date or at the election of G42, the Convertible Amount shall be converted into such number of Subordinate Voting Shares as is equal to the Convertible Amount divided by CAD$32.40 ($22.54 at balance sheet rate) per Share; and (ii) in connection with an Equity Financing, the Convertible Amount shall be converted into such number of Subordinate Voting Shares as is equal to the Convertible Amount divided by the issue price per Subordinate Voting Share sold pursuant to the Equity Financing, multiplied by 80%, provided that, in no event shall such conversion price be greater than CAD$32.40 ($22.54 at balance sheet rate).

If the conversion occurs prior to the Maturity Date, the Holder shall be entitled to all accrued and outstanding unpaid interest, plus an amount equal to the amount of interest that would have otherwise accrued on the Principal Amount to the Maturity Date but for such prior Conversion.

Each Warrant will be exercisable into one Subordinate Voting Share at a price of CAD$40.50 ($28.17 at balance sheet rate) per share until June 20, 2027 (the "Expiry Date"), subject to acceleration. If at any time prior to the Expiry Date, the volume-weighted average trading price of the Subordinate Voting Shares on CBOE Canada (or such other principal exchange or market where the Subordinate Voting Shares are then listed or quoted for trading) exceeds CAD$149.85 ($104.24 at balance sheet rate), as adjusted in accordance with the terms of the certificate representing the Warrants (the "Warrant Certificates"), for a period of 10 consecutive trading days, Verses may, at its option, accelerate the Expiry Date to the date that is 30 days following the written notice to G42, in the form of a press release or other form of notice permitted by the Warrant Certificates.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**13.** **CONVERTIBLE DEBENTURE (continued)** 

In connection with commercial agreements that may be entered into between VERSES and affiliates of G42, G42 will also receive 37,037 restricted stock units ("RSUs") of VERSES, each vested RSU to be settled through the issuance of one (1) Subordinate Voting Share. The RSUs will vest in installments of 370 RSUs for every CAD$100,000 ($69,560 at balance sheet rate) of revenue derived by VERSES from such commercial agreements.

On February 25, 2025, in connection with the prospectus supplement offering, the Convertible Debenture was converted into 510,370 Subordinate Voting Shares and 257,312 warrants exercisable at a price of CAD$52.92 ($36.81 at balance sheet rate) per share.

A reconciliation of convertible debenture is as follows:

---

| | | |
|:---|:---|:---|
|  | March 31, 2025 | March 31, 2024 |
| Balance, beginning of the year | $- | $4905334 |
| Issuance | 10000000 |  |
| Accretion expense |  | 203918 |
| Interest expense | 1941743 | 338011 |
| Issuance costs | (446682) |  |
| Foreign exchange effect on convertible debenture | (368197) | 154109 |
| Converted into Subordinate Voting Shares (1) | (11126864) | (5601372) |
| Balance, end of the year | $- | $- |

---

**14.** **PREPAID EXPENSES** 

Prepaid expenses consisted of the following:

---

| | | |
|:---|:---|:---|
|  | March 31, 2025 | March 31, 2024 |
| Deposit | $10000 | $59535 |
| Retainer | 251983 | 126153 |
| Prepaid insurance | 106084 | 107663 |
| Subscriptions | 267997 | 501000 |
| Balance, end of the year | $636064 | $794351 |

---

**15.** **EQUIPMENT** 

---

| | |
|:---|:---|
| Cost | Equipment |
| Balance, March 31, 2023 | 365017 |
| Additions | 185155 |
| Balance, March 31, 2024 | $550172 |
| Additions | 30579 |
| Balance, March 31, 2025 | $580751 |

---

**VERSES AI INC.**

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**15.** **EQUIPMENT (continued)** 

---

| | |
|:---|:---|
| Accumulated depreciation | Equipment |
| Balance, March 31, 2023 | 130177 |
| Additions | 152736 |
| Balance, March 31, 2024 | $282913 |
| Additions | 172425 |
| Balance, March 31, 2025 | $455338 |
| Net book value, March 31, 2024 | $267259 |
| Net book value, March 31, 2025 | $125413 |

---

**16.** **PROMISSORY NOTES** 

On March 11, 2024, the Company's wholly owned subsidiary VTU, accepted an interest free loan in the amount of $2,000,000 from two arms-length investors for $1,000,000 each. The loan matures on the earlier of (i) March 10, 2025; or (ii) the date the Company completes a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells its securities to one or more bona fide third parties. On the maturity date, the Company may elect to repay loan by way of cash, or through the issuance of Subordinate Voting Shares in the capital of the Company at a per share price equal to the price of the securities issued in the Equity Financing, subject to the approval of CBOE Canada.

On April 18, 2024, the promissory notes were settled through the issuance of Special Warrants (Note 12).

**17.** **FINANCIAL INSTRUMENTS** 

As of March 31, 2025, the Company's financial instruments consist of cash and restricted cash, accounts receivable, accounts payable and accrued liabilities, restricted share unit liability, provision for legal claim, convertible debenture, and loans payable.

In accordance with ASC 820, Fair Value Measurement, the Company categorizes financial assets and liabilities measured at fair value into a three-level hierarchy based on the inputs used in the valuation techniques. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3).

The levels of the fair value hierarchy are defined as follows:

● Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date.

● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active or inactive markets.

● Level 3 – Unobservable inputs for the asset or liability, which are used to measure fair value to the extent that observable inputs are not available, and which are significant to the overall fair value measurement.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**17.** **FINANCIAL INSTRUMENTS (continued)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| As of March 31, 2025 | Level 1 | Level 2 | Level 3 | Total |
| Assets: |  |  |  |  |
| Cash and restricted cash | $4816906 | $- | $- | $4816906 |
| Due from related parties | $68080 | $- | $- | $68080 |
| Liabilities: |  |  |  |  |
| Accounts payable | $2036916 | $- | $- | $2036916 |
| Accrued liabilities | $41736 | $- | $- | $41736 |
| Provision for legal claim | $8948085 | $- | $- | $8948085 |
| Restricted share unit liability | $- | $3911823 | $- | $3911823 |
| Loans payable | $139039 | $- | $- | $139039 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| As of March 31, 2024 | *Level 1* | *Level 2* | *Level 3* | *Total* |
| Assets: |  |  |  |  |
| Cash | $892727 | $- | $- | $892727 |
| Accounts receivable | $100000 | $- | $- | $100000 |
| Due from related parties | $64936 | $- | $- | $64936 |
| Liabilities: |  |  |  |  |
| Accounts payable | $2782502 | $- | $- | $2782502 |
| Accrued liabilities | $82500 | $- | $- | $82500 |
| Promissory notes | $2000000 | $- | $- | $2000000 |
| Provision for legal claim | $9921298 | $- | $- | $9921298 |
| Restricted share unit liability | $- | $576214 | $- | $576214 |
| Loans payable | $140904 | $- | $- | $140904 |

---

*Credit risk*

Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The financial instrument that potentially subjects the Company to concentrations of credit risk consists principally of cash, accounts receivable, and due from related parties. To minimize the credit risk, the Company places its cash with large financial institutions.

Amounts due from related parties of $68,080 as of March 31, 2025 (March 31, 2024 - $64,934) represent receivables from an unsecured loan to a key member of the management team. The loan has an annual interest rate of 5% and requires principal and interest to be paid in full by May 1, 2033 (Note 9).

As of March 31, 2025, management assessed that there is no need to provide a credit loss allowance.

*Liquidity risk*

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company's operations on an ongoing basis. The Company strives to ensure that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations, cash holdings, and anticipated future financing transactions.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**17.** **FINANCIAL INSTRUMENTS (continued)** 

Contractual cash flow requirements as of March 31, 2025, were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *<1 year*<br> *$* | *1-2 years*<br> *$* | *2-5 years*<br> *$* | *>5 years*<br> *$* | *Total*<br> *$* |
| Accounts payable | 2036916 |  |  |  | 2036916 |
| Accrued liabilities | 41736 |  |  |  | 41736 |
| Loans payable | 7752 | 7752 | 23256 | 15067532 | 15106292 |
| Total | 2086404 | 7752 | 23256 | 15067532 | 17184944 |

---

As of March 31, 2025, the Company had a working capital deficit of $8,923,210 (March 31, 2024 - $11,867,403).

*Foreign exchange risk*

Foreign exchange risk is the risk that the fair value or future cash flows will fluctuate due to changes in foreign exchange rates. The Company has financial assets denominated in Euros and Canadian dollars and is therefore exposed to exchange rate fluctuations. As of March 31, 2025, the Company had the equivalent of $223,534 (March 31, 2024 - $552,476) net financial liabilities denominated in Canadian dollars and $104,416 (March 31, 2024 - $117,648) in net financial assets denominated in Euros.

The foreign exchange risk exposure of the Company financial instruments as at March 31, 2025 is as below:

---

| | | |
|:---|:---|:---|
|  | | +/- 10% fluctuation |
|  | Currency | Increase/(decrease) |
| Financial Instrument Type | CAD$ | $ impact |
| Cash | 5445994 | 378823 |
| Tax receivable | 870173 | 60529 |
| Prepaid expenses | 408202 | 28395 |
| Accounts payable | (1362055) | (94745) |
| Accrued liabilities | (60000) | (4174) |
| Restricted share unit liability | (5623668) | (391182) |
|  | (321354) | (22354) |

---

---

| | | | |
|:---|:---|:---|:---|
|  |  | *+/- 10% fluctuation* | *+/- 10% fluctuation* |
|  | *Currency* | *Increase/(decrease)* | *Increase/(decrease)* |
| Financial Instrument Type | *EURO* | *$ impact* |  |
| Restricted cash | 113701 | 12274 | (12274) |
| Tax receivable | (352) | (38) | 38 |
| Accounts payable | (16622) | (1794) | 1794 |
| Deferred Grant | (62615) | (6773) | 6773 |
|  | 34111 | 3668 | (3668) |

---

*Interest rate risk*

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The interest earned on cash balances approximate fair value rates, and the Company is not subject to significant risk due to fluctuating interest rates. As of March 31, 2025, the Company does not hold any liabilities that are subject to fluctuations in market interest rates.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**17.** **FINANCIAL INSTRUMENTS (continued)** 

*Price risk* 

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or currency risk. The Company is not exposed to other price risk.

**18.** **MANAGEMENT OF CAPITAL** 

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the development of their technology. The Company considers the items in shareholders' equity as capital. There has been no change to what the Company considers capital from the prior year. The Company does not have any externally imposed capital requirements to which it is subject to.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may issue Subordinate Voting Shares, dispose of assets or adjust the amount of cash. There has been no change to how capital is managed from the prior year.

**19.** **SUPPLEMENTAL CASH FLOW INFORMATION** 

The supplemental cash paid and received by the Company as at March 31, 2025 is as below:

---

| | | |
|:---|:---|:---|
| Non-cash Financing and Investing Activities | 2025 | 2024 |
| SAFE conversion to shares | $- | $1025000 |
| Fair value of finders and advisory warrants | $1402511 | $1488527 |

---

---

| | | |
|:---|:---|:---|
|  | 2025 | 2024 |
| Cash paid for interest | $5241 | $5325 |
| Cash received for interest | $119480 | $240393 |

---

**20.** **SEGMENT REPORTING** 

Operating segments comprised of the components of an entity in which separate information is available for evaluation by the Company's chief operating decision maker, or group of decision makers, in determining how to allocate resources in evaluating performance.

The Company consists of a single reporting segment providing Software as a Service, which includes proof of concept and software implementation services.

The Company's chief operating decision maker ("CODM") is its Chief Executive Officer. The accounting policies of the services segment are as described in the summary of significant accounting policies. The CODM evaluates the performance of the services segment based on the Company's net income (loss) as reported in the Statements of Operations.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**20.** **SEGMENT REPORTING (continued)** 

The CODM reviews performance based on gross profit, operating profit, and net earnings. Operating profit is reviewed to monitor the operating and administrative expenses of the Company. The Company does not have any operations or sources of revenue outside of the United States. Accordingly, the CODM considers the revenue, operating expenses, and other income (expenses) of our single operating segment as reported on the statement of operations and considers our current and total assets as recorded on the balance sheet. There are no additional expense or asset information that are supplemental to those disclosed in these consolidated financial statements that are regularly provided to the CODM.

**21.** **OTHER INCOME** 

Other income consisted of the following:

---

| | | |
|:---|:---|:---|
|  | 2025 | 2024 |
| Interest earned | $119480 | $240293 |
| R&D tax credits | 33933 |  |
| Credit card reward cash back | 60000 | - |
|  | $213413 | $240293 |

---

**22.** **PROVISION FOR LEGAL CLAIM** 

On July 13, 2022, David Thomson, a former independent contractor, filed a lawsuit against VTU, Cyberlab LLC, and two directors/officers of the Company in Los Angeles Superior Court. The claim alleged violations of various sections of the California Corporations code, breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Plaintiff claimed as much as $5,000,000 in damages, subject to proof.

On September 1, 2022, the Company filed an answer denying any wrongdoing, and also made its own counterclaim against Mr. Thomson. The cross-claims against David Thomson included: (i) misappropriation of trade secrets; (ii) breach of contract; (iii) violation of the California Computer Data Access and Fraud Act ("CDAFA"); and (iv) violation of the Economic Espionage Act, along with three additional cross-claims (alleging violation of the Computer Fraud and Abuse Act, conversion, violation of the Stored Communications Act, respectively) that were subsequently dismissed by the Court. The Company, for its part, sought to recover both compensatory and punitive damages from Mr. Thomson, as well as restitution of any ill-gotten gains and an award of reasonable attorneys' fees.

The arbitration was conducted for a total of 13 days over a period from February 5 through April 3, 2024, via a single arbitrator at the American Arbitration Association. The CDAFA claim was dismissed by the Arbitrator, but the claims for trade secret misappropriation, breach of contract and unjust enrichment were allowed to move forward.

A final arbitration award was issued on May 17, 2024. It imposed liability against: (i) Verses Technologies USA, Inc. (VTU), a subsidiary of the Company, jointly and severally with Cyberlab, LLC (a company owned by the Company's president, Dan Mapes), in the amount of $6,307,258, inclusive of interest; and (ii) Cyberlab, VTU and its principals, Gabriel René and Daniel Mapes, jointly and severally, for damages in the amount of $1,900,000, interest of $709,973, costs of $64,303 and the fees of plaintiff's counsel totaling $920,231. To resolve their part of joint and several liability, Mr. René and Mr. Mapes are working toward satisfying the portion of the award that applies to them as individuals, including $1,666,000 proceeds from insurance. The remaining liability belongs to VTU, a subsidiary of the Company. Initial good faith payments of $1,791,000 have been made to the claimant. However, the likelihood of a favourable or unfavourable outcome, or an estimate of the amount or range of potential loss, which is isolated to VTU and Cyberlab, is not reasonably foreseeable at this time.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**22.** **PROVISION FOR LEGAL CLAIM (continued)** 

On January 24, 2025, Mr. Thompson filed a Petition to Confirm the Arbitration Award with the Los Angeles Superior Court. This is a necessary "first step" that must be undertaken before an arbitration award can be converted into an enforceable judgment. A hearing on the Petition is currently set for April 29, 2025. On May 8, 2025, the Petition was confirmed for the amounts listed below, including interest from the date of the Arbitration Award. Settlement discussions are ongoing.

---

| | |
|:---|:---|
| Arbitration award amount | 9921298 |
| Payments in the year | (1791000) |
| Interest | 817787 |
| Balance, end of the year | 8948085 |

---

**23.** **PROVISION FOR LOSSES ON RELATED PARTY TRANSACTIONS** 

Included in provision for losses on related party transactions in the year ended March 31, 2025 $479,808 (in the years ended March 31, 2024 - $1,872,334) are amounts due from companies controlled by key management personnel, Cyberlab LLC ("Cyberlab"), and the Spatial Web Foundation ("SWF"), an entity associated with the Company's founders.

The related expenses arose primarily from payments made by the Company on behalf of these related parties to third-party vendors.

<u>Cyberlab</u>

The expenses are mostly related to legal defense shared costs incurred in connection with the David Thomson litigation in which both the Company and Cyberlab were joint defendants. Under an internal arrangement, the Company paid for 100% of these legal costs, with the expectation of future reimbursement.

● Total payments made on behalf of Cyberlab amounted to $263,954 in the year ended March 31, 2025 (in the years ended March 31, 2024 – $954,150). The Company continues to pursue recovery of this amount through anticipated revenue that Cyberlab expects to generate from the commercialization of spatial domain royalties. The receivable from Cyberlab is unsecured, non-interest bearing, and its collection is subject to significant uncertainty.

<u>SWF</u>

The expenses are primarily related to professional services, consulting fees, and costs associated with the development and establishment of spatial web protocols and technical standards, including support for IEEE Standards Organization ("IEEE") working group initiatives.

● Total payments made on behalf of SWF totaled $215,854 as of March 31, 2025 (in the years ended March 31, 2024 – $918,184). The Company continues to pursue recovery of this amount through anticipated revenue that SWF expects the Company to receive as the preferred registrar of the special web domains. The receivable from SWF is unsecured, non-interest bearing, and its collection is subject to significant uncertainty.

No significan direct cash transfers were made to the individuals controlling these entities; rather, the amounts represent vendor payments made through the Company's normal accounts payable processes, with appropriate invoice review and approval by management.

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**23.** **PROVISION FOR LOSSES ON RELATED PARTY TRANSACTIONS (continued)** 

Initially, it was anticipated that the amounts advanced would be repaid through revenues generated by the related parties from future commercial activities. However, management performed a credit risk assessment in accordance with the current expected credit loss. The assessment considered factors such as the financial condition of the related parties, the speculative nature of their anticipated revenues, the aging of the receivables, and the lack of enforceable repayment mechanisms.

Although these amounts are expected to be settled through future service agreements, management performed a credit assessment in accordance with the current expected credit loss ("CECL") model under ASC 326. Based on this assessment, management determined that there is significant uncertainty regarding the timing and collectability of these receivables. As of March 31, 2025, management concluded that full repayment is not probable within a reasonable timeframe.

The decision to establish a full allowance represents a change in accounting estimate as defined under ASC 250, Accounting Changes and Error Corrections. A change in accounting estimate results from new information or new developments and, in accordance with U.S. GAAP, is accounted for prospectively in the period of change and future periods, if applicable. This treatment does not require restatement of prior periods.

**24.** **INCOME TAXES** 

As of March 31, 2025, the Company had estimated non-capital loss ("NCL") for US Federal income tax purposes of $72,000,000 (2024 - $45,682,000), NCL for Canadian income tax purposes of $25,418,000 (2024 - $13,696,000, and NCL for Netherlands income tax purposes of $520,000 (2024 - $416,000). These losses may be carried forward to reduce taxable income derived in future years and have expiry dates starting in 2040. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. Tax attributes are subject to review, and potential adjustment, by tax authorities.

The provision for Federal income tax consists of the following for the years ended March 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | 2025 | 2024 |
| Federal Income tax benefits attributed to : |  |  |
| Current operations: | $10299000 | $12583000 |
| Less: valuation allowance | (10299000) | (12580487) |
| Net provision for federal income taxes | $- | $2513 |

---

The cumulative tax effect at the expected rate of 27% (2024 - 27%) of significant items comprising our net deferred tax amount is as follows at March 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | 2025 | 2024 |
| Deferred tax asset attributable to: |  |  |
| Net operating loss carryover | $26444000 | $16145000 |
| Less: valuation allowance | (26444000) | (16145000) |
| Net deferred tax asset | $- | $- |

---

**VERSES AI INC.** 

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

*(Expressed in United States dollars)*

**24.** **INCOME TAXES (continued)** 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $97,938,000 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

**25.** **SUBSEQUENT EVENTS** 

On April 28, 2025, the Company announced the closing of securities offering in Canada under the base shelf prospectus (the "Offering"). Pursuant to the Offering, the Company raised gross proceeds of approximately US$7.9 million (CAD$11.0 million) by issuing 916,666 Units of the Company (the "Units") at a price of US$8.64 (CAD$12.00) per Unit.

Each Unit is comprised of one Class A Subordinate Voting Share of the Company (a "Share") and one-half of one Share purchase warrant (each whole Share purchase warrant, a "Warrant"). Each Warrant entitles the holder to purchase one Share of the Company (a "Warrant Share") at an exercise price of US$10.80 (CAD$15.00) per Warrant Share at any time until the date that is 36-month from the date of issuance, subject to adjustment in certain events.

The Offering was completed pursuant to an agency agreement dated April 23, 2025 between the Company, A.G.P. Canada Investments ULC, Clear Street LLC and A.G.P./Alliance Global Partners.

In connection with the Offering, the Company agreed to pay the agents up to a cash commission equal to 7% of the gross proceeds of the Offering and agreed to issue to the agents up to such number of compensation warrants as is equal to an aggregate of 3.5% of the number of Units sold pursuant to the Offering (the "Compensation Warrants"). Each Compensation Warrant is exercisable into a Share at an exercise price of US$8.64 (CAD$12.00) per Share until the date that is 36 months after the date of issuance. The cash commission and the number of Compensation Warrants was reduced to 2.0% in respect to the portion of aggregate gross proceeds of the Offering attributable to subscribers identified by the Company.

The Offering was completed in Canada pursuant to a prospectus supplement dated April 25, 2025 (the "Supplement") to the Company's base shelf prospectus receipted on September 26, 2024 (the "Base Shelf Prospectus").

On May 25, 2025, the Company granted 33,334 Option Shares and 33,333 RSUs to consultants of the Company.

---

| |
|:---|
| 33,334 Stock Options at an exercise price of CAD$12.57 ($8.74 at balance sheet rate), vesting on the grant date. |
| 33,333 RSUs, vesting on July 1, 2025. |

---

On June 20, 2025, the Company announced the consolidation of all of its issued and outstanding Class A Subordinate Voting Shares on the basis of one (1) post-consolidated Subordinate Voting Share for every three (3) pre-consolidated Subordinate Voting Shares held.

## Exhibit 99.2

**Exhibit 99.2**

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

This Management Discussion and Analysis ("MD&A") of VERSES AI Inc. ("Company" or "VERSES") is for the year ended March 31, 2025, and is prepared by management using information available as of June 30, 2025. The Company's fiscal year end is March 31. This MD&A should be read in conjunction with the Company's audited consolidated financial statements for the year ended March 31, 2025, and the notes thereto, prepared in accordance with U.S generally accepted accounting principles ("GAAP") as defined by the Financial Accounting Standards Board (FASB).

This MD&A complements and supplements, but does not form part of, the Company's audited consolidated financial statements. This MD&A contains forward-looking statements. Statements regarding the adequacy of cash resources to carry out the Company's software development and/or customer development or the need for future financing are forward-looking statements. All forward-looking statements, including those not specifically identified herein, are made subject to cautionary language.

This MD&A is prepared in conformity with National Instrument ("NI") 51-102F1 Continuous Disclosure Obligations.

All dollar amounts referred to in this MD&A are expressed in United States dollars unless otherwise indicated.

*<u>DISCLAIMER FOR FORWARD LOOKING STATEMENTS</u>*

 

This following MD&A contains "forward-looking statements" (also referred to as "forward-looking information") within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical facts, included in this MD&A that address activities, events or developments that the Company expects or anticipate will or may occur in the future, including statements about the anticipated impact of the operations of the Company, as well as the benefits expected to result from capital expenditures, potential management contracts for ongoing services, and other such matters are forward-looking statements. When used in this MD&A, the words "estimate", "plan", "anticipate", "expect", "intend", "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, among other things, statements relating to the Genius<sup>TM</sup> beta program and the Company's future objectives and plans.

There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. Forward looking statements are subject to risks, uncertainties and assumptions, including those discussed elsewhere in this MD&A. Although the Company believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Such forward-looking statements are based on a number of assumptions of management, including, without limitation: that the Genius<sup>TM</sup> beta program will proceed as planned and that the Company will be able to operate and advance its business objectives as currently anticipated.

Some of the risks which could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include but are not limited to risks related to: failure to launch the Genius<sup>TM</sup> beta program as anticipated, or at all; general business operations; sales assumptions; limited operating history; development of the Company's brand; competition; need for continued improvement; intellectual property issues; interactive digital media; potential liability claims; litigation; insurance; economic downturns; currency; key personnel; conflicts of interest; changes in general applicable laws; compliance with advertising laws and regulations; foreign operations; no guaranteed return on investment; dilution; fluctuation of share price; access to capital; internal controls; accounting policies; and other factors beyond the control of the Company. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the risks as more particularly described under "Risk Factors." Although the Company attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

*<u>BUSINESS OVERVIEW</u>*

 

VERSES is a cognitive computing company specializing in next generation intelligence software systems. We are primarily focused on developing an intelligence-as-a-service smart software platform, Genius (which has absorbed the Company's previous KOSM™and KOSM Exchange products), through our subsidiary VERSES Technologies USA, Inc. ("VTU"). Our business is based on the vision of the "Spatial Web" – an open, hyper-connected, context-aware, governance-based network of humans, machines and intelligent agents. Our ambition is to build tools that enable the Spatial Web and to become a leader in the transition from the information age to the intelligence age. In early 2024, we launched a private beta program of Genius (including Genius Agents and Genius Core) with a few select partners with whom we have existing business relationships and in the second half of 2024 we launched a public beta program for a broader number of developers. This public beta program included enhanced functionalities and was intended to help us increase our potential customer base, while refining our product offerings in anticipation of the 1.0 launch of Genius

On April 30, 2025, we announced the launch of our flagship product, Genius, enabling agentic intelligence for enterprise. The initial target audience for Genius is machine learning and data science professionals trying to solve enterprise problems that require prediction where there is uncertainty or hidden factors. Genius is designed to provide the tools necessary to build domain-specific models that are intended to improve decision-making (inference as a service) for third-party agents through our software development kits/application programming interfaces and model editor. We will offer Genius as a paid service with consumption-based and performance-based pricing as well as enterprise licensing.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

*<u>SELECTED FINANCIAL INFORMATION</u>*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2024** | **$ Change** | **% Change** |
| **REVENUE** | $155000 | $1966731 | $(1811731) | -92% |
| **COST OF REVENUE** | (631691) | (1699170) | 1067479 | -63% |
| **NET REVENUE** | (476691) | 267561 | (744252) | -278% |
| **OPERATING EXPENSES** |  |  |  |  |
| <u>Cash expenses</u> |  |  |  |  |
| Accounting fees | (567566) | (538394) | (29172) | 5% |
| Consulting fees | (5201045) | (4146232) | (1054813) | 25% |
| Investor relations and marketing | (3165838) | (6980578) | 3814740 | -55% |
| Legal fees | (1801538) | (2015619) | 214081 | -11% |
| Management fees | (146666) | (41067) | (105599) | 257% |
| Office and general | (1881530) | (1709991) | (171539) | 10% |
| Personnel expenses | (3581964) | (3713861) | 131897 | -4% |
| Rent | (90965) | (26838) | (64127) | 239% |
| Research and development | (15142542) | (12024288) | (3118254) | 26% |
| Travel and meals | (617877) | (1098984) | 481107 | -44% |
|  | (32197531) | (32295852) | 98321 | 0% |
| <u>Non-cash expenses</u> |  |  |  |  |
| Depreciation | (172425) | (261747) | 89322 | -34% |
| Provision for contract settlement | (1252076) |  | (1252076) | 0% |
| Share based payments | (7679205) | (7850119) | 170914 | -2% |
|  | (9103706) | (8111866) | (991840) | 12% |
| **TOTAL EXPENSES** | (41301237) | (40407718) | (893519) | 2% |
| **OTHER ITEMS:** |  |  |  |  |
| Grant income | 156885 | 154709 | 2176 | 1% |
| Other income | 213413 | 240293 | (26880) | -11% |
| Accretion expense |  | (203918) | 203918 | -100% |
| Interest expense | (1953499) | (348441) | (1605058) | 461% |
| Legal claim expense | 848213 | (9921298) | 10769511 | -109% |
| Provision for losses on related party transactions | (479808) | (1872334) | 1392526 | -74% |
| **LOSS BEFORE INCOME TAXES** | (42992724) | (52091146) | 9098422 | -17% |
| Income Taxes |  | (2513) | 2513 | -100% |
| **NET LOSS** | **(42992724)** | **(52093659)** | **9100935** | **-17%** |
| **Loss Per Class A Subordinate Voting Shares - Basic and Diluted** | $**(5.49)** | $**(9.44)** | 4 | -42% |
| **Loss Per Class B Proportionate Voting Shares - Basic and Diluted** | **$Nil** | $**(22.50)** | - | 0% |
| **Class A Subordinate Voting Shares Shares used in computing earnings per share - Basic and Diluted** | **7825570** | **3205324** | 4620246 | 144% |
| **Class B Proportionate Voting Shares Shares used in computing earnings per share - Basic and Diluted** | **-** | **370370** | (370370) | -100% |
| Loss from Continuing Operations | (9580397) | (7844305) | (1736092) | 22% |
| Loss from Continuing Operations Per Class A Subordinate Voting Shares - Basic and Diluted | (1.22) | (1.42) | 0 | -14% |
| Loss from Continuing Operations Per Class B Proportionate Voting Shares - Basic and Diluted | - | (8.88) | 9 | 0% |

---

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **% of Revenue** | **2024** | **% of Revenue** | **$ Change** | **% Change** |
| **REVENUE** | $155000 |  | $1966731 |  | $(1811731) | -92% |
| **COST OF REVENUE** | (631691) | 408% | (1699170) | 86% | 1067479 | -63% |
| **NET REVENUE** | (476691) | -308% | 267561 | 14% | (744252) | -278% |

---

<u>REVENUE</u> – Consists of proof of concept projects, software implementation services, and software as a service (Saas). Revenue decreased by $1.81 million, or 92%, to $155,000 for the year ending March 31, 2025, compared to $1.97 million for the prior year. This decrease is primarily attributed to the termination of the SaaS contract, which did not report in 2025 (compared to $1.75 million in 2024).

<u>COST OF REVENUE</u> – Consists of personnel, contractors, hosting, and other costs related to the delivery services to the customers. Cost of Revenue decreased by $1.07 million, primarily due to the termination of the Saas contract. In 2025, the Company recorded a provision of $486,691 related to the estimated loss for the agreement with Analog. If this provision is disregarded, the restated cost of revenue would be $145,000 and represent 94% of the revenue.

<u>NET REVENUE</u> – Represents the revenue minus cost of revenue. Net revenue decreased by $744,252, or 96%, to a negative net revenue of $476,691 for the year ending March 31, 2025, compared to $267,561 for the prior year. The decrease in net revenue is attributed to the overall decline in revenue, as well as the increase in cost of revenue for the period.

<u>OPERATING EXPENSES</u> – Operating Expenses are allocated between Cash and Non-Cash Expenses. We allocated expenses on this basis to help facilitate the calculation and understanding of the Company's Cash Flow from Operations and liquidity, which we believe are important financial and operating metrics.

<u>CASH EXPENSES</u> – consists of the items below. Cash Expenses decreased by $98,321, or less than 1%, to $32.20 million for the year ending March 31, 2025, compared to $32.30 million for the prior year. The consistency of our cash expenses is primarily due to the Company's base cost structure.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **% of TCE** | **2024** | **% of TCE** | **$ Change** | **% Change** |
| <u>Cash expenses</u> |  |  |  |  |  |  |
| Accounting fees | (567566) | 2% | (538394) | 2% | (29172) | 5% |
| Consulting fees | (5201045) | 16% | (4146232) | 13% | (1054813) | 25% |
| Investor relations and marketing | (3165838) | 10% | (6980578) | 22% | 3814740 | -55% |
| Legal fees | (1801538) | 6% | (2015619) | 6% | 214081 | -11% |
| Management fees | (146666) | 0% | (41067) | 0% | (105599) | 257% |
| Office and general | (1881530) | 6% | (1709991) | 5% | (171539) | 10% |
| Personnel expenses | (3581964) | 11% | (3713861) | 11% | 131897 | -4% |
| Rent | (90965) | 0% | (26838) | 0% | (64127) | 239% |
| Research and development | (15142542) | 47% | (12024288) | 37% | (3118254) | 26% |
| Travel and meals | (617877) | 2% | (1098984) | 3% | 481107 | -44% |
| **Total Cash Expenses (TCE)** | (32197531) | 100% | (32295852) | 100% | 98321 | 0% |

---

● Accounting Fees – relates to accounting staff and external audit fees. Accounting fees increased by $29,172, or 5%, to $567,566 for the year ending March 31, 2025, compared to $538,394 for the prior year. Accounting fees remained consistent for both periods at approximately 2% of Cash Expenses, as staff and activities for both periods have remained consistent.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

● Consulting Fees – relates to business development consulting, financial advisory services, and general consulting services. Consulting Fees increased by $1.05 million, or 25%, to $5.20 million for the year ending March 31, 2025, compared to $4.15 million for the prior year. Consulting Fees were 16% of cash expenses for the year ending March 31, 2025, compared to 13% for the prior period.

○ Business development consulting was $2.85 million in the year ended March 31, 2024 (2024 - $3.26 million). The decrease of $415,203 is related to a reduction of consultants involved with the business strategy development of the Company during the year.

○ Financial advisory services were $1.99 million (2024 - $497,781). The increase of $1.49 million is primarily attributed to fees paid to financial advisors in connection with the implementation and expansion of the Company's financing strategy. This is directly related to the $10.12 million increase in cash flow from financing activities observed in the year ended March 31, 2025.

○ General consulting services were $370,313 in the year ended March 31, 2025 (2024 - $388,034). The $17,721 represents a reduction in resources associated with the delivery of the European grant.

● Investor Relations and Marketing – relates to messaging, marketing, and advertising of the Company and its products to potential users, and to develop general Company and brand awareness as well as investor relations initiatives associated with presenting the Company to the investing public in media, at roadshows, and on social media. Investor Relations and Marketing decreased by $3.82 million or 55% to $3.17 million for the year ending March 31, 2025, compared to $6.98 million for the prior year. Investor Relations and Marketing was 10% of cash expenses for the year ending March 31, 2025, compared to 22% for the prior year. We combine these expenses for both years ending March 31, 2024, and 2025, as the Company's initiatives to market the product of the Company and investment in the Company were intertwined and indistinguishable. Going forward, as the Company begins to market its products and services, we will be able to distinguish between marketing and investor relations expenses. This decrease in Investor Relations and Marketing is due to:

○ Business development reported $1.74 million in the year ended March 31, 2025 (2024 - $3.67 million). The decrease of $1.93 million is a result of fewer consultants engaged to perform business development functions.

○ Marketing and investor awareness reported $869,989 in the year ended March 31, 2025 (2024 - $2.40 million). The decrease of $1.53 million is a result of fewer consultants engaged to perform business development functions.

○ General consulting services reported $554,079 in the year ended March 31, 2025 (2024 - $912,612). The decrease of $358,533 is a result of fewer consultants engaged to perform business development functions.

● Legal Fees – Legal Fees decreased $214,081, or 11%, to $1.80 million for the year ending March 31, 2025, compared to $2.02 million for the prior year. Legal Fees were 6% of Cash Expenses for the years ending March 31, 2025, and 2024. This decrease is mainly due to the reduction of special projects conducted during the year ending March 31, 2025 that required the support of external counsel compared to the prior year.

● Management Fees – Management fees relate to costs associated with Board members. Management Fees increased by $105,599, or 257%, to $146,666 for the year ending March 31, 2025, compared to $41,067 for the prior year. The increase is related to higher fees paid to the new Chairman of the Company, who joined the Board in September 2024.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

● Office and General Expenses – relates to subscriptions, insurance, transaction fees, and general expenses of the Company. Office and general expenses increased $171,539, or 10%, to $1.88 million for the period ending March 31, 2025, compared to $1.71 million for the prior year. Office and General Expenses remained consistent at approximately 5-6% of cash expenses for both years. The increase is due to higher fees incurred with a professional employment agency to contract employees outside of the United States and Canada, higher expenses due to transaction fees paid to the Canadian Exchange, and higher general expenses, including subscriptions.

● Personnel Expenses – relates to general and administrative payroll costs. Personnel Expenses decreased $131,897, or 4%, to $3.58 million for the period ending March 31, 2025, compared to $3.71 million for the prior year. Personnel Expenses remained consistent at 11% of cash expenses for both years.

● Rent – relates to the rent paid for various office and other spaces used by the company. Rent Expense increased by $64,127, to 239% $90,965 for the year ending March 31, 2025, compared to $26,838 for the prior year. Rent Expense was less than 1% of Cash Expenses for both years. Rent increased for 2025 as the Company had to rent additional space to test and prepare various projects under development or being tested.

● Research and Development – relates to payroll and contractor costs associated with the development of the Company's product. Research and Development increased by $3.12 million, or 26%, to $15.14 million for the year ending March 31, 2025, compared to $12.02 million for the prior year. Research and Development was 47% of Cash Expenses for the year ending March 31, 2025, compared to 37% for the prior year.

● Travel and Meals – relates to expenses related to meals, airfare, transportation, and other related expenses. Travel and Meals decreased by $0.48 million, or 44%, to $0.62 million for the year ending March 31, 2025, compared to $1.10 million for the prior year. Travel and Meals remained consistent at approximately 2-3% of cash expenses for both years.

<u>NON-CASH EXPENSES</u> – Consists of the items below. Non-Cash Expenses increased by $0.99 million, or 12%, to $9.10 million for the year ending March 31, 2025, compared to $8.11 million for the prior year.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **% of TNCE** | **2024** | **% of TNCE** | **$ Change** | **% Change** |
| <u>Non-cash expenses</u> |  |  |  |  |  |  |
| Depreciation | (172425) | 2% | (261747) | 3% | 89322 | -34% |
| Provision for contract settlement | (1252076) | 14% |  | 0% | (1252076) | 0% |
| Share based payments | (7679205) | 84% | (7850119) | 97% | 170914 | -2% |
| **Total Non Cash Expenses (TNCE)** | (9103706) | 100% | (8111866) | 100% | (991840) | 12% |

---

● Depreciation – relates to the decrease in the useful life of computer equipment. Depreciation decreased by $89,322, or 34%, to $172,425 for the year ending March 31, 2025, compared to $261,747 for the prior year. The reduction is attributable to some equipment that exceeded its 3-year useful life that are no longer being depreciated.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

● Provision for contract settlement – relates to the unbilled balance of the SaaS project terminated in August 2024. Provision for contract settlement was $1.25 million for the year ending March 31, 2025, there was no comparable expense in the prior year.

● Share based payments – relates to Black-Scholes grading vesting of stock options and RSUs granted to the Company's employees, contractors and strategic consultants. Share based payments decreased by $170,914, or 2%, $7.68 million for the year ending March 31, 2025, compared to $7.85 million for the prior period. The reduction is primarily due to a shorter vesting period associated with the 2024 stock option grants, resulting in a higher front-loaded expense in the prior year. In contrast, the 2025 stock option grants follow a longer vesting schedule, resulting in lower expense recognition in the current period. This decrease was partially offset by a larger number of Restricted Share Units (RSUs) granted during the year ended March 31, 2025. Please see the details of the variations in the table below.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Share based payments** | Stock Options | RSUs | Modification of broker's warrants | Settlement agreement | Total |
| Previous year graded vesting | 473109 |  |  |  | 473109 |
| New grants Q1 2023 | 70925 |  |  |  | 70925 |
| New grants Q3 2023 | 6390644 | 127400 |  |  | 6518044 |
| Modification of broker's warrants |  |  | 440604 |  | 440604 |
| Revaluation RSUs |  | 148636 |  |  | 148636 |
| Settlement agreement | - | - | - | 198801 | 198801 |
| Balance, March 31, 2024 | $6934678 | $276036 | $440604 | $198801 | $7850119 |
| Previous years graded vesting | 675250 |  |  |  | 675250 |
| Previous years RSUs revaluation |  | (231386) |  |  | (231386) |
| New grants Q1 2024 | 128287 | 29948 |  |  | 158235 |
| New grants Q2 2024 | 1542912 | 3049516 |  |  | 4592428 |
| New grants Q3 2024 | 1291759 | 2621935 |  |  | 3913694 |
| Cancelled options / RSUs | (1416299) | (12717) | - | - | (1429016) |
| Balance, March 31, 2025 | $2221909 | $5457296 | $- | $- | $7679205 |

---

<u>TOTAL OPERATING EXPENSES</u> – increased by $0.89 million, or 2%, to $41.30 million for the year ending March 31, 2025, compared to $40.41 million for the prior year. This increase is primarily due to $0.99 million in non-cash expenses associated with the provision for contract settlement, which was partially offset by lower share based payments ($0.17 million) and depreciation ($0.09 million).

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

<u>OTHER ITEMS</u> – Consists of the items below. Other Items loss decreased by $10.7 million, or 90%, to $1.2 million for the year ending March 31, 2025, compared to a loss of $11.95 million for the prior year.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **% TOI** | **2024** | **% TOI** | **$ Change** | **% Change** |
| **OTHER ITEMS:** |  |  |  |  |  |  |
| Grant income | 156885 | -13% | 154709 | -1% | 2176 | 1% |
| Other income | 213413 | -18% | 240293 | -2% | (26880) | -11% |
| Accretion expense |  | 0% | (203918) | 2% | 203918 | -100% |
| Interest expense | (1953499) | 161% | (348441) | 3% | (1605058) | 461% |
| Legal claim expense | 848213 | -70% | (9921298) | 83% | 10769511 | -109% |
| Provision for losses on related party transactions | (479808) | 39% | (1872334) | 16% | 1392526 | -74% |
| **Total Other Items (TOI)** | (1214796) | 100% | (11950989) | 100% | 10736193 | -90% |

---

● Grant Income – relates to the reimbursement of expenses for amounts spent on project activities related to the grant agreement with Horizon Europe, which is delegated by the European Commission. Grant Income increased by $2,176, or 1%, to $156,885 for the year ending March 31, 2025, compared to income of $155,000 for the prior year. This project is expected to end in August 2026.

● Other Income – relates to interest received from interest-bearing bank accounts. Other income decreased $26,880, or 11%, to $213,413 for the year ending March 31, 2025, compared to income of $240,293 for the prior year.

● Accretion Expense – relates to the increase in the carrying value of the discounted value of the convertible debenture converted in 2024. There was no accretion expense for the year ending March 31, 2025, compared to an expense of $203,918 for the prior year.

● Interest Expense – relates to interest incurred in the conversion of the convertible debenture converted in 2025, interest incurred in the loan payable, and the interest related to the financing of the directors and officers insurance. Interest expense increased $1.61 million, or 461%, to $1.95 million for the year ending March 31, 2025, compared to an expense of $348,441 for the prior year.

● Legal Claim Expense – Legal Claim Expense decreased $10.77 million, or 109%, to income of $0.85 million for the year ending March 31, 2025, compared to an expense of $9.92 million for the prior year. The Company recorded the total amount of $9.92 million associated with the David Thomson Arbitration award confirmed by the Los Angeles Superior Court as an expense incurred during the year ending March 31, 2024, while during the following year ending March 31, 2025, we recorded as income the $1.67 million insurance payment received by Mr. Dan Mapes (President Emeritus, Director of Global Development and a director of the Company) and Mr. Gabriel Rene (CEO and director), which was partially offset by an aggregate of $817,787 of interest that accrued on the total award during the most recently completed fiscal year ended, resulting in an income of $0.85 million for the year ended March 31, 2025.

● Provision for Loss on Related Party Transactions – Provision for loss on related party transactions decreased $1.39 million, or 74%, to $0.48 million for the year March 31, 2025, compared to an expense of $1.87 million for the prior year.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

The provision for losses on related party transactions includes amounts due from Cyberlab LLC ("Cyberlab") and the Spatial Web Foundation ("SWF"), entities controlled or associated with the Company's founders, Dan Mapes and Gabriel Rene.

The related expenses arose primarily from payments made by the Company on behalf of these related parties to third-party vendors.

Although these amounts are expected to be settled through future service agreements, management performed a credit assessment in accordance with the current expected credit loss ("CECL") model under ASC 326. Based on this assessment, management determined that there is significant uncertainty regarding the timing and collectability of these receivables. As of March 31, 2025, management concluded that full repayment is not probable within a reasonable timeframe.

<u>INCOME TAXES</u> – The Company did not pay any income tax for the year ending March 31, 2025, compared to an expense of $2,513 for the prior year. This expense is related to the California franchise tax.

<u>NET LOSS</u> – decreased $9.10 million, or 17%, to $43.00 million for the year ending March 31, 2025, compared to a net loss of $52.10 million for the prior year.

<u>LIQUIDITY AND CAPITAL RESOURCES</u>

The Company has historically raised capital to fund operations plans, primarily through investor support. The Company will continue to rely on such support to generate sufficient amounts of cash and cash equivalents to cover its operating costs, satisfy short and long term capital requirements, and meet planned growth objectives. The ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions. Any quoted market for the Company's shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating new revenues, cash flows or earnings.

The Company's ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. The ability of the Company to raise sufficient capital to fund operation are conditional primarily through the continuation of its agreements and investor support. The material uncertainty associated with these events and conditions may cast substantial doubt about the Company's ability to continue as a going concern. The Company's financial statements do not give effect to any adjustments, which would be necessary should the Company be unable to continue as a going concern. In such circumstances, the Company would be required to realize its assets and discharge its liabilities outside of the normal course of business, and the amounts realized could differ materially from those reflected in the accompanying condensed consolidated interim financial statements.

The Company's consolidated financial statements have been prepared on a going concern basis which assumes that the Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company has incurred losses since inception and has not yet achieved profitable operations. The Company has been relying on debt and equity financing to fund its operation in the past. While the Company has been successful in securing financing to date, there can be no assurances that it will be able to do so in the future. As noted in the report of our independent public accountants for our financial statements for the year ended March 31, 2024, the aforementioned factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that such audited annual financial statements were issued.

Historically, the Company has used net proceeds from issuances of debt and equity to provide sufficient funds to meet its near-term asset development plans and other contractual obligations when due. Management plans to fund operations of the Company with its current working capital and through additional equity and/or debt financings. Management believes that this plan provides an opportunity for the Company to continue as a going concern.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

In view of these matters, continuing as a going concern is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to, meets its financial requirements, raise additional capital, and the success of its future operations.

The Company's long-term capital requirements may vary materially from those currently planned and will depend on many factors, including the rate of net sales growth, the timing and extent of spending on research and development efforts and other growth initiatives, the expansion of sales and marketing activities, the timing of new products, and overall economic conditions. The ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions and its success with its strategic collaborations. Any quoted market for the Subordinate Voting Shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating new revenues, cash flows or earnings. The sale of additional equity would result in additional dilution to the Company's shareholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that may restrict our operations. There can be no assurances that we will be able to raise additional capital on terms that are attractive to us or at all. The inability to raise capital would adversely affect our ability to achieve our business objectives.

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Cash | 4816906 | 892727 |
| Current assets, including cash | 6183082 | 3495111 |
| **Total Assets** | $6376575 | $3827306 |
| Current liabilities | 15106292 | 15362514 |
| Other liabilities | 139039 | 140904 |
| Shareholder's equity | (8868756) | (11676112) |
| **Total liabilities and shareholder's equity** | $6376575 | $3827306 |

---

Cash increased to $4.82 million for the year ending March 31, 2025, compared to $0.89 million for the prior year. Working capital is current assets minus current liabilities, including the current portion of long-term debt. We had a working capital deficit of $8.92 million for the year ended March 31, 2025, compared to a working capital deficit of $11.87 million for the prior year.

---

| | | | |
|:---|:---|:---|:---|
| For the year ended | 2025 | 2024 | Change |
| Cash provided by (used) in operating activities | $(33091087) | $(29593507) | $(3497580) |
| Cash provided by (used) in investing activities | (510387) | (1255737) | 745350 |
| Cash provided by (used) in financing activities | 37658432 | 27538420 | 10120012 |
| Foreign exchange effect on cash | (132779) | (193730) | 60951 |
| Net change in cash during the period | $3924179 | $(3504554) | $7428733 |

---

● Cash used in operating activities is comprised of net loss, add-back of non-cash expenses, and net change in non-cash working capital items. Cash used in operating activities increased by $3.50 million to $33.10 million for the year ended March 31, 2025, compared to $29.59 million for the prior year. The increase is mostly attributed to a higher variation of cash used to settle accounts payable ($2.41 million) and the higher loss adjusted by items not involving cash in the year ended March 31, 2025 ($1.22 million).

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

● Cash used in investing activities primarily reflects payments related to SWF and Cyberlab, as well as purchases of computer equipment. For the year ended March 31, 2025, the Company reduced its payments related to SWF and Cyberlab by $590,774 to $479,808 for the year ended March 31, 2025 (2024 - $1.07 million), primarily due to lower expenses associated with the arbitration legal process. Additionally, capital expenditures decreased by $154,576 to $30,579 for the year ended March 31, 2025 (2024 - $185,155), reflecting a reduction in computer equipment purchases compared to the prior year.

● Cash provided by financing activities relates to the instruments used by the Company to fund its working capital needs. The increase in cash flows from financing activities was primarily driven by higher net proceeds from the issuance of units ($11.75 million) and the issuance of convertible debentures ($10.00 million). These inflows were partially offset by a decline in equity issuances ($6.89 million) and the repayment of promissory notes ($2.00 million).

*<u>COMMITMENTS</u>*

The Company has an obligation to pay royalties to Cyberlab, LLC (a company owned by Dan Mapes, President Emeritus, Director of Global Development and a director of the Company). Cyberlab shall be entitled to receive a share of the gross revenue derived from the sales, licensing and other commercial activities involving Spatial Domain Names, pursuant to the following schedule:

● Years 1 through 10 of the Spatial Domain Program: Cyberlab shall be entitled to Five Percent (5%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Five Percent (95%) to allocate between itself and other Spatial Domain Program stakeholders (e.g. registries, registrars, etc.) as it sees fit.

● Years 11 through 14 of the Spatial Domain Program: Cyberlab shall be entitled to retain Four Percent (4%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Six Percent (96%).

● Years 15 through 17 of the Spatial Domain Program: Cyberlab shall be entitled to retain Three Percent (3%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Seven Percent (97%).

● Years 18 and 19 of the Spatial Domain Program: Cyberlab shall be entitled to retain Two Percent (2%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Eight Percent (98%).

● Years 20 through 25 of the Spatial Domain Program: Cyberlab shall be entitled to retain One Percent (1%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Nine Percent (99%).

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

As of March 31, 2025, no amounts are payable under the royalty agreement.

The Company is obligated to grant stock options ("Options"), deferred share units ("DSU"), or restricted stock units ("RSU") to qualifying consultants and employees based on their respective contracts, to be determined at the grant date based on the market price of the Company's shares. As at March 31, 2025, the outstanding commitment balance is nil (March 31, 2024 – 320,069) to be granted as options, RSUs or DSUs.

The Company has entered into severance agreements with Gabriel Rene (Chief Executive Officer and Director), Dan Mapes (President Emeritus and Global Ambassador and Director), James Christodoulou, Chief Financial Officer), Donald Moody (General Counsel and Chief Legal Officer), Capm Petersen (Chief Innovation Officer), Steven Swanson (Chief Experience Officer), and Michael Wadden (Chief Commercial Officer). In the case of involuntary termination or a change in control, the executives are entitled to a monetary payment equal to 12 month's worth of base salary, continuation for 12 months of medical and dental insurance, and immediate, accelerated vesting of all stock options, equity, and related compensation.

The Company has entered into a severance agreement with Kevin Wilson, its Chief Accounting Officer. In the case of involuntary termination or a change in control, the Chief Accounting Officer is entitled to a monetary payment equal to 36 months of base salary, continuation for 36 months of medical and dental insurance, and immediate, accelerated vesting of all stock options, equity, and related compensation.

*<u>OUTSTANDING SHARE CAPITAL</u>*

<u>As at</u> <u>The date of <br>this MD&A</u> <u>March 31, 2025</u> <br> Shares issued to Class A Subordinate Voting Share shareholders   <u>8,746,491</u>   <u>7,825,571</u>

*<u>OUTSTANDING WARRANTS</u>*

<u>As at</u> <u>*The date of* *this MD&A*</u> <u>March 31, 2025</u> <br> Warrants   <u>2,621,402</u>   <u>2,095,224</u>

*<u>OUTSTANDING STOCK OPTIONS</u>*

<u>As at</u> <u>The date of <br>this MD&A</u> <u>March 31, 2025</u> <br> Stock options   <u>803,712</u>   <u>770,884</u>

*<u>OUTSTANDING RESTRICTED SHARE UNITS ("RSUs")</u>*

<u>As at</u> <u>The date of <br>this MD&A</u> <u>March 31, 2025</u> <br> RSUs   <u>Note 1</u>   <u>718,706</u>   <u>685,373</u>

Note:

&nbsp;&nbsp;&nbsp;&nbsp;(1) RSUs
 are convertible into one Subordinate Voting Shares or payable in cash.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

*<u>TRANSACTIONS WITH RELATED PARTIES</u>*

 

The Company's related parties consist of the directors, executive officers and key management personnel, who have authority and responsibility for planning, directing, and controlling the Company's activity and companies controlled by them. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources, services, or obligations between related parties.

Transactions are measured at the exchange amount, which is the amount agreed to by the parties.

Key management personnel include those with authority and responsibility for planning, directing, and controlling the company's activities. The Company has determined that key management personnel consist of executive and non-executive members of its Board of Directors and senior officers.

During the years ended March 31, 2025 and 2024, related party transactions were as follows:

---

| | | |
|:---|:---|:---|
|  | 2025 | 2024 |
| Management fees | $146666 | $41067 |
| Management salaries and benefits included in personnel expenses | 1719195 | 1338762 |
| Share-based payments (Note 8) | 655145 | 720222 |
|  | $2521007 | $2100051 |

---

The following management members incurred in the salaries and management fees:

---

| | | | |
|:---|:---|:---|:---|
|  | Position | 2025 | 2024 |
| Management salaries, Gabriel Rene | Chief Executive Officer and director | 405000 | 435000 |
| Management bonus, Gabriel Rene | Chief Executive Officer and director | 100000 |  |
| Management benefits, Gabriel Rene | Chief Executive Officer and director | 32011 | 28829 |
| Management salaries, Dan Mapes | President and director | 306000 | 358500 |
| Management benefits, Dan Mapes | President and director | 24385 | 22751 |
| Management salaries, James Christodoulou | Chief Financial Officer | 29167 |  |
| Management benefits, James Christodoulou | Chief Financial Officer |  |  |
| Management salaries, James Hendrickson | Chief Operating Officer | 237917 | 200000 |
| Management bonus, James Hendrickson | Chief Operating Officer | 243500 |  |
| Management benefits, James Hendrickson | Chief Operating Officer | 33204 | 27443 |
| Share-based payments, James Hendrickson | Chief Operating Officer | 77664 | 24294 |
| Management salaries, Kevin Wilson | Chief Accounting Officer and Secretary | 251167 | 249000 |
| Management bonus, Kevin Wilson | Chief Accounting Officer and Secretary | 40000 |  |
| Management benefits, Kevin Wilson | Chief Accounting Officer and Secretary | 16844 | 17239 |
| Share-based payments, Kevin Wilson | Chief Accounting Officer and Secretary | 27287 | 335808 |
| Management fees, Michael Blum | Chairman | 62500 |  |
| Share-based payments, Michael Blum | Chairman | 439973 |  |
| Management fees, Jay Samit | Former Chairman | 84166 | 41067 |
| Share-based payments, Jay Samit | Former Chairman | 40766 | 84594 |
| Share-based payments, Gordon Scott Paterson | Director | 28690 | 190933 |
| Share-based payments, Jonhatan de Vos | Director | 40766 | 84594 |
| Total |  | $2521007 | $2100051 |

---

Included in accounts payable at March 31, 2025, were amounts totaling $105,799 (March 31, 2024 – $nil) due to James Hendrickson, the Chief Operating Officer ($83,500), Michael Blum, the Chairman ($20,000), and Kevin Wilson, the Chief Accounting Officer ($2,299).

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

Also included in the due from related parties is an unsecured loan of $68,080 (March 31, 2024 - $64,936) to a key member of the management team. The loan has an annual interest rate of 5% and requires principal and interest to be paid in full by May 1, 2033. No repayments were made in the year ended March 31, 2025.

On December 23, 2024, the Company granted 7,407 stock options to James Hendrickson, its Chief Operating Officer with an exercise price of CAD$30.51 ($21.22 at balance sheet rate), expiring in 5 years, where 25% will within one year of the grant date, and 6.25% every subsequent quarter. The stock options were fair valued at $118,679, of which $40,354 is recognized in the year ended March 31, 2025, using the Black-Scholes option pricing model.

On September 13, 2024, the Company granted 74,074 RSUs to Michael Blum, a director of the Company with no exercise price, expiry date of 10 years from the grant date, vesting 24,691 within one year of the grant date and 8.33% every three months afterwards. For the year ended March 31, 2025, the Company revalued the RSUs based on the market price of one Subordinate Voting Share on the revaluation date. The Company recognized $439,973 as share-based payment for RSUs in the year.

On July 3, 2024, the Company granted 3,704 stock options to James Hendrickson, the Chief Operating Officer and 1,852 to Kevin Wilson, the Chief Accounting Officer. The Options have an exercise price of CAD$28.89 ($20.10 at balance sheet rate) and expire in 5 years. 25% of the options will vest within one year of the grant date and 6.25% every subsequent quarter. The stock options were fair valued at $89,355, of which $41,095 is recognized in the year ended March 31, 2025, using the Black-Scholes option pricing model.

On July 3, 2024, the Company granted 1,852 RSUs to Kevin Wilson, the Chief Accounting Officer and 16,665 to the three independent directors of the Company, 5,555 to Gordon Scott Paterson, 5,555 to Jonhatan de Vos, and 5,555 to Jay Samit. The RSUs have no exercise price and expire in 10 years. They vest 33.33% within one year of the grant date and 33.33% yearly thereafter. The Company revalued the RSUs based on the market price of one Subordinate Voting Share on the revaluation date. The Company recognized $135,888 as share-based payment for RSUs in the year ended March 31, 2025.

On December 23, 2023, the Company granted 16,278 stock options to Kevin Wilson, the Chief Accounting Officer and 1,852 stock options to James Hendrickson, its Chief Operating Officer with an exercise price of CAD$36.45 ($22.57 at balance sheet rate), expiring in 5 years, where 16,278 vested on the grant date and 1,852 will vest 25% within one year of the grant date, and 6.25% every subsequent quarter. The stock options were fair valued at $374,011, of which $9,913 is recognized in the year ended March 31, 2025, using the Black-Scholes option pricing model.

On March 31, 2025, the remaining 6,172 RSUs granted to Gordon Scott Paterson, a director of the Company, in the year ended March 31, 2023, were valued based on the market price of one Subordinate Voting Share on the revaluation date, of which $12,078 is derecognized in the year ended March 31, 2025.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

*<u>CRITICAL ACCOUNTING ESTIMATES</u>*

 

● Equipment – The Company reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected remaining useful life of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utilization of equipment.

● Recoverability of accounts receivable, contracts assets, and unbilled revenues, and allowance for credit loss – The Company provides an allowance for expected credit losses based on an assessment of the recoverability of accounts receivable. Allowances are applied to accounts receivable at initial recognition based on the probability of default. Management analyzes its debts, customer concentrations, customer creditworthiness, current economic trends, and changes in customer payment terms when making a judgment to evaluate the adequacy of the allowance for expected credit losses. Where the expectation is different from the original estimate, such difference will impact the carrying value of accounts receivable.

● Functional currency – The determination of the functional currency of each entity within the Company requires management judgment in determining the currency that mainly influences the sale price of services and costs of providing services.

● Revenue recognition – When the Company enters into an agreement for software development which is longer in nature (longer than 1 year), the Company records a contract asset which is representative of receivables from the agreements not yet billed to the customer. Significant judgment is made to determine the performance obligations and whether each performance obligation is satisfied at a point in time or over the term of the contracts.

● Going concern – The assessment of the Company's ability to continue as a going concern. The determination that the Company will be able to continue as a going concern is subject to critical judgments of management with respect to assumptions surrounding the short and long-term operating budget and financing activities. Should these judgments prove to be inaccurate, management's continued use of the going concern assumption may be inappropriate.

*<u>FINANCIAL INSTRUMENTS</u>*

 

As of March 31, 2025, the Company's financial instruments consist of cash and restricted cash, accounts receivable, accounts payable and accrued liabilities, restricted share unit liability, provision for legal claim, convertible debenture, and loans payable.

In accordance with ASC 820, Fair Value Measurement, the Company categorizes financial assets and liabilities measured at fair value into a three-level hierarchy based on the inputs used in the valuation techniques. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3).

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

The levels of the fair value hierarchy are defined as follows:

● Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date.

● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active or inactive markets.

● Level 3 – Unobservable inputs for the asset or liability, which are used to measure fair value to the extent that observable inputs are not available, and which are significant to the overall fair value measurement.

There were no transfers between the levels of the fair value hierarchy during the year.

---

| | | | | |
|:---|:---|:---|:---|:---|
| As of March 31, 2025 | Level 1 | Level 2 | Level 3 | Total |
| Assets: |  |  |  |  |
| Cash and restricted cash | $4816906 | $- | $- | $4816906 |
| Due from related parties | $68080 | $- | $- | $68080 |
| Liabilities: |  |  |  |  |
| Accounts payable | $2036916 | $- | $- | $2036916 |
| Accrued liabilities | $41736 | $- | $- | $41736 |
| Provision for legal claim | $8948085 | $- | $- | $8948085 |
| Restricted share unit liability | $- | $3911823 | $- | $3911823 |
| Loans payable | $139039 | $- | $- | $139039 |
| As of March 31, 2024 | *Level 1* | *Level 2* | *Level 3* | *Total* |
| Assets: |  |  |  |  |
| Cash | $892727 | $- | $- | $892727 |
| Accounts receivable | $100000 | $- | $- | $100000 |
| Due from related parties | $64936 | $- | $- | $64936 |
| Liabilities: |  |  |  |  |
| Accounts payable | $2782502 | $- | $- | $2782502 |
| Accrued liabilities | $82500 | $- | $- | $82500 |
| Promissory notes | $2000000 | $- | $- | $2000000 |
| Provision for legal claim | $9921298 | $- | $- | $9921298 |
| Restricted share unit liability | $- | $576214 | $- | $576214 |
| Loans payable | $140904 | $- | $- | $140904 |

---

Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The financial instrument that potentially subjects the Company to concentrations of credit risk consists principally of cash, accounts receivable, and due from related parties. To minimize the credit risk, the Company places its cash with large financial institutions.

Amounts due from related parties of $68,080 as of March 31, 2025 (March 31, 2024 - $64,934) represent receivables from an unsecured loan to a key member of the management team. The loan has an annual interest rate of 5% and requires principal and interest to be paid in full by May 1, 2033 (Note 9).

As of March 31, 2025, management assessed that there is no need to provide a credit loss allowance.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

*Liquidity risk*

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements on an ongoing basis. The Company strives to ensure that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations, cash holdings, and anticipated future financing transactions.

Contractual cash flow requirements as of March 31, 2025, were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | *<1 year*<br> *$* | *1-2 years*<br> *$* | *2-5 years*<br> *$* | *>5 years*<br> *$* | *Total*<br> *$* |
| Accounts payable | 2036916 |  |  |  | 2036916 |
| Accrued liabilities | 41736 |  |  |  | 41736 |
| Loans payable | 7752 | 7752 | 23256 | 15067532 | 15106292 |
| Total | 2086404 | 7752 | 23256 | 15067532 | 17184944 |

---

As of March 31, 2025, the Company had a working capital deficit of $8.92 million (March 31, 2024 - $11.87 million).

*Foreign exchange risk*

Foreign exchange risk is the risk that the fair value or future cash flows will fluctuate due to changes in foreign exchange rates. The Company has financial assets denominated in Euros and Canadian dollars and is therefore exposed to exchange rate fluctuations. As of March 31, 2025, the Company had the equivalent of $223,534 (March 31, 2024 - $552,476) net financial liabilities denominated in Canadian dollars and $104,416 (March 31, 2024 - $117,648) in net financial assets denominated in Euros.

The foreign exchange risk exposure of the Company financial instruments as at March 31, 2025 is as below:

---

| | | |
|:---|:---|:---|
|  | | +/- 10% fluctuation |
|  | Currency | Increase/(decrease) |
| Financial Instrument Type | CAD$ | $ impact |
| Cash | 5445994 | 378823 |
| Tax receivable | 870173 | 60529 |
| Prepaid expenses | 408202 | 28395 |
| Accounts payable | (1362055) | (94745) |
| Accrued liabilities | (60000) | (4174) |
| Restricted share unit liability | (5623668) | (391182) |
|  | (321354) | (22354) |

---

---

| | | |
|:---|:---|:---|
|  |  | *+/- 10% fluctuation* |
|  | *Currency* | *Increase/(decrease)* |
| Financial Instrument Type | *EURO* | *$ impact* |
| Restricted cash | 113701 | 12274 |
| Tax receivable | (352) | (38) |
| Accounts payable | (16622) | (1794) |
| Deferred Grant | (62615) | (6773) |
|  | 34111 | 3668 |

---

 

*Interest rate risk*

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The interest earned on cash balances approximate fair value rates, and the Company is not subject to significant risk due to fluctuating interest rates. As of March 31, 2025, the Company does not hold any liabilities that are subject to fluctuations in market interest rates.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

*Price risk* 

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or currency risk. The Company is not exposed to other price risk.

*<u>MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS</u>*

 

The information included in the consolidated financial statement and this MD&A is the responsibility of management, and their preparation requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amount of expenses during the reported period. Actual results could differ from those estimates.

*<u>RELIANCE ON KEY PERSONNEL</u>*

The success of the Company will be largely dependent upon the performance of its management and key employees and contractors. In assessing the risk of an investment in the shares of the Company, potential investors should realize that they are relying on the experience, judgment, discretion, integrity and good faith of the proposed management of the Company.

*<u>CONFLICTS OF INTEREST</u>*

Certain directors and officers of the Company will be engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies. As a result of these and other activities, such directors and officers of the Company may become subject to conflicts of interest. The BCBCA provides that in the event that a director or senior officer has a material interest in a contract or proposed contract or agreement that is material to the issuer, the director or senior officer must disclose his or her interest in such contract or agreement and a director must refrain from voting on any matter in respect of such contract or agreement, subject to and in accordance with the BCBCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the BCBCA. To the knowledge of the management of the Company, as at the date of this MD&A, there are no existing or potential material conflicts of interest between the Company and a director or officer of the Company, except as otherwise disclosed in this MD&A.

*<u>DIVIDENDS</u>*

To date, the Company has not paid any dividends on its outstanding Subordinate Voting Shares. Any decision to pay dividends on the shares of the Company will be made by the Board of Directors on the basis of the Company's earnings, financial requirements and other conditions.

*<u>LIMITED OPERATING HISTORY</u>*

The Company was incorporated in November 2020 and has yet to generate a profit from its activities. The Company will be subject to all of the business risks and uncertainties associated with any business enterprise, including the risk that it will not achieve its growth objective. The Company anticipates that it may take several years to achieve positive cash flow from operations. There is no certainty that the Company will produce revenue, operate profitably or provide a return on investment in the future.

---

| | |
|:---|:---|
| **VERSES AI INC.** | ![](ex99-2_001.jpg) |
| Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 | Management's Discussion and Analysis of Financial Condition and Results of Operations<br> As of June 30, 2025 |

---

*<u>OTHER RISK FACTORS</u>*

The Company is subject to a number of other risks and uncertainties and is affected by several factors which could have a material adverse effect on the Company's business, financial condition, operating results, and/or future prospects. These risks should be considered when evaluating an investment in the Company and may, among other things, cause a decline in the price of the Company's securities. The risks and uncertainties which management considered the most material to the Company's business are described in the section entitled, "RISK FACTORS" of the Company's Annual Information Form filed on SEDAR on June 30, 2025.

*<u>DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING</u>*

Disclosure controls and procedures are intended to provide reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported within the time periods specified by securities regulations and that the information required to be disclosed is accumulated and communicated to management. Internal controls over financial reporting ("ICFR") are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. In connection with National Instrument 52-109 (Certificate of Disclosure in Issuer's Annual and Interim Filings) ("NI 52-109"), the Chief Executive Officer and Chief Financial Officer of the Company have each delivered a certificate in form provided for in 52-109F1 - Certificate of Annual Filings with respect to the Company's ICFR and the financial information contained in the consolidated financial statements for the year ended March 31, 2025 and this accompanying MD&A (together, the "Annual Filings").

<u>Changes in internal control over financial reporting</u>

Since adoption on November 1, 2021, there have been no changes in the Company's ICFR that have materially affected, or is reasonably likely to materially affect, the Company's ICFR.

 

*<u>ADDITIONAL INFORMATION</u>*

Additional information about the Company, including the financial statements, is available on the Company's website at <u>https://www.verses.ai</u> and on SEDAR at <u>www.sedarplus.ca.</u>

## Exhibit 99.3

**Exhibit 99.3**

**ANNUAL INFORMATION FORM**

![](ex99-3_001.jpg)

**VERSES AI INC.**

**1111 West Hastings Street, 15th Floor**

**Vancouver, British Columbia, V6E 2J3** 

**Telephone: 323 868-0514**

**E-Mail: <u>JC@verses.</u><u>ai</u>**

For the year ended March 31, 2025

Dated June 30, 2025

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| **[EXPLANATORY NOTES AND CAUTIONARY STATEMENTS](#a_001)** | **3** |
| **[DEFINITIONS AND GLOSSARY OF TERMS](#a_002)** | **7** |
| **[CORPORATE STRUCTURE](#a_003)** | **13** |
| **[GENERAL DEVELOPMENT OF THE BUSINESS](#a_004)** | **14** |
| **[DESCRIPTION OF THE BUSINESS](#a_005)** | **23** |
| **[RISK FACTORS](#a_006)** | **34** |
| **[DIVIDENDS AND DISTRIBUTIONS](#a_007)** | **45** |
| **[DESCRIPTION OF CAPITAL STRUCTURE](#a_008)** | **45** |
| **[MARKET FOR SECURITIES](#a_009)** | **57** |
| **[ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER](#a_010)** | **60** |
| **[DIRECTORS AND EXECUTIVE OFFICERS](#a_011)** | **60** |
| **[PROMOTERS](#a_012)** | **63** |
| **[LEGAL PROCEEDINGS AND REGULATORY ACTIONS](#a_013)** | **64** |
| **[INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS](#a_014)** | **64** |
| **[TRANSFER AGENTS AND REGISTRARS](#a_015)** | **64** |
| **[MATERIAL CONTRACTS](#a_016)** | **64** |
| **[INTERESTS OF EXPERTS](#a_017)** | **65** |
| **[AUDIT COMMITTEE](#a_018)** | **65** |
| **[ADDITIONAL INFORMATION](#a_019)** | **67** |
| **[SCHEDULE "A"](#a_020)** | **68** |

---

**EXPLANATORY NOTES AND CAUTIONARY STATEMENTS**

In this annual information form (this "**AIF**" or "**Annual Information Form**"), unless the context otherwise requires, the "**Company**", "**we**" or "**VERSES**" refers to Verses AI Inc. This AIF applies to the business activities and operations of the Company for the financial year ended March 31, 2025. Unless otherwise indicated, the information in this AIF is given as of June 30, 2025.

This AIF contains company names, product names, trade names, trademarks and service marks of the Company and other organizations, all of which are the property of their respective owners.

This AIF contains references to Canadian dollars and United States dollars. References in this AIF to "Cdn$" are to Canadian dollars. References in this AIF to "USD$" are to US dollars. Any references to "$" not preceded by "Cdn" or "USD" are to Canadian dollars. On June 30 2025, the closing exchange rate for US dollars to Canadian dollars, as quoted by the Bank of Canada was USD$1.00:Cdn$1.4376 (Cdn$1.00:USD$0.7312).

All references to securities of the Company in this AIF are presented on a post-Consolidation basis.

**<u>Cautionary Statement Regarding Forward-Looking Information</u>**

This AIF and the Company's other public disclosure contain "forward-looking information" within the meaning of applicable Canadian securities laws ("**forward-looking information**") concerning the Company's business plans, including, but not limited to, anticipated results and developments in the Company's operations in future periods and other matters that may occur in the future. In certain cases, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "target", "scheduled", "estimates", "forecasts", "intends", "anticipates", "determine", "continue", "projects", "potential", "proposed" or "believes", or variations or the negative of such words and phrases, or statements that certain actions, events or results "may", "could", "whether to", "would", "should", "likely", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. Forward-looking information contained in this AIF includes, but is not limited to, statements regarding:

● the competitive and business strategies of the Company;

● market prices, values and other economic indicators;

● receipt and timing of any required governmental, regulatory and third-party approvals, licenses and permits;

● the performance of the Company's business and operations;

● the intention to grow the business, operations and potential activities of the Company;

● the Company's competitive positioning;

● the capabilities of Genius;

● the development and roll-out of Genius;

● the scalability of the Spatial Web and Genius;

● the Company's anticipated partnerships and agreements with third parties and the expected outcomes of such partnerships and agreements;

● the use of available funds;

● analyses and other information based on expectations of future performance and planned products;

● possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action;

● timing, costs and potential success of future activities on the Company's facilities and projects;

● future outlook and goals;

● whether the Company will have sufficient working capital and its ability to raise additional financing required in order to continue development of its business and continue operations;

● the Company's expected reliance on key management personnel, advisors and consultants;

● the Company's intended compensation policy and practices and compensation structure;

● planned expenditures and budgets and the execution thereof.

Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management's experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this AIF, including, without limitation, assumptions about:

● possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action;

● general economic, financial market, regulatory and political conditions in which the Company operates;

● general demand and consumer interest in the Company's products and services;

● competition;

● anticipated and unanticipated costs;

● there being no significant delays in the development and commercialization of Genius and other products and services;

● the ability of the Company to raise any necessary capital on acceptable terms;

● the ability of the Company to anticipate future needs of clients and partners;

● the ability of the Company to maintain sufficient and effect research and development capabilities;

● the ability of the Company to execute the Company's growth, sales and customer acquisition strategies;

● the ability of the Company to attract and retain skilled personnel;

● the ability of the Company to conduct operations in a safe, efficient and effective manner;

● there being no significant barriers to the acceptance of the Company's products and services;

● the continued adoption and acceptance of the Spatial Web;

● the accuracy of budgeted costs and expenditures;

● future currency exchange rates and interest rates;

● the timely receipt of any required governmental, regulatory and third-party approvals, license and permits on favourable terms and any required renewals of the same;

● political and regulatory stability;

● requirements under applicable laws; and

● stability in financial and capital markets.

While the Company considers these assumptions to be reasonable, the assumptions are inherently subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors that could cause actual actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward-looking information. Many assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct.

Furthermore, by their very nature, forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, events, results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, without limitation, those related to:

● the industry-wide risks;

● fluctuations in capital markets and share prices;

● price volatility;

● risks related to the ability to obtain financing needed to fund the continued development of the Company's business;

● the Company's limited operating history;

● the Company's requirement for substantial additional capital to operate the Company's business;

● the Company's ability to manage anticipated and unanticipated costs;

● the Company's reliance on strategic partnerships;

● the Company's failure to maintain, promote and enhance the Company's brand;

● the Company's failure to manage future growth and scalability;

● the Company's dependence on customer internet access;

● the Company's dependence on management and key personnel;

● the uncertainty and variation of the Company's intended use of available funds;

● rapid technological change affecting the Company's industry and competitive positioning;

● risks related to possible future government legislation, policies and controls or by changes in applicable laws and regulations;

● risks associated with potential reputational damage;

● risks related to the Company's ability to successfully implement its growth strategy;

● risks related to the Company's inability to maintain or improve its competitive position;

● risks related to the Company's ability to protect its intellectual property;

● risks related to the potential loss of the Company's "foreign private issuer" status;

● risks related to the Company's failure to retain key personnel and hire additional personnel needed to develop its business;

● risks related to the performance of the Company's directors and officers;

● risks related to the Company's failure to adequately evaluate its current business and its future prospects;

● risks outside of the control of the Company;

● risks related to security breaches, software errors and defects;

● risks related to internal controls and the reliability of financial reporting and financial statement preparation;

● risks associated with government regulation of the Company;

● the impact of securities or industry analysts not publishing research or publishing inaccurate or unfavourable research about the Company's business;

● market conditions, volatility and global economic conditions;

● dilution from future equity financing;

● restrictions imposed by regulatory authorities on the Company's business;

● risks related to foreign exchange rate fluctuations, as applicable; and

● the risks described in the section of this AIF entitled "*Risk Factors* ".

This is not an exhaustive list of the risks and factors that may affect the Company's forward-looking information. Although the Company has attempted to identify important factors that could affect the Company and may cause actual actions, events, conditions, results, performance or achievements to differ materially from those described in the forward-looking information, there may be other factors that cause actions, events, conditions, results, performance or achievements not to be as anticipated, estimated or intended. In addition to those discussed in this AIF, please refer to the risks described in the Company's public disclosure record.

The Company cautions that the foregoing lists of important assumptions and factors are not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward-looking information contained in this AIF. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake any obligation to publicly update or revise any forward-looking information other than as required under applicable securities laws.

**DEFINITIONS AND GLOSSARY OF TERMS**

The following is a glossary of certain terms used in this AIF, including the summary that follows. Words importing the singular, where the context requires, include the plural and vice versa and words importing any gender include all genders. Certain additional terms are defined within the body of this AIF and in such cases will have the meanings ascribed thereto.

---

| | |
|:---|:---|
| **2022 Listed Warrants** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **2023 Listed Warrants** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **2024 Special Warrant Financing** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **2024 Special Warrant Unit** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **2024 Special Warrants** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **2024 SW Unit Warrant** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **40% Threshold** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure – Proportionate Voting Shares – Voluntary Conversion*". |
| **AGI** | Artificial General Intelligence |
| **AI** | Artificial intelligence. |
| **AIF** | This Annual Information Form. |
| **API** | Application Programming Interface. |
| **April 2025 Offering** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **April 2025 Units** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **April 2025 Warrants** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **Audit Committee** | The audit committee of the Board. |
| **Audit Committee Charter** | The charter of the Audit Committee. |
| **August 2022 Private Placement** <br>| Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **August 2022 Units** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*" |

---

---

| | |
|:---|:---|
| **August 2022 Warrant** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*" |
| **Award** | Options, RSUs, PSUs and DSUs. |
| **AWS** | Amazon Web Services. |
| **BCBCA** | The *Business Corporations Act* (British Columbia), including the regulations thereunder, as amended from time to time. |
| **Board** | The board of directors of the Company. |
| **Cboe Canada** | Cboe Canada stock exchange. |
| **CAO Contract** | Has the meaning ascribed to such term under the heading "*Statement of Executive Compensation - Employment Agreements and Termination and Change of Control Benefits*". |
| **CCO Contract** | Has the meaning ascribed to such term under the heading "*Statement of Executive Compensation - Employment Agreements and Termination and Change of Control Benefits*". |
| **CEO Contract** | Has the meaning ascribed to such term under the heading "*Statement of Executive Compensation - Employment Agreements and Termination and Change of Control Benefits*". |
| **CFO Contract** | Has the meaning ascribed to such term under the heading "*Statement of Executive Compensation - Employment Agreements and Termination and Change of Control Benefits*". |
| **CIO Contract** | Has the meaning ascribed to such term under the heading "*Statement of Executive Compensation - Employment Agreements and Termination and Change of Control Benefits*". |
| **Code** | Has the meaning ascribed to such term under the heading "*Corporate Governance Disclosure – Ethical Business Conduct*". |
| **Common Shares** | The common shares in the capital of the Company as constituted prior to July 20, 2021. |
| **Compensation Committee** | The compensation committee of the Board. |
| **Company or VERSES** | Verses AI Inc., a company existing under the BCBCA. |
| **Consolidation** | Collectively, the March 2025 Consolidation and the June 2025 Consolidation. |
| **Cyberlab Purchase Agreement** | Has the meaning ascribed to such term under the heading "*Material Contracts*". |
| **Cyberlab Royalty** | Has the meaning ascribed to such term under the heading "*Material Contracts*". |
| **Determination Date** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure – Proportionate Voting Shares – Voluntary Conversion*". |
| **DSU** | Deferred share unit granted pursuant to the Omnibus Plan. |
| **Endeavor** | Endeavor Trust Corporation. |
| **Equity Units** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **Exchange Act** | The United States Securities Exchange Act of 1934, as amended. |
| **FDIC** | Federal Deposit Insurance Corporation |
| **FEP** | Has the meaning ascribed to such term under the heading "*Description of the Business – Approach to Developing Artificial Intelligence*". |

---

---

| | |
|:---|:---|
| **FPI Restriction** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure – Proportionate Voting Shares – Voluntary Conversion*". |
| **G42** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Development of the Business*". |
| **G42 Conversion Unit** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Development of the Business*". |
| **G42 Conversion Warrant** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Development of the Business*". |
| **G42 Financing** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **G42 LOI** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Development of the Business*". |
| **G42 SPV** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **G42 Unit** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **Genius** | The Company's flagship product and a natural computing system based on principles found in physics and neuroscience. |
| **Genius Agents** | as the meaning ascribed to such term under the heading "*Description of the Business – Overview of Genius*". |
| **Genius Core** | as the meaning ascribed to such term under the heading "*Description of the Business – Overview of Genius*". |
| **GIA** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Events After the Incorporation of the Company – Development of the Business*". |
| **HSML** | Hyper Spatial Modeling Language. |
| **HSTP** | Hyperspatial Transaction Protocol. |
| **HSQL** | Hyperspatial Query Language. |
| **IEEE** | Institute of Electrical and Electronics Engineers. |
| **Indirect Subsidiaries** | The indirect subsidiaries of the Company being, collectively, VERSES Operations Canada Inc., VERSES Logistics Inc., VERSES Health, Inc., VERSES Realities, Inc., VERSES, Inc. and VERSES Global B.V. and "**Indirect Subsidiary**" means any one of them. |
| **IoT** | Internet of things. |
| **January 2025 Offering** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **January 2025 Units** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **January 2025 Warrant** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **July 2023 Brokered Offering** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |

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| | |
|:---|:---|
| **July 2023 Offering** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **July 2023 Special Warrants** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **July 2023 Units** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **July 2023 Warrant** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **July 2023 Warrant Share** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **June 2025 Consolidation** | The consolidation of the Subordinate Voting Shares of the Company on the basis of one (1) post-consolidation Subordinate Voting Share for every nine (3) Subordinate Voting Share outstanding immediately prior to the consolidation, effective June 20, 2025. |
| **KOSM** | KOSM™ operating system, the previous flagship product of the Company, which has been merged into Genius as an underlying capability. |
| **KPI** | Key performance indicator. |
| **LIFE Offering** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **LIFE Units** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **Listed Warrants** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **Listing Date** | June 28, 2022 |
| **March 2023 Convertible Debentures** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **March 2023 Private Placement** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **March 2023 Unit** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **March 2023 Warrant** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **March 2024 Warrant** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **March 2025 Consolidation** | The consolidation of the Subordinate Voting Shares of the Company on the basis of one (1) post-consolidation Subordinate Voting Share for every nine (9) Subordinate Voting Share outstanding immediately prior to the Consolidation, effective March 27, 2025. |
| **NI 41-101** | National Instrument 41-101 – *General Prospectus Requirements* |
| **NI 52-110** | National Instrument 52-110 – *Audit Committees*. |
| **NI 58-101** | National Instrument 58-101 – Disclosure of Corporate Governance Practices |
| **Nominating & Corporate Governance Committee** | The nominating & corporate governance committee of the Board. |
| **November 2024 Equity Unit** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |

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| | |
|:---|:---|
| **November 2024 Offering** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **November 2024 Special Warrants** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **November 2024 Units** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **November 2024 Warrant** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **NRI** | NRI Distribution. |
| **NRI SaaS Agreement** | Has the meaning ascribed to such term under the heading "*Material Contracts*". |
| **Offer** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure – Subordinate Voting Shares – Conversion of the Shares Upon An Offer"*. |
| **Omnibus Plan** | Omnibus equity incentive plan of the Company. |
| **Option** | An option to purchase a Subordinate Voting Share granted pursuant to the Omnibus Plan. |
| **OSC Rule 56-501** | Ontario Securities Commission Rule 56-501 – *Restricted Shares* |
| **PCT** | Patent Cooperation Treaty |
| **POC** | Proof of concept. |
| **Proportionate Share Conversion Right** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure – Proportionate Voting Shares – Voluntary Conversion*". |
| **Proportionate Voting Shares** | Class B Proportionate Voting Shares of the Company. |
| **Proportionate Voting Shareholders** | Holders of the Proportionate Voting Shares and "**Proportionate Voting Shareholder**" means any one of them. |
| **PSU** | A performance share unit granted pursuant to the Omnibus Plan. |
| **Restricted Share Rules** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure – Restricted Securities"*. |
| **RSU** | A restricted share unit granted pursuant to the Omnibus Plan. |
| **SAFE** | Simple agreement for future equity, which is a security that gives the holder a future equity conversion right based on a floating conversion price determined by future events. SAFEs are convertible based on a deemed price per security calculated using the consideration paid or valuation determined on the occurrence of an equity financing or liquidity event (i.e., going public transaction, acquisition). |
| **SDK** | Software development toolkit. |
| **SEC** | United States Securities and Exchange Commission. |
| **Securities Legislation** | The securities legislation of each of the provinces and territories of Canada and the Exchange Act and U.S. Securities Act each as now enacted or as amended and the applicable rules, regulations, rulings, orders, instruments and forms made or promulgated under such statutes, as well as the rules, regulations, by-laws and policies of Cboe Canada. |
| **SEDAR+** | System for Electronic Document Analysis and Retrieval+. |

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| | |
|:---|:---|
| **September 2024 Offering** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **September 2024 Unit** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **September 2024 Warrant** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **Shareholders** | Subordinate Voting Shareholders and the Proportionate Voting Shareholders. |
| **ShareIntel** | ShareIntel Shareholder Services, LLC. |
| **SIs** | Systems Integrators. |
| **SKU** | Stock keeping unit. |
| **Spatial Web** | An open, hyper-connected, context-aware, governance-based network of humans, machines and AI. |
| **Subordinate Share Conversion Right** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure – Subordinate Voting Shares*". |
| **Subordinate Voting Shares** | Class A Subordinate Voting Shares of the Company. |
| **Subordinate Voting Shareholders** | Holders of the Subordinate Voting Shares and "**Subordinate Voting Shareholder**" means any one of them. |
| **Subsidiary Plan** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure - Options to Purchase Securities – Omnibus Plan*". |
| **Subsidiary Option** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure - Options to Purchase Securities – Omnibus Plan*". |
| **Subsidiary Share** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure - Options to Purchase Securities – Omnibus Plan*". |
| **Supplemental Listing** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Development of the Business*". |
| **Listed Warrants** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **United States or U.S.** | The United States of America, its territories and possessions, any state of the United States and the District of Columbia. |
| **U.S. Residents** | Has the meaning ascribed to such term under the heading "*Description of Capital Structure – Proportionate Voting Shares – Voluntary Conversion*". |
| **VERSES Business** | The Company's business of developing Genius and the facilitation of next generation world models and intelligent agents that enable optimal and personalized predictions, recommendations and automations on Genius. |
| **VLog** | VERSES Logistics Inc., a wholly owned subsidiary of the Company, existing under the laws of the State of Wyoming. |
| **VTU** | VERSES Technologies USA, Inc. (formerly VERSES Labs Inc.), a wholly owned subsidiary of the Company, existing under the laws of the State of Wyoming. |
| **Warrant Amendments** | Has the meaning ascribed to such term under the heading "*General Development of the Business – Three Year History – Financings and Share Issuances*". |
| **WayFinder** | A VERSES logistics service designed to address real world spatial challenges. |

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**CORPORATE STRUCTURE**

**<u>Name, Address and Incorporation</u>**

The Company was incorporated on November 19, 2020, pursuant to the BCBCA under the name "Chromos Capital Corp." On June 17, 2021, the Company changed its name to "Verses Technologies Inc." in connection with the three-cornered amalgamation of the Company, Verses Technologies Incorporated and 1288098 B.C. Ltd. On March 31, 2023, the Company changed its name to "Verses AI Inc."

The head office of the Company is located at 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, V6E 2J3, and the Company's registered and records office is located at 1111 West Hastings Street, 15<sup>th</sup> Floor, Vancouver, BC V6E 2J3. The Company also has offices located at 2121 Avenue of the Stars, Suite 800, Los Angeles, CA 90067, and High Tech Campus 6a 5656 AE Eindhoven, Netherlands.

Effective July 20, 2021, the Company amended its articles to create the Proportionate Voting Shares and to attach special rights and restrictions to the Subordinate Voting Shares and Proportionate Voting Shares. For more information of the special rights and restrictions of the Subordinate Voting Shares and Proportionate Voting Shares, see "*Description of Capital Structure*".

The Company is a reporting issuer in the Provinces of British Columbia, Alberta and Ontario and the Company's Subordinate Voting Shares and Listed Warrants are listed for trading on Cboe Canada.

**<u>Intercorporate Relationships</u>**

As of the date hereof, the Company has two directly wholly owned subsidiary, being VTU and VSI, and six indirectly wholly-owned subsidiaries, being VERSES Operations Canada Inc., VERSES Logistics Inc., VERSES Health, Inc., VERSES Realities, Inc., VERSES, Inc. and VERSES Global B.V. (each, an "**Indirect Subsidiary**"). Each of VTU and certain of the Indirect Subsidiaries operate different segments of the VERSES Business and are focused on developing different parts and aspects of the Company's flagship product, Genius<sup>TM</sup>.

The following table illustrates the Company's legal structure and relationship to and ownership interest in VTU and the Indirect Subsidiaries as at the date hereof.

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| | | |
|:---|:---|:---|
| **Name** | **Jurisdiction of Formation** | **Ownership<br> Interests** |
| VERSES Operations Canada Inc. | British Columbia | 100%<sup>(2)</sup> |
| VERSES Technologies USA, Inc. ("VTU") | Wyoming | 100%<sup>(1)</sup> |
| VERSES Logistics Inc. ("VLOG") | Wyoming | 100%<sup>(2)</sup> |
| VERSES Health, Inc. ("VHE") | Wyoming | 100%<sup>(2)</sup> |
| VERSES Realities, Inc. ("VRI") | Wyoming | 100%<sup>(2)</sup> |
| VERSES, Inc. ("VINC") | Wyoming | 100%<sup>(2)</sup> |
| VERSES Solutions, Inc. ("VSI") | Wyoming | 100%<sup>(1)</sup> |
| VERSES Global B.V. ("VBV") | Netherlands | 100%<sup>(2)</sup> |

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**Notes**:

(1) Directly
 held by the Company.

(2) Directly
 held by VTU.

The chart below illustrates VERSES' corporate structure:

![](ex99-3_002.jpg)

**GENERAL DEVELOPMENT OF THE BUSINESS**

**<u>Three Year History</u>**

The following is a summary of certain material developments of the Company's business over the last three completed financial years up to the date of this AIF and includes a discussion of certain material developments involving the Company's predecessor entities. In this section, references to "the Company" or "VERSES" when used to describe the development of the VERSES Business, refer to the Company, VTU, and the Indirect Subsidiaries, as applicable.

<u>Development of the Business</u>

*Financial Year Ended March 31, 2023*

 

On April 14, 2022, Jonathan De Vos was appointed as director of the Company.

On June 15, 2022, Jay Samit and G. Scott Paterson were elected as directors of the Company.

On June 22, 2022 the final long-form non-offering prospectus of the Company was filed with and receipted by the securities regulatory authorities in British Columbia and Ontario pursuant to the provisions of applicable Securities Legislation and a deemed receipt was issued in Alberta pursuant to Multilateral Instrument 11-102 – *Passport System.*

 

On June 28, 2022, the Subordinate Voting Shares were listed and started trading on Cboe Canada under the symbol "VERS".

On July 27, 2022, VLog entered into an operating agreement with Tompkins Ventures, an executive supply chain match-making firm, to introduce VERSES and its technology to companies within the supply chain industry.

On August 16, 2022, the Company became a member of the Digital Twin Consortium, an international organization based in North America dedicated to creating collaborative partnerships between digital twin users and experts working in industry, government, academia and the tech sector. As a member of the consortium, the Company may collaborate with members like Google, HSBC, Microsoft, Kaiser Permanente and Esri across a range of industries including academia and research; aerospace and defense; agriculture; engineering; construction; healthcare and life sciences; manufacturing; mobility and transportation; natural resources, and such other industries currently supported by the Digital Twin Consortium that are investing in and promoting the benefits of digital twins and related technologies.

On September 13, 2022, the Subordinate Voting Shares became eligible to facilitate electronic clearing and settlement in the United States via the Depository Trust Company.

On September 21, 2022, the Culver City sensor fusion lab and research facility opened. The lab showcases VERSES' technology portfolio, including Genius, and equips VERSES' data science and product development teams with an immersive space to develop and launch solutions based on sensor fusion research techniques.

On October 4, 2022, the Subordinate Voting Shares commenced trading on the OTCQX® Best Market under the ticker symbol VRSSF.

On November 28, 2022, VERSES announced its engagement by Blue Yonder, a company specializing in digital supply chain and omni-channel commerce fulfillment providing solutions to over 3500 of the world's largest retailers and warehouse distribution providers across 78 countries.

On December 1, 2022, Dr. Karl Friston, Professor of Neuroscience at University College London, Scientific Director of the Welcome Trust Centre for Neuroimaging, and one of the world's most cited scientists in the study of the brain and mind (i.e., Computational Neuroscience and Artificial Intelligence), joined the Company as Chief Scientist.

On December 5, 2022, VERSES published a "white" paper in collaboration with Universities across Canada, UK, Germany, Australia, The Netherlands, and the USA. The paper, entitled "Designing Ecosystems of Intelligence from First Principles," describes their novel approach to the design and development of the next generation of AI known as Artificial General Intelligence (AGI) intelligent agents with human-level intelligence that can reason, plan, learn and act in the world and presents a vision and roadmap for AI based on a field of research called Active Inference.<sup>1</sup>

On February 15, 2023, VERSES announced its engagement by SVT Robotics™, whose SOFTBOT® Platform and partner ecosystem streamline the integration and deployment of robotics, IoT, and other industrial applications.

On March 29, 2023, VERSES announced its engagement by SimWell, a leader in digital simulations aiming to make the world more efficient through the use of advanced analytics technologies. SimWell was the first to join the VERSES developer network to build intelligent agents in the KOSMOS™ ecosystem.

On March 31, 2023, the Company changed its name from "Verses Technologies Inc." to "Verses AI Inc." to better reflect the focus of the Company's business.

*Financial Year Ended March 31, 2024*

 

On May 1, 2023, the Company filed a patent application for a new invention, being a method and system that for automatically developing rules for agents driving device behaviour.

<sup>1</sup> https://arxiv.org/pdf/2212.01354.pdf

On June 8, 2023, the Company published a research paper titled "Designing Explainable Artificial Intelligence with Active Inference: A framework for interpretability based on the study of introspection and decision-making", which articulates methods for developing human-understandable artificial intelligence (XAI) systems.<sup>2</sup>

On June 23, 2023, the Subordinate Voting Shares were made available for trading on Cboe's Netherlands and United Kingdom exchanges enabling secondary trading and local currency access to European and United Kingdom investors.

On June 26, 2023, the Company announced the release of the first WayFinder service-based AI Routing Agent. The WayFinder Routing Agent provides AI routing capability for any networked system such as autonomous robots, forklifts and other machines, and human operators in industrial environments. The WayFinder Routing Agent is based on the routing service provided in the Company's WayFinder application.

On July 12, 2023, the Company announced that it had won a research and innovation grant in the amount of €418,000 from the EU Commission and their Horizon Europe project entitled dAIEDGE. The Company has not received the research and innovation grant as certain terms of the agreement in respect of the dAIEDGE Project are being negotiated and have yet to be finalized with consortium partners.

On July 19, 2023, the Company welcomed Dr. Hari Thiruvengada as VP of Product.

On July 24, 2023, the Company, in collaboration with Dentons US and the Spatial Web Foundation, announced the release of the AI industry report entitled "The Future of Global AI Governance". The report offers a unique perspective on global AI governance that combines the legal expertise of Dentons, the AI acumen of the Company and guidance from the Spatial Web Foundation.

On August 2, 2023, the Company announced the filing of a provisional patent application representing a new method for Predictive Querying on vector graph document databases.

On September 7, 2023 the Company announced that it had been contracted to amplify the digital transformation efforts of a leading US pharmacy retailer. The multi-year collaboration aims to enhance the pharmacy retailer's operational intelligence and the efficiency of its existing and newly designed distributed centers.

In September 2023, the Company announced that it had merged KOSM, the Company's operating system and GIA, the Company's intelligent agent, into a unified platform called Genius. Genius is the Company's flagship product and is an intelligent software system aimed at combining the power of natural algorithms, knowledge modeling and data transformation to create a more flexible and intelligent system. On November 3, 2023, the Company held a webinar for private beta participants to demo select Genius capabilities.

Each of Nalantis, Blue Yonder, Cortical Labs, SimWell, NASA Jet Propulsion Laboratory, and Volvo Car Group participated in the private Genius Beta program. Participation in the Genius Beta program was voluntary and the only compensation that was exchanged between the Company and each participant was the opportunity for such participant to learn about and use Genius and its associated products and services. Participation in the private Genius Beta program was subject to customary confidentiality and non-disclosure terms. Participation in the Genius Beta program ran for an initial period of 90 days, which term may have been extended by mutual agreement between the parties.

<sup>2</sup> https://arxiv.org/pdf/2306.04025.pdf

On November 28, 2023, the Company announced that it had filed a provisional patent application representing an innovative method for "Knowledge Expansion" in next-generation artificial intelligence systems.

On December 8, 2023 the Company welcomed Dr. Peter Provost as VP of Product, Developer Platforms.

On January 18, 2024, the Company announced its engagement by Analog, a company led by Alex Kipman and backed by G42 Capital SPV RSC Ltd., to transform Abu Dhabi's urban landscape through smart city projects.

On February 15, 2024, the Company entered into a non-binding letter of intent (the "**G42 LOI**") with G42 Capital SPV RSC Ltd ("**G42**"), which set out terms of: (i) a USD$10,000,000 private placement of convertible debentures and warrants in the capital of the Company; (ii) the introduction by G42 to the Company of certain pilot transactions in Abu Dhabi; and (iii) G42's option to invest up to an additional USD$90,000,000 in a subsequent private placement of securities of the Company. Certain transactions contemplated by the G42 LOI were formalized on closing of the G42 Financing. See "*Financings and Share Issuances*" below.

On February 22, 2024, the Company provided a research roadmap that outlined key milestones and benchmarks against which to measure the progress and significance of the Company's research and development efforts, against conventional deep learning, for the benefit of industry, academia, and the public.

*Financial Year Ended March 31, 2025*

 

On May 1, 2024, the Company announced that Dr. Thiruvengada had been promoted to Chief Product Officer as the Company shifted its focus to commercializing Genius.

On July 2, 2024, the Company appointed James Hendrickson as Chief Operating Officer. Mr. Hendrickson formerly served as President and General Manager, VERSES Logistics, Inc.

On August 14, 2024, the Company announced that in connection with NRI USA, LLC ("**NRI**") moving to the Genius beta program, the Company and NRI had terminated their previous Software-as-a-Service agreement which pertained to the implementation of WayFinder and the Company's previous KOSM product into NRI's warehousing operations

On September 3, 2024, the Company incorporated a new directly wholly-owned subsidiary, VSI, incorporated under the laws of the state of Wyoming.

On September 19, 2024 VSI entered into a framework agreement with Analog Studios FZ LLC ("**Analog**"), pursuant to which VSI will provide Analog with the right and license to use the GENIUS beta platform and GENIUS platform, together with other various professional services to be detailed in separate statements of work (each, a "**SOW**") executed from time to time, each of which shall include or incorporate by reference a SOW-specific GENIUS beta platform license and/or a GENIUS platform license. The fees payable to VSI in consideration for the performance of the services and the grant of the applicable license pursuant to a SOW, will be set forth in each such SOW. The first SOW was executed for an aggregate of USD$500,000.

On September 9, 2024, Jay Samit relinquished his position as Chairman of the board of directors in order to take a position with the Company, being the Head of Global Partnerships, focusing on deploying Genius to systems integrators, channel partners, business process outsource firms and strategic investors. Additionally, Michael Blum was appointed into the vacated Chairman position.

On December 17, 2024, the Company announced positive performance results of Genius in the code-breaking challenge, "Mastermind".

On December 23, 2024, the Company announced that it had extended its contract with Karl Friston to continue his role as Chief Scientist at the Company. The contract extension included additional performance-based incentives which recognize his contributions to Genius.

On February 25, 2025, the Company announced that it expects to launch the commercial version of Genius in April 2025.

On March 26, 2025, the Company announced the March 2025 Consolidation, pursuant to which the Subordinate Voting Shares of the Company would be consolidated on the basis of one (1) post-consolidation Subordinate Voting Share for every nine (9) Subordinate Voting Share outstanding immediately prior to the March 2025 Consolidation.

On March 26, 2025, the Company also announced the appointment of James Christodoulou as Chief Financial Officer of the Company in connection with Kevin Wilson's transition from Chief Financial Officer to Chief Accounting Officer.

On March 27, 2025, the Company effected the March 2025 Consolidation and the post-consolidation Subordinate Voting Shares began trading on the Cboe Canada.

On March 28, 2025, the Company announced the Company's Class A Subordinate shares began trading on the OTCQB market under the symbol "VRSSD".

*Subsequent to Financial Year Ended March 31, 2025*

 

On April 17, 2025, the Company announced that James Hendrickson had been promoted to the role of President and Chief Operating Officer of the Company. The Company also announced Dan Mapes left his role as President of the Company and had been appointed President Emeritus and Director of Global Development of the Company.

On April 30, 2025, the Company announced that it had launched its flagship product Genius, enabling agentic intelligence for enterprise. The Company will offer Genius as a paid service with consumption-based and performance-based pricing as well as enterprise licenses.

On June 2, 2025, the Company announced positive performance results of AXIOM in the "Gameworld 10K" benchmark.

On June 5, 2025, the Company announced that a large global investment firm had converted its Genius beta participation into a renewable enterprise licence offering unlimited inferences and future outcome-based pricing.

On June 10, 2025, the Company announced the appointment of Dr. David Bray, Ph.D., as chair of its newly formed Strategic Advisory Council.

On June 13, 2025, the Company announced that Analog had entered into a Genius enterprise license.

On June 16, 2025, the Company announced the selection of Soothsayer Analytics as the first certified Genius reseller and implementation channel partner for global enterprises.

On June 20, 2025, the Company announced the June 2025 Consolidation, pursuant to which the Subordinate Voting Shares of the Company would be consolidated on the basis of one (1) post-consolidation Subordinate Voting Share for every nine (3) Subordinate Voting Share outstanding immediately prior to the June 2025 Consolidation.

On June 23, 2025, the Company announced that Kalosys had entered into a Genius enterprise license.

On June 23, 2025, the Company effected the June 2025 Consolidation and the post-consolidation Subordinate Voting Shares began trading on the Cboe Canada.

<u>Financings and Share Issuances</u>

 

On August 11, August 17, and August 26, 2022, the Company completed three tranches of its non-brokered private placement (the "**August 2022 Private Placement**") of units (the "**August 2022 Units**") pursuant to which the Company issued an aggregate of 553,964 August 2022 Units at a price of Cdn$27.00 per August 2022 Unit for aggregate gross proceeds raised under the private placement of Cdn$14,957,030. Each August 2022 Unit was comprised of one Subordinate Voting Share and one-half of a Subordinate Voting Share purchase warrant (each whole warrant, a "**August 2022 Warrant**"). Each August 2022 Warrant is exercisable into one Subordinate Voting Share at a price of Cdn$32.40 per share until August 15, 2025. In connection with the August 2022 Private Placement, the Company paid cash finder's fees of $859,655, issued 10,790 August 2022 Units to a certain arm's length finder at a deemed price of Cdn$27.00 per August 2022 Unit, and issued 42,629 finder warrants. Each finder warrant is exercisable into one Unit at a price of Cdn$27.00 until August 15, 2025.

On December 16, 2022, the Company received acceptance from Cboe Canada for certain warrant amendments (the "**Warrant Amendments**") in connection with up to 670,397 Subordinate Voting Share purchase warrants of the Company (the "**2022 Listed Warrants**"). The Company received the required written consents from over 50% of the applicable warrant holders and disinterested shareholders to: extend the expiry date of 2022 Listed Warrants to August 15, 2025; decrease the exercise price of 2022 Listed Warrants from Cdn$32.40 to Cdn$27.00; subject the 2022 Listed Warrants to an accelerated expiry provision if at any time prior to the expiry date, the volume-weighted average trading price of the Company's Subordinate Voting Shares exceeds Cdn$54.00 for a period of 10 consecutive trading days; and govern 2022 Listed Warrants by a warrant indenture executed by the Company and Endeavor. All consenting warrant holders automatically received a replacement warrant containing the Warrant Amendments and governed by the terms of the warrant indenture between the Company and Endeavor. The 2022 Listed Warrants, of warrant holders who did not consent to the Warrant Amendments, are: (i) not subject to the Warrant Amendments; (ii) not included in the Supplemental Listing (as defined below); and (iii) continue to be governed by their current terms and conditions until the applicable expiry date.

On January 23, 2023, the Company received acceptance from Cboe Canada to list (the "**2022 Supplemental Listing**") up to 670,397 2022 Listed Warrants.

On March 1, March 22 and March 31, 2023, the Company completed three tranches of its non-brokered private placement (the "**March 2023 Private Placement**") of unsecured convertible debentures units of the Company ("**March 2023 Units**") comprised of convertible debentures ("**March 2023 Convertible Debentures**") and detachable warrants ("**March 2023 Warrants**") through the sale of March 2023 Convertible Debentures in the aggregate principal amount of Cdn$7,504,845 and 96,957 March 2023 Warrants to purchase Subordinate Voting Shares. In connection with the March 2023 Private Placement, the Company paid cash finders' fees of Cdn$446,320 and issued 18,356 finder warrants. Each finder warrant entitles the holder thereof to acquire one Subordinate Voting Share at an exercise price of Cdn$27.00 until August 15, 2025 or on such other terms as required by Cboe Canada.

On May 19, 2023, the Company announced its plan to amend certain terms of an aggregate of 48,770 finder warrants. The Company amended the finder warrants by changing the expiration date of the finder warrants from October 21, 2023 and November 2, 2023, as applicable, to August 15, 2025. The amendments were completed on May 24, 2023.

On July 6, 2023, the Company completed an underwritten overnight marketed offering of units (the "**LIFE Units**") of the Company, whereby, a total of 180,668 LIFE Units were sold at a price per LIFE Unit of Cdn$55.35 for gross proceeds of Cdn$9,897,498.40 (the "**LIFE Offering**") concurrently with an agency basis private placement of special warrants (the "**July 2023 Special Warrants**") of the Company, each exercisable for one unit of the Company (each, an "**Equity Unit**", and together with the LIFE Units, the "**July 2023 Units**") at no additional cost, for gross proceeds of Cdn$8,037,617.45 (the "**Brokered Private Placement**", and together with the LIFE Offering, the "**July 2023 Brokered Offering**"). Each July 2023 Unit consisted of one Subordinate Voting Share and one-half of one Subordinate Voting Share purchase warrant (a "**July 2023 Warrant**"). Each July 2023 Warrant entitles the holder thereof to acquire one Subordinate Voting Share (each, a "**July 2023 Warrant Share**") at an exercise price of Cdn$68.85 per July 2023 Warrant Share, subject to adjustment and acceleration in certain circumstances, until July 6, 2026. Concurrently with the July 2023 Brokered Offering, the Company closed a non-brokered private placement (the "**July 2023 Non-Brokered Private Placement**", and together with the July 2023 Brokered Offering, the "**July 2023 Offering**"). Pursuant to the July 2023 Offering, a total of 180,668 LIFE Units were sold at a price per LIFE Unit of Cdn$55.35 (the "**July 2023 Offering Price**") and 244,920 July 2023 Special Warrants were sold at the July 2023 Offering Price for aggregate gross proceeds of Cdn$23,556,338.85.

The completion of the July 2023 Offering triggered the automatic conversion of the March 2023 Convertible Debentures having an aggregate principal balance of $7,504,845 into an aggregate of 161,950 July 2023 Units. As a result of the foregoing, between July 13, 2023 and August 2, 2023, a total of 161,950 Subordinate Voting Shares and a total of 80,974 July 2023 Warrants were issued upon the conversion of the March 2023 Convertible Debentures (of which 108,357 of such Subordinate Voting Shares and 54,178 of such July 2023 Warrants were issued on July 13, 2023, 40,585 of such Subordinate Voting Shares and 20,292 of such July 2023 Warrants were issued on July 25, 2023 and, 13,008 of such Subordinate Voting Shares and 6,504 of such July 2023 Warrants were issued on August 2, 2023).

On August 30, 2023, the Company listed 294,694 July 2023 Warrants (the "**2023 Listed Warrants**") together with the 2022 Listed Warrants, the "**Listed Warrants**") on Cboe Canada.

On October 6, 2023 the Company announced it had filed a final short form prospectus and obtained a receipt in British Columbia, Alberta, Saskatchewan and Ontario to qualify the distribution of: (i) an aggregate of 244,920 Equity Units of the Company issuable upon the deemed exercise of 244,920 July 2023 Special Warrants previously issued under the July 2023 Offering and (ii) 15,014 broker warrants issuable upon the deemed exercise of 15,014 broker special warrants of the Company previously issued under the July 2023 Offering.

On March 18, 2024, the Company announced that VTU had accepted interest free loans in the amount of USD$2,000,000 for USD$1,000,000 each. Each loan matured on the earlier of: (i) March 10, 2025; and (ii) the date the Company completes an equity financing. On the maturity date, the investors may elect to repay the loan by way of cash, or through the issuance of Subordinate Voting Shares at a per share price equal to the price of the securities issued in the equity financing, subject to the approval of Cboe Canada. In April 2024, the Company extinguished and settled the loans by way of cash repayment.

On April 17, April 29 and May 16, 2024, the Company completed three tranches of a private placement offering (the "**2024 Special Warrant Financing**") of 370,370 special warrants (the "**2024 Special Warrants**") at an issue price of Cdn$27.00 per 2024 Special Warrant for aggregate gross proceeds of Cdn$10,000,000. Each 2024 Special Warrant shall convert into one unit (a "**2024 Special Warrant Unit**") upon the earlier of: (i) the Company obtaining a receipt from the applicable securities commission(s) in Canada for the final prospectus qualifying the distribution of the Units to be issued upon exercise or deemed exercise of the Special Warrants; and (ii) the date that is four months and a day after the date of issuance of the Special Warrants. Each 2024 Special Warrant Unit is comprised of one Subordinate Voting Share, and one-half of one Subordinate Voting Share purchase warrant (a "**2024 SW Unit Warrant**"). Each 2024 SW Unit Warrant shall be exercisable into one Subordinate Voting Share at a price of Cdn$40.50 per share for a period of 24 months from the date of issue of the 2024 SW Unit Warrants. In connection with the 2024 Special Warrant Financing, the Company paid to eligible finders: (i) Cdn$317,286 in cash finder fees; and (ii) 11,720 finder warrants, each finder warrant exercisable into a unit of the Company for a period of two years from the date of issuance thereof.

On June 20, 2024, G42, through Expansion Project Technologies Holding 9 SPV RSC Ltd (EPTH) ("**G42 SPV**"), invested USD$10,000,000 in the Company via a private placement (the "**G42 Financing**") of unsecured convertible units of the Company (a "**G42 Unit**"). Each G42 Unit consists of: (i) Cdn$1,000 in principal amount of unsecured convertible debentures ("**G42 Convertible Debentures**"); and (ii) 18 detachable Subordinate Voting Share purchase warrants ("**G42 Warrants**"). The G42 Convertible Debentures bear interest at a rate of 10% per annum and mature on June 20, 2026. The principal amount of the G42 Convertible Debentures, together with all accrued interest, shall be convertible, for no additional consideration, on the earliest to occur of: (A) the date on which the Company completes an equity financing, in one or more tranches, for aggregate gross proceeds of at least Cdn$15,000,000 at a price per Subordinate Voting Share of not less than Cdn$27.00; (B) the date on which G42 elects to convert the G42 Convertible Debentures, and (C) the maturity date. In the event of a conversion of the Convertible Debentures: (x) on the maturity date or at the election of G42, the convertible amount under the G42 Convertible Debentures shall be converted into such number of Subordinate Voting Shares as is equal to the convertible amount divided by Cdn$32.40 per share; and (ii) in connection with an equity financing, the convertible amount shall be converted into such number of Subordinate Voting Shares as is equal to the convertible amount divided by the issue price per share sold pursuant to the equity financing, multiplied by 80%, provided that, in no event shall such conversion price be greater than Cdn$32.40. Each G42 Warrant will be exercisable into one Subordinate Voting Share at a price of Cdn$40.50 per share until June 20, 2027, subject to acceleration.

In connection with the G42 Financing, G42 SPV was granted 37,037 RSUs, each vested RSU to be settled through the issuance of one Subordinate Voting Share. The RSUs will vest in installments of 3,333 RSUs for every Cdn$100,000 of revenue derived by the Company from such commercial agreements. The Company also granted G42 SPV the right to be the lead investor and invest up to an additional USD$90,000,000 in a subsequent private placement of securities of the Company to raise aggregate gross proceeds of up to USD$350,000,000 at an anticipated post-money valuation of USD$3,500,000,000, subject to a 25% discount to be received by G42 SPV.

On September 20, 2024, the Company announced a non-brokered listed-issuer-financing-exempt private placement of up to 462,963 units at Cdn$21.60 each for gross proceeds of up to Cdn$10,000,000 (the "**September 2024 Offering**"). Each unit (a "**September 2024 Unit**") comprised one Subordinate Voting Share and one-half of one Subordinate Voting Share purchase warrant (each whole warrant, a "**September 2024 Warrant**") exercisable at Cdn$32.40 per share for 36 months. On September 26, 2024 the Company closed the first tranche, issuing 231,480 September 2024 Units for gross proceeds of Cdn$5,000,000. Finder fees totaled Cdn$112,134 in cash and 10,562 compensation warrants, each exercisable into one September 2024 Unit at the offering price for 36 months. An officer purchased 1,852 September 2024 LIFE Units; the Company relied on the related-party exemptions in MI 61-101. Net proceeds are being applied to general working capital and corporate purposes as set out in the offering document.

On November 8, November 15 and December 9, 2024, the Company completed three tranches of a private-placement offering (the "**November 2024 Offering**") of (i) an aggregate 310,122 listed-issuer-financing-exempt units (the "**November 2024 Units**") and (ii) 133,333 special warrants (the "**November 2024 Special Warrants**") at an issue price of Cdn$13.50 per security for aggregate gross proceeds of Cdn$5,986,650. Each November 2024 Unit consisted of one Subordinate Voting Share and one-half of one Subordinate Voting Share purchase warrant (each whole warrant, a "**November 2024 Warrant**"). Each November 2024 Warrant is exercisable into one Subordinate Voting Share at Cdn$18.90 per share for a period of 36 months from the applicable closing date. Each November 2024 Special Warrant is exercisable, for no additional consideration, into one unit (a "**November 2024 Equity Unit**") comprising one Subordinate Voting Share and one-half of one November 2024 Warrant, with the underlying securities subject to a four-month statutory hold period.

In connection with the November 2024 Offering, the Company paid cash finder fees totaling Cdn$275,132 and issued 20,380 finder compensation warrants, each exercisable into one unit identical to a November 2024 Unit at Cdn$13.50 per unit for 36 months. Net proceeds are being used for general working capital, ongoing operations and continued development of Genius.

On January 9, 2025, the Company closed a reasonable "best-efforts" public offering of 471,809 units (the "**January 2025 Units**") at Cdn$42.39 per unit for gross proceeds of approximately Cdn$20 million (the "Ja**nuary 2025 Offering**"). Each January 2025 Unit comprised one Class A Subordinate Voting Share and one-half of one share purchase warrant (each whole warrant, a "**January 2025 Warrant**"). Each January 2025 Warrant is exercisable to acquire one Class A Subordinate Voting Share at Cdn$52.92 until January 9, 2028, subject to adjustment in certain events. A.G.P. Canada Investments ULC acted as lead agent, with A.G.P./Alliance Global Partners as U.S. agent and Clear Street LLC and TriView Capital Ltd. as financial advisors. The Company paid an 8% cash commission and issued compensation warrants equal to 8% of the Units sold (each exercisable for one Unit at Cdn$42.39 until January 9, 2028), reduced to 2% on proceeds from Company-identified subscribers. Net proceeds are intended to strengthen the Company's financial position and fund research and development, working capital and general corporate purposes. The January 2025 Offering was completed pursuant to a prospectus supplement dated January 7, 2025 to the base shelf prospectus receipted on September 26, 2024, and an agency agreement dated January 9, 2025.

On March 4, 2025, the Company announced that G42 SPV converted the entire USD$10,000,000 principal of the G42 Convertible Debentures into units of the Company (each, a "**G42 Conversion Unit**") at Cdn$32.40 per unit. Each G42 Conversion Unit consists of one Class A Subordinate Voting Share and one-half of one share purchase warrant (each whole warrant, a "G42 Conversion Warrant") exercisable at Cdn$52.92 per share until March 4, 2028. The conversion eliminated the outstanding debenture liability and resulted in the issuance of approximately 308,642 Class A Subordinate Voting Shares and 154,321 G42 Conversion Warrants.

On April 24, 2025, the Company announced a public offering of 916,666 units (the "**April 2025 Units**") at USD$8.64 (Cdn$12.00) per unit for aggregate gross proceeds of approximately USD$7.9 million (Cdn$11.0 million) (the "**April 2025 Offering**"). Each April 2025 Unit comprised one Subordinate Voting Share and one-half of one Subordinate Voting Share purchase warrant (each whole warrant, an "**April 2025 Warrant**"). Each April 2025 Warrant is exercisable into one Subordinate Voting Share at Cdn$15.00 per share until April 28, 2028. The April 2025 Offering was conducted pursuant to the Company's Canadian base shelf prospectus dated September 26, 2024, a prospectus supplement dated April 25, 2025, and a U.S. registration statement on Form F-10.

On April 28, 2025, the Company completed the April 2025 Offering. In connection with the April 2025 Offering, the agents received a cash commission equal to up to 7% of gross proceeds and 3.5% compensation warrants, each exercisable into one Subordinate Voting Share at Cdn$12.00 per share until April 28, 2028 (reduced to 2% on proceeds attributable to Company-identified subscribers).

**<u>Expected Changes</u>**

The Company intends to move forward in carrying out its strategies, meeting its business objectives and developing its business as described elsewhere in this AIF – see information under the heading "*Description of the Business*" for a description of the Company's business. However, the Company's strategies and business objectives may be impacted by changes in the global economy, changes in legislation, and unanticipated costs.

**DESCRIPTION OF THE BUSINESS**

**<u>General Overview</u>**

VERSES is a cognitive computing company specializing in next generation intelligence software systems. The Company is primarily focused on developing an intelligence-as-a-service smart software platform, Genius (which has absorbed the Company's previous KOSM™ and KOSM Exchange products), through its subsidiary VTU.

The Company's business is based on the vision of the "Spatial Web" – an open, hyper-connected, context-aware, governance-based network of humans, machines and intelligent agents. The Company's ambition is to build tools that enable the Spatial Web and to become a leader in the transition from the information age to the intelligence age.

The Company launched a private beta program of Genius (including Genius Agents and Genius Core) in early 2024 with a few select participants with whom the Company has existing business relationships and has launched a public beta program for a broader number of developers for the second half of 2024. This public beta program is included enhanced functionalities and was intended to help the Company increase its potential customer base, while refining its product offerings in anticipation of the 1.0 launch of Genius.

On April 30, 2025, the Company announced that it had launched its flagship product Genius, enabling agentic intelligence for enterprise. The initial target audience for Genius is machine learning and data science professionals trying to solve enterprise problems that require prediction when there is uncertainty or hidden factors. Genius is designed to provide the tools necessary to build domain-specific models that are intended to enhance decision-making (inference as a service) for third-party agents through the Company's software development kits/application programming interfaces and model editor. The Company will offer Genius as a paid service with consumption-based and performance-based pricing as well as enterprise licenses.

**<u>Background</u>**

We believe civilization is transitioning from the information age to the intelligence age. We are working on achieving super-human level intelligence in computing, which we believe will exhibit and exceed the flexible and general intelligence found in humans. However, despite the large potential addressable market, the AI industry faces several challenges, such as:

● *Technological Limitations:* Current AI approaches are limited primarily to sophisticated pattern recognition but not the ability to understand the world, or to reason, plan, and learn. AI models based on the mainstream approach to Deep Learning (DL) and Reinforcement Learning (RL) are constrained by the quantity and quality of data. Moreover, once trained, a model is not updatable.

● *Narrowly Applicable and Lack of Interoperability:* The textual and graphical outputs of Generative AI models such as ChatGPT (OpenAI), BARD (Google), Midjourney, Stable Diffusion and others are single purpose tools, and we believe they are incapable of adapting to and overcoming changing conditions and uncertainty, learning new concepts and performing a broad array of tasks and activities. To achieve human-level intelligence and beyond, we believe that software agents must not only understand and be curious about what they are doing and why they are doing it, but they must also be able to adapt, share what they learn, and explain how they learned it.

● *Scale:* Generative AI is expensive to develop, requiring massive amounts of data, labor, computation, and energy.

● *Network Design:* While Artificial "General" or "Super" Intelligence is generally portrayed as a single entity, an all-knowing monolithic artificial brain, we believe that the apex of the intelligence age will more likely be a distributed network or ecosystem of intelligences, both synthetic and natural.

● *Lack of Vision:* Digital Transformation, a concept typically associated with terms such as Web 3.0, Industry 4.0, the Metaverse, the IoT, Smart Cities and Digital Twins, each with a slightly different emphasis, in our view, lacks a specific *prescription* for how to attain the overarching vision.

As the industry continues to rapidly grow, such growth and harmonization of various data processing and producing technologies will yield better insights, predictions, recommendations and decision-making, enabling AI developers to overcome the above-listed limitations. This will in turn shift processes and decision making from humans to machines and give rise to more autonomous systems. The increased transparency and accountability of a unified knowledge network will offer improvements in the cost of privacy and security when built around a network of *everything* that encompasses data governance, credentialing mechanisms and trust We believe this will result in a hyper-integrated, hyper-personalized, hyper-automated and ethically-aligned network of humans, machines and intelligent agents.

The growth in investment and adoption of AI reflects the increasing demand for better, more economical and automatic solutions – greater output with less input. AI capabilities like Computer Vision, Language Models and Autonomous Vehicles that use Neural Nets are expected to process massive amounts of data to detect patterns and anomalies. This will allow humans to make better decisions and machines (vehicles, robots, drones) to navigate and perform tasks autonomously. However, there are significant problems with conventional AI as the models are inferred, generated through brute force computation, relying heavily on manual data labeling, opaque internal functions, and biased data inputs. They are narrow in purpose and are incompatible with other models. VERSES' objective is to provide a user-friendly suite of tools to map both stored data and live data streams into a common interoperable data model. This pre-labeled, contextualized data structure can generate models that require less computer and human supervision, and that are transparent and interoperable with other models. This should translate into greater accuracy and flexibility, faster development, and lower costs in the deployment of autonomous applications.

**<u>Approach to Developing Artificial Intelligence</u>**

The Free Energy Principle ("**FEP**"), which informs the approach to machine learning in the AI systems that the Company is developing, is a general principle of information physics that allows the Company to model the probabilistic beliefs that guide or control the actions of physical systems, like the human brain. The main advantage provided by FEP over other methods of implementing AI is that it involves using principles in physics to improve machine learning systems. We believe FEP improves machine learning systems in the following two ways:

● *Product advantages:* Machine learning systems are composed of a model architecture, an algorithm, and data. The algorithm is applied to the model architecture to perform computation over the data. FEP, which provides the mathematical basis for the algorithm used in VERSES' machine learning systems, allows computation over data that is fully explainable (i.e. human interpretable), contrary to standard approaches such as deep neural networks that are black box models; and

● *Technical advantages:* We believe FEP provides a physics-informed method of improving the machine learning algorithms that enable AI, as FEP can be designed to solve problems related to real physical systems (e.g., designing new materials for an aircraft, or modeling the dynamics of a fluid) as opposed to problems that may be only digital problems (e.g., generating a realistic image based on a user prompt). As a consequence, algorithms based on FEP are particularly well suited to model physical systems like the human brain and its cognitive functions, such as perception, attention, learning, emotion, recognition, and action.

HSML: Hyperspace Modeling Language, which is being implemented by VERSES, is a human and machine-readable modeling language and semantic ontology schema for describing reality by expressing objects and concepts as entities with interrelationships and interdependencies. HSML is an implementation specification with testable requirements that enable independent implementations to interoperate.

**<u>Overview of Genius</u>**

Generative AI models like GPT and DALL-E-2 excel at producing written and visual content by predicting the next statistically most likely word or pixel based on "correlations" and patterns found in enormous training data sets.<sup>3 4</sup> While some outputs might suggest some spark of intelligence, mathematically, such generative AI models simply mimic the input data on which they were trained, including the biases therein, without genuine understanding or reasoning.<sup>5</sup> Further, there are ethical concerns around, among other things, the predisposition of such technology for potentially generating misinformation, bias inherent in the training data and the likelihood of intellectual property infringement used in training data without consent or remuneration.<sup>6</sup> The Company believes it will take more than increasing the volume of training data sets to create intelligent software that can reason, plan and learn.

We are developing Genius as our flagship product, with the intention that it will generate intelligent agents ("**Genius Agents**"), that are each expected to function as a "digital brain" by transforming data into interoperable knowledge model ("**Genius Core**") on which to infer the "causality" and hidden states that generate the data they observe. This causal modeling or "inference" mechanism is being built on the Active Inference, a framework based on FEP.

In conventional computing, storage and compute are independent components and the sequential data transfer between the two is massively inefficient in both time and energy. In the human brain, neurons function as both memory and processor and, being interconnected, process information in parallel. Genius Core and Genius Agents are being designed to function like integrated memory and processor. Consequently, Genius Agents and Genius Core are not separate products but rather integral parts of Genius.

The Company launched a private beta program of Genius (including Genius Agents and Genius Core) in early 2024 with a few select participants with whom the Company has existing business relationships and has launched a public beta program for a broader number of developers for the second half of 2024. This public beta program is included enhanced functionalities and was intended to help the Company increase its potential customer base, while refining its product offerings in anticipation of the 1.0 launch of Genius.

On April 30, 2025, the Company announced that it had launched its flagship product Genius, enabling agentic intelligence for enterprise. The initial target audience for Genius is machine learning and data science professionals trying to solve enterprise problems that require prediction when there is uncertainty or hidden factors. Genius is designed to provide the tools necessary to build domain-specific models that are intended to enhance decision-making (inference as a service) for third-party agents through the Company's software development kits/application programming interfaces and model editor. The Company will offer Genius as a paid service with consumption-based and performance-based pricing as well as enterprise licenses.

<sup>3</sup> <u>https://dl.acm.org/doi/10.1145/3442188.3445922</u>

<sup>4</sup> <u>https://www.sciencedirect.com/science/article/pii/S1389041723001080</u>

<sup>5</sup> <u>https://arxiv.org/pdf/2309.12288.pdf</u>

<sup>6</sup> Lucchi, Nicola, ChatGPT: A Case Study on Copyright Challenges for Generative AI Systems (June 12, 2023). European Journal of Risk Regulation (2023), 1–23, Available at SSRN: <u>https://ssrn.com/abstract=4483390.</u>

<u>Genius Agents</u>

Genius Agents are intended to read from and write to HSML knowledge models to reason, plan and learn. Much like a real assistant, Genius Agents are being designed to solve complex problems based on context, intent, requirements, and restrictions. The more context (such as location, schedule, weather, history, preferences, goals, available resources) that a Genius Agent has, the more hyper-personalized the results and recommendations it can provide. Genius Agents are being designed to adapt to dynamically changing conditions and collaborate with other agents which is essential for evolving from automatic, to automated, to autonomous, and ultimately, to autonomic self-organizing systems.

Genius Agents are being designed to be able to perform other highly context-dependent and multi-step decisions in a professional capacity such as aggregating information from multiple sources into a unified report with charts, graphs, summaries, and suggested action items. For instance, a Genius Agent is being designed to be able to ingest a number of unstructured pdfs. research papers and generate an HSML knowledge graph mapping all authors, university attributions, bibliographical references, external citations, diagrams, formulas, and other content to answer complex questions – the answers to which are not explicit and must be inferred.

<u>Genius Core</u>

Genius Core is being developed to actively manage, organize, and store data, while transforming it into strategic, actionable insights. Data structures such as document-oriented databases, knowledge graphs, and vector databases offer different solutions for data storage and retrieval, each having unique strengths and weaknesses. Genius Core is being designed as a unique search, recommendation, and knowledge engine that is intended to combine the benefits of all three types (document, graph, and vector) by transforming structured and unstructured data into a unified hyperspatial knowledge model that is expected to be uniquely suited to serve as memory for AI systems which need to represent complex multidimensional relationships. In Genius Core, entities and their relationships are being modeled in HSML and queried via HSQL.

**<u>Research and Development</u>**

The Company's AI R&D team, led by Chief Scientist, Karl Friston, is composed of experts in computational neuroscience, which is the study of the principles that govern the development, structure, physiology, and cognitive abilities of the brain and the nervous system, and how these mathematical and statistical models can be applied in software.

The core function of the R&D team is to explore new techniques and emerging technologies while working closely with engineering staff to align outcomes with commercial product objectives. Among other things, the team generates whitepapers, demonstrations and proofs-of-concept in order to help qualify and quantify the business value of continued investment or inspire new product development.

Our team of multi-PhD researchers have collectively published over 2,000 papers (including 30+ with VERSES affiliation) and bring a diverse set of competencies and expertise including:

● Active Inference

● Bayesian Scene Graphs

● Category Theory

● Cognition and Neuroscience Modeling

● Computational Phenomenology

● Control Theory

● Eco-Bio-Psycho-Social

● Free Energy Principle

● Model-based Reinforcement Learning

● Social Sciences (philosophy, neuroscience, psychology, anthropology)

● Swarm Intelligence

**<u>Business Model</u>**

The Company intends to market Genius to developers as a Software-as-a-Service (SaaS) for making their applications smarter, safer and more sustainable. We anticipate offering multiple subscription tiers priced based on usage and pricing will be informed by various performance metrics gathered during the beta program.

**<u>Growth Strategy</u>**

It is the intention that Genius can serve various roles for different end users. These markets will require different growth strategies, pricing models, industry partnerships and sales cycles.

● *Genius:* In order to demonstrate the versatility and broad applicability of what we believe is Genius' unique value proposition – adaptive intelligence – we anticipate working closely with domain experts in various verticals and supporting their implementations as showcases that attract customers seeking similar solutions.

● *Strategic & Accretive M&A:* From time to time, we may identify acquisition opportunities that are in similar verticals to us that could have a number of benefits including: expanding customer relationships, accelerating AI tools and leveraging additional AI infrastructure. These opportunities could range materially in size and scale. Any determination to act in this regard will be based on market conditions and opportunities existing at the time and accordingly, the timing, size or success of any efforts and associated potential capital commitments are unpredictable.

 

**<u>Sales and Marketing</u>**

Our sales team focuses on new sales opportunities mostly within our enterprise and channel partner ecosystem.

To generate demand, we have developed a library of whitepapers, demonstrations and proofs-of-concept generated by our research and development team in order to help qualify and quantify the business value of continued investment or to inspire new product development.

We have also developed long-term relationships with our largest customers and SIs and maintain an ongoing relationship with them that includes technical support.

**<u>Employees, Specialized Skills and Knowledge</u>**

The management of VERSES' business requires a high degree of competence in a variety of general aspects including operations, software development, sales and marketing, legal compliance, human resources, finance, and accounting. Given the horizontal applicability of VERSES' offerings across many sectors, the Company leverages domain experts, advisors, and consultants for translating its core value proposition into the respective domain specific use cases and jargon in order to accelerate sales cycles (i.e., healthcare vs logistics). The VERSES team includes members with deep expertise in specialized areas such as data science, AI, user experience design, cybersecurity, distributed identity, and systems integration and is an important competitive advantage.

As of the year ended March 31, 2025, the Company had 92 staff members, consisting of 61 employees and 31 independent contractors across 16 countries, including the United States, Australia, Austria, Belgium, Canada, France, Germany, India, Italy, Netherlands, and the United Kingdom.

The Company expects its hiring cadence to be commensurate with scaling of customers and market demand of product features. VERSES' hiring strategy includes working with specialized recruiting firms to source domain experts, academic institutions to source PhD talent with relevant R&D experience, and outsource agencies ready to allocate entire teams to meet the Company's hiring requirements.

**<u>Competitive Conditions</u>**

The markets in which the Company competes are competitive and evolving rapidly. Genius directly or indirectly competes in a number of categories against leaders in AI including Microsoft, OpenAI, Anthropic, Cohere, Adept, Google, and Meta, all of which employ an approach that can be classified as generative AI. Additionally, Vector databases providers such as Pinecone, Weaviate, and Qdrant and graph databases such as Neo4j and ArangoDB address demand for data storage in formats conducive to AI platforms. Cloud data management platforms such as Snowflake and DataBricks store massive amounts of enterprise data.

The principal competitive factors in the Company's market are:

● the ability to provide capabilities that meet current and future technology requirements;

● ease of deployment;

● customer relationship, reputation, and brand recognition;

● resources for customer, technology and platform supports; and

● strength of sales and marketing efforts.

VERSES expects the competition to evolve as the market continues to grow, evolve and attract new market entrants, especially smaller emerging companies focused on different AI tools and platforms.

The Company believes that it has several competitive advantages including, but not limited to the following:

● *Team and Domain Expertise*: The inventor of the Active Inference framework and FEP on which it is based, Dr. Karl Friston, is VERSES' Chief Scientist. The Company's research and development team is composed of experienced researchers and engineers from a range of disciplines including neuroscience, robotics, enterprise SaaS, media, and systems integrations.

● *HSML*. VERSES is implementing a specification that is intended to address fundamental problems in computing: poor interoperability and trust. VERSES, in collaboration with IEEE, a standards development association, are formalizing HSML as a global specification. The Company is also working with Dentons, to advocate governments and private industry to endorse and adopt HSML as the means to encode laws and regulations into a universal machine-readable format.

● *Network vs Platform*. Whereas Generative AI companies are building platforms, VERSES is focused on building a more-encompassing open network, the Spatial Web, and Genius is currently the exclusive means of interfacing with it.

● *Strategic Relationships*. VERSES is focused on a multi-pronged approach to fostering relationships with channel partners and systems integrators, and currently has cultivated relationships with professional firms such as Deloitte and Accenture.

**<u>Intangible Properties</u>**

VERSES recognizes the importance of its intangible assets such as brand names, relationships with customers and partners, licenses, and trade secrets. To protect its products and processes, VERSES periodically reviews opportunities to register copyrights, trademarks, and patents in different countries. The following are patents, copyrights and trademarks relevant to the Company's business:

The Company has filed the following non-provisional and provisional applications with the United States Patent and Trademark Office:

***Non-Provisional Patent Applications***

● As of June 16, 2025, we have submitted formal non-provisional applications in the Untied States through the U.S. Patent and Trademark Office ("USPTO") for the four patents listed below. The non-provisional filings have been assigned new applications serial numbers, which are set out below.

● "METHOD AND SYSTEM FOR AUTOMATICALLY DEVELOPING RULES FOR AGENTS DRIVING DEVICE BEHAVIOR", provisional filed on May 1, 2023 (old provisional # 63/499,287) (new U.S. non-provisional application serial number 18/651,479, converted April 30, 2024).

● "METHOD AND SYSTEM FOR SPECIFYING AN ACTIVE INFERENCE BASED AGENT USING NATURAL LANGUAGE", provisional filed on July 12, 2023 (old provisional # 63/513,322) (new U.S. non-provisional application serial number 18/770,654, converted August 18, 2024).

● "METHOD AND SYSTEM FOR PROBABILISTIC QUERYING OF A VECTOR GRAPH DATABASE", provisional filed on July 25, 2023 (old provisional # 63/515,573) (new U.S. non-provisional application serial number 18/783,398, converted July 24, 2024).

● "METHOD OF UPDATING GRAPH DATABASES BY USING COMPUTATION GRAPHS", provisional filed on September 1, 2023 (old provisional # 63/580,314) (new U.S. non-provisional application serial number 18/809,219, converted August 19, 2024).

● "A METHOD FOR AUTOMATICALLY EXPANDING FACTOR GRAPH DATABASE", provisional filed on October 27, 2023 (old provisional # 63/593,745) (new U.S. non-provisional application serial number 18/927,933, converted October 26, 2024).

● "A METHOD FOR GENERATING USER SPECIFIC INTERFACES USING GENERATIVE UI", provisional filed on November 29, 2023 (old provisional # 63/604,123) (new U.S. non-provisional application serial number 18/963,247, converted February 2, 2025).

● "A METHOD OF IMPROVING TEXT VECTORIZATION USING DEPTH FIRST SEARCH AND RADIX TREES", provisional filed on January 8, 2024 (old provisional # 63/618,776) (new U.S. non-provisional application serial number 19/004,267, converted December 28, 2024).

● "A METHOD FOR EXTRACTING,TRANSFORMING AND LOADING LEGAL INFORMATION ONTO AUTONOMOUS AGENTS USING LARGE LANGUAGE MODELS AND COMPUTER GRAPH DATABASES", provisional filed on February 5, 2024 (old provisional # 63/549,994) (new U.S. non-provisional application serial number 19/043,493, converted February 8, 2025).

● "A METHOD OF DIGITAL DOCUMENT REVIEW USING FACTOR GRAPH DOCUMENT DATABASES", provisional filed on February 27, 2024 (old provisional # 63/558,504) (new U.S. non-provisional application serial number 19/064,659, converted February 26, 2025).

● "A METHOD OF INTERAGENT COMMUNICATION IN PROBABILISTIC AGENTS IMPLEMENTING FACTOR GRAPH DOCUMENT DATABASES", provisional filed on April, 08 2024 (old provisional # 63/631,184) (new U.S. non-provisional application serial number 19/095,775, converted March 31, 2025).

Additionally, the PCT application "METHOD AND SYSTEM FOR OPTIMIZING A WAREHOUSE" (provisional filed on September 21, 2022 and subsequently filed under the PTC - old provisional # 63/360,286) was converted to a non-provisional on March 19, 2024, with only the USA being selected for localization (new non-provisional application serial number 18/693,486).

<u>Provisional Patent Applications</u>

● "A METHOD FOR PERFORMING GAUSSIAN SPLATTING USING VARIATIONAL BAYES", 63/701,522, filed on September 30, 2024.

● "A METHOD AND SYSTEM FOR IMPLEMENTING LEGAL DECISION MAKING IN ARTIFICIAL INTELLIGENCE SYSTEMS USING ACTIVE INFERENCE", 63/752,789, filed on February 02, 2025.

● "A SYSTEM AND METHOD FOR THE DISCOVERY OF VIABLE BAYESIAN MODELS BY SUBJECT MATTER EXPERTS", 63/795,510, filed on April 27, 2025.

As of the date of this AIF, the Company does not have any pending non-provisional patent applications.

Provisional applications are not official patents and do not provide prosecutable intellectual property protection. However, the provisional application for a patent allows the Company to obtain an official filing date before public disclosure of an invention. This filing date ensures, if the application is successful, that no other provisional application made in respect of the same invention filed after the filing date, is able to proceed with the patent application. Once a provisional application is filed, the Company has 12 months to file a formal non-provisional application. Once a non-provisional application is submitted, the review process can take approximately two to four years at a cost of approximately USD$15,000 per patent for filing fees.

Additionally, while a provisional application is active, an applicant may file a patent application under the PCT for the purposes of seeking international patent protection. A PCT application extends the filing deadline of a non-provisional patent application by up to 18 months which means that under the PCT regime, it can take up to 30 months for a non-provisional patent application to be filed in connection with a provisional application. Except for patent applications filed under the PCT, the 12 month period for the filing of a formal non-provisional application cannot be extended.

<u>Trademarks</u>

The Company has the following registered trademarks:

● U.S. Registration No. 5838650 ("VERSES") in International Class 42, registered on August 20, 2019;

● U.S. Registration No. 7201904 ("VERSES") in International Class 42, registered on October 24, 2023;

● U.S. Registration No. 7201550 ("V VERSES") in International Class 42, registered on October 24, 2023;

● U.S. Registration No. 7248436 ("IMAGINE A SMARTER WORLD") in International Class 42, registered on December 19, 2023;

● U.S. Registration No. 7080725 ("WAYFINDER") in International Class 42, registered on June 13, 2023;

● U.S. Registration No. 5839158 ("THE POWER OF SMART SPACE") in International Class 42, registered on August 20, 2019;

● U.S. Registration No. 6811022 ("VERSES SPATIAL WEB PROTOCOL") in International Class 42, registered on August 9, 2022;

● U.S. Registration No. 7289102 ("SPATIAL INTELLIGENCE MANAGEMENT") in International Class 42, registered on January 23, 2024;

● European Application Serial No. 18392857 ("VERSES") in Class 42, registered on June 12, 2021;

● European Application Serial No. 18392876 ("WAYFINDER") in Class 42, registered on June 12, 2022;

● European Application Serial No. 18392875 ("COSM") in Class 42, registered on June 12, 2022;

● European Application Serial No. 18392878 ("POWERING THE SPATIAL WEB") in Class 42, registered on June 12, 2022;

● European Application Serial No. 18659312 ("DOMAINFLOW") in Class 9, registered on July 20, 2022; and

● European Application Serial No. 18658983 ("SIMFLOW") in Class 9, registered on August 24, 2022.

In addition, we have filed the following trademark applications with the USPTO:

● U.S. Registration No. 97853452 ("AI REIMAGINED") in International Class 42, filed on March 23, 2023;

● U.S. Registration No. 98071341 ("GENIUS") in International Classes 9 and 42, filed on July 5, 2023;

● U.S. Registration No. 97930135 ("VERSES.AI") in International Class 42, filed on May 10, 2023; and

● U.S. Registration No. 98242187 ("SMARTER BY NATURE") in International Class 42, filed on October 26, 2023.

**<u>Regulatory Environment</u>**

We plan to operate in a variety of industries; some being heavily regulated such as health care and finance. As a result, we factor in many different laws, agency regulations and rules when developing and implementing our products and services. Some examples of such laws, agency regulations and rules include, but are not limited to, the following:

*<u>Data Privacy</u>*. Because our software and services can involve, among other things, the collection, transmission and management of potentially sensitive, personally identifiable data, we use our best efforts to comply with data privacy and security laws applicable to each location and/or sector that we participate in. Examples of these laws include, but are not limited to: (i) the European General Data Protection Regulation; (ii) the California Consumer Privacy Act and its equivalents in other U.S. states; (iii) the Health Insurance Portability and Accountability Act (HIPAA); and (iv) the Children's Online Privacy Protection Act. We are sensitive to the importance of these regulations, and routinely employ "privacy by design" and "principles of least privilege" when crafting new applications and services.

*<u>Intellectual Property.</u>* We respect the intellectual property rights of others, and always seek to ensure that our offerings are not used to violate those rights. To ensure our ongoing commitment to respecting the intellectual property of others, we have conducted extensive patent prior art clearance searches and trademark reviews. Additionally, we periodically audit and ensure compliance with the terms and conditions of all critical proprietary and open-source software licenses used in our offerings. Further, we seek to participate in community development efforts by making all reasonable efforts to return back any bug or security fixes into the upstream code repositories.

*<u>Artificial Intelligence.</u>* The regulatory framework and potential liability issues applicable to the development and use of machine learning, AI, related technology and automated decision-making is evolving. As the regulatory landscape continues to develop, we will use reasonable efforts to comply with AI laws, regulations and agency guidance as applicable to our operations. In October 2023, the White House issued an Executive Order focusing on safe, secure and trustworthy AI, laying out a national policy on AI and directing various agencies to take certain actions. We expect an increase in new legislation, agency guidance, agency enforcements and other federal regulations as a result of the Executive Order, as well an increase in state-specific AI laws that may be applicable to our operations. A number of lawsuits that address unresolved legal issues under existing laws are currently pending and additional lawsuits are likely to be filed, the outcomes of which may have an impact on future laws affecting our business and our compliance obligations.

The international legal and regulatory landscape is also evolving. As we plan to expand into additional markets, we will use reasonable efforts to comply with applicable international laws, which may include those under the European Union AI Act and new laws that have been or may be adopted by other countries. The European Union AI Act, which was adopted on March 13, 2024, aims to create a comprehensive regulatory framework for AI technologies to ensure their responsible development and use while addressing potential risks. It is one of the first comprehensive attempts to regulate and establish limits on the use of AI. This regulatory framework and other potential legislation is expected to have a material impact on the way AI is regulated in the EU and elsewhere, and together with developing guidance and/or decisions in this area, may affect our use of AI and our ability to provide and to improve our services, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition. We will continue to monitor new legislation applicable to our operations and use reasonable efforts to comply with such legislation.

**<u>Privacy and Cybersecurity</u>**

VERSES' business can involve the collection, transmission, and management of potentially sensitive, personally identifiable data of third parties. As a result, VERSES has established a variety of physical, administrative and technical measures to help protect users' privacy and ensure cybersecurity. These include, without limitation: access control, multi-factor authentication, encryption, network firewalls, intrusion detection, performance monitoring, disaster recovery, security incident handling, password management tools, mobile device management and more.

*<u>Physical</u>*<u>.</u> VERSES is a "distributed organization," so there is no centralized server, network, or single point of failure. Instead, VERSES leverages enterprise-grade cybersecurity and encryption intrinsic to cloud service providers such as AWS, Microsoft Azure, and Google's Cloud Platform for hosting and computing.

*<u>Administrative.</u>* VERSES recognizes that cybersecurity risks represent a significant operational and reputational threat to our business. Our cybersecurity risk management program is designed to identify, assess, mitigate, and respond to cybersecurity threats in a timely and effective manner. The program is integrated into our broader enterprise risk management framework through a defense-in-depth approach.

Key components include:

● Regular internal and external vulnerability assessments and penetration testing;

● Ongoing employee training with user phishing simulation tests;

● A dedicated incident response plan, tested and refined annually;

● Use of multi-factor authentication, encryption, and access control policies;

● Disaster Recovery and Business Continuity Plans;

● Policy acknowledgment;

● Yearly risk assessments;

● Enforcement of least privilege access across environments;

● Continuous improvement loop using CI/CD pipeline, providing accountability and segregation of duties:

● 24/7 monitoring by security operation center;

● Engagement with third-party security consultants for audits and advisory services.

We monitor cybersecurity threats across our systems through both automated tools and manual review processes.

As of the date of this filing, we have not experienced any material cybersecurity incidents that have materially impacted our operations, financial condition, or results of operations.

*<u>Technical.</u>* Our technology "stack" complies with Spatial Web protocols which are architected around privacy-by-design, including using the principle of least privilege, decentralized identities, verifiable credentials and cryptographic "zero-knowledge" proofs.

 

 

**<u>Reorganizations</u>**

The Company has not completed any material reorganization of the Company or any of its subsidiaries within the three most recently completed financial years or completed during or proposed for the current financial year.

**RISK FACTORS**

There are a number of risk factors that could cause future results to differ materially from those described herein. The following are certain risk factors relating to the business carried on by the Company, which prospective investors should carefully consider before deciding whether to invest in the Company's securities. The risks and uncertainties described herein are not the only ones that the Company faces. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company's business. If any of the following risks actually occur, the Company's business may be harmed, and its financial condition and results of operation may suffer significantly. References to the Company include its owned and partially owned subsidiaries and affiliates in which the Company has an interest, as applicable.

**<u>Risk Relating to the Company</u>**

<u>Limited Operating History</u>

The Company has a relatively limited operating history. As such, the Company will be subject to all of the business risks and uncertainties associated with any new business enterprise, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources. Although the Company possesses an experienced management team, there is no assurance that the Company will be successful in achieving a return on Shareholders' investment and the likelihood of success of the Company must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the establishment of any business. There is no assurance that the Company will generate revenues, operate profitably, or provide a return on investment, or that it will successfully implement its business and growth plans. An investment in the Company's securities carries a high degree of risk and should be considered speculative by investors. Prospective investors should consider any purchase of the Company's securities in light of the risks, expenses and problems frequently encountered by all companies in the early stages of their corporate development and operations.

<u>Additional Funding</u>

The operation of the Company's business will require substantial additional capital. When such additional capital is required, the Company will need to pursue various financing transactions or arrangements, which may include debt financing, equity financing or other means. Additional financing may not be available when needed or, if available, the terms of such financing might not be favourable to the Company and might involve substantial dilution to existing Shareholders. The Company may not be successful in locating suitable financing transactions in the time period required or at all. A failure to raise capital when needed would have a material adverse effect on the Company's business, financial condition and results of operations. Any future issuance of securities to raise required capital will likely be dilutive to existing Shareholders. In addition, debt and other debt financing may involve a pledge of assets and may be senior to interests of equity holders. The Company may incur substantial costs in pursuing future capital requirements, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. The ability to obtain needed financing may be impaired by such factors as the capital markets, the Company's status as a relatively new enterprise with a limited history and/or the loss of key management personnel.

<u>Negative Cash Flow from Operating Activities</u>

The Company has had negative cash flow from operating activities since inception. The Company's business is in an early stage and additional capital investment will be required to achieve revenue. There is no assurance that the Company will generate earnings, operate profitably or provide a return on investment in the future. Accordingly, the Company will be required to obtain additional financing in order to meet its future cash commitments.

<u>Implementation of Growth Strategy</u>

VERSES' future growth, profitability and cash flows depend upon the Company's ability to successfully implement its growth strategy, which, in turn, is dependent upon a number of factors, including the Company's ability to:

1. expand
 its customer/user base;

2. retain
 qualified operations staff;

3. protect
 its technology and intellectual property;

4. support
 growth of existing customers; and

5. enhance
 and develop Genius and Genius-based applications.

There can be no assurance that the Company can successfully achieve any or all of the above initiatives in the manner or time period that the Company expects. Further, achieving these objectives will require investments which may result in short-term costs without generating any current revenue and therefore may be dilutive to VERSES' earnings. The Company cannot provide any assurance that it will realize, in full or in part, the anticipated benefits the Company expects its strategy will achieve. The failure to realize those benefits could have a material adverse effect on VERSES' business, financial condition and results of operations.

<u>Protection of Intellectual Property</u>

The Company's commercial success depends to a significant degree upon its ability to develop technologies, instruments, and services, and to obtain patents, where appropriate, or other intellectual property rights or statutory protection for these technologies and products in Canada, the United States and elsewhere. The Company currently has no issued patents related to any of its intellectual property. Despite devoting resources to the research and development of proprietary technology, the Company may not be able to develop technology that is patentable or protectable. Further, patents issued to the Company, if any, could be challenged, held invalid or unenforceable, or be circumvented and may not provide the Company with necessary or sufficient protection or a competitive advantage. Competitors and other third parties may be able to design around the Company's intellectual property or develop technology similar to Genius that is not within the scope of such intellectual property. The Company's inability to secure its intellectual property rights may have a material adverse effect on its business and results of operations.

Currently, the Company's intellectual property includes provisional patent applications, copyrights and registered trademarks. With respect to the Company's provisional patent applications, such applications may not result in full patents being granted, and any full patent applications that the Company files may not result in issued patents or may take longer than expected to result in issued patents. The Company plans on taking the necessary steps, including but not limited to, the filing of additional patents applications as appropriate. There is no assurance any patents will be issued or that when they are issued, they will include all of the claims currently included in the applications. The Company also relies on contractual obligations of its employees and contractors to maintain the confidentiality of the Company's technologies. To compete effectively, the Company needs to develop and continue to maintain a proprietary position with respect to its technologies and business.

Additionally, prosecution and protection of the intellectual property rights sought can be costly and uncertain, often involve complex legal and factual issues and consume significant time and resources. The laws of certain countries may not protect intellectual property rights to the same extent as the laws of Canada or the United States.

<u>Conflicts of Interest</u>

Certain of the Company's directors and officers do not devote their full time to the affairs of the Company and certain of the Company's directors and officers are also directors, officers and shareholders of other public companies in general, and as a result they may find themselves in a position where their duty to another company conflicts with their duty to the Company. Although the Company has policies which address such potential conflicts and the BCBCA has provisions governing directors in the event of such a conflict, none of the Company's constating documents or any of its other agreements contain any provisions mandating a procedure for addressing such conflicts of interest. There is no assurance that any such conflicts will be resolved in favour of the Company. If any such conflicts are not resolved in favour of the Company, the Company may be adversely affected.

<u>Uncertainty of Use of Available Funds</u>

Management of the Company retains broad discretion in the application of the Company's funds. The failure by the Company to apply these funds effectively could have a material adverse effect on the Company's business, including the Company's ability to achieve its stated business objectives.

<u>Proprietary Artificial Intelligence Algorithms</u>

VERSES uses proprietary AI algorithms in its product offerings. The continuous development, maintenance, and operation of VERSES' AI products is expensive and complex, and may involve unforeseen difficulties, including material performance problems, undetected defects or errors. If Genius does not function reliably, this could negatively impact the user experience for VERSES' customers. Any of these situations could result in customers' dissatisfaction with VERSES, which could negatively impact VERSES' business. Additionally, VERSES' AI algorithms may lead to unintentional bias and discrimination, which could subject VERSES to legal or regulatory liability as well as reputational harm. Any of these eventualities could result in a material and adverse effect on VERSES' business, financial condition, operating results, cash flows, and prospects.

<u>Failure to Manage Growth</u>

VERSES anticipates that growing demand for the Company's services and Genius will place significant demands on the Company's operational infrastructure. The scalability of Genius will depend on VERSES' ability to develop Genius for different industry applications. Moreover, as the Company's business grows, VERSES will need to devote additional resources to improving its operational infrastructure and to continue to enhance its scalability in order to maintain the performance of Genius and related applications.

As the Company grows, VERSES will be required to continue to improve its operational and financial controls and reporting procedures and VERSES may not be able to do so effectively. In managing the Company's growing operations, VERSES is also subject to the risks of over-hiring and/or overcompensating its employees and over-expanding its operating infrastructure. As a result, VERSES may be unable to manage its expenses effectively in the future, which may negatively impact VERSES' gross profit or operating expenses.

As the Company continues to grow and develop the infrastructure of a public company, the Company must effectively integrate, develop and motivate a growing number of new employees, some of whom are based in various countries around the world. In addition, the Company must preserve its ability to execute quickly in further developing the Company's platform and implementing new features and initiatives. As a result, VERSES may find it difficult to maintain its corporate culture, which could limit the Company's ability to innovate and operate effectively. Any failure to preserve VERSES' culture could also negatively affect the Company's ability to recruit and retain personnel, to continue to perform at current levels or to execute on the Company's business strategy effectively and efficiently.

<u>Reliance on Strategic Partnerships</u>

We rely on strategic partnerships with third parties for technologies that are vital to the functionality of our Company. We anticipate that we will continue to depend on relationships with these and other third parties, such as data center hosting companies, cloud computer platform providers, and software and hardware vendors. Identifying partners, and negotiating and documenting relationships with them, requires significant time and resources. If we are unsuccessful in establishing and maintaining our relationships with third parties, or if these third parties are unable or unwilling to provide services to us, our ability to grow and scale Genius or to generate revenue could be impaired, and our results of operations may suffer. Even if we are successful in doing so, we cannot be sure that these relationships will result in increased customer usage of Genius and Genius applications or increased revenue.

<u>Security Breaches</u>

VERSES operates in an industry that is prone to cyber attacks. Failure to prevent or mitigate security breaches and improper access to or disclosure of the Company's data or customer data could result in the loss or misuse of such data, which could harm VERSES' business and reputation. The security measures VERSES has integrated into its internal networks and systems and Genius, which are designed to prevent or minimize security breaches, may not function as expected or may not be sufficient to protect the Company's internal networks against certain attacks. In addition, techniques used to sabotage or to obtain unauthorized access to networks in which data is stored or through which data is transmitted change frequently. As a result, VERSES may be unable to anticipate these techniques or implement adequate preventative measures to prevent an electronic intrusion into the Company's networks.

If a security breach were to occur, as a result of third-party action, employee error, breakdown of VERSES' internal security processes and procedures, malfeasance or otherwise, and the confidentiality, integrity or availability of VERSES' customers' data was disrupted, the Company could incur significant liability to its customers, and VERSES' services and Genius may be perceived as less desirable, which could negatively affect the Company's business and damage its reputation.

Moreover, Genius and related applications could be breached if vulnerabilities in Genius or such related applications are exploited by unauthorized third parties or due to employee error, breakdown of VERSES' internal security processes and procedures, malfeasance, or otherwise. Further, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information or otherwise compromise the security of VERSES' internal networks and electronic systems in order to gain access to the Company's data or its customers' data.

Any actual or perceived security breach could damage the Company's reputation and brand, expose the Company to a risk of litigation and possible liability and require VERSES to expend significant capital and other resources to respond to and/or alleviate problems caused by the security breach. Some jurisdictions have enacted laws requiring companies to notify individuals and authorities of data security breaches involving certain types of personal or other data. In addition, pursuant to the terms of certain agreements, VERSES may be required to notify certain customers and partners in the event of a security incident. Any of these events could harm VERSES' reputation or subject VERSES to significant liability, and materially adversely affect the Company's business and financial results.

<u>Software Errors or Defects</u>

Genius and related applications are and will be dependent upon the successful and uninterrupted functioning of VERSES' computer and data processing systems, cloud computing platform and network operating system. These software and systems may contain errors, defects, security vulnerabilities or software bugs that are difficult to detect and correct, particularly when first introduced or when new versions or enhancements are released.

The failure or unavailability of these systems could materially impact VERSES's ability to deliver Genius and related applications to customers effectively or comply with contractual obligations to third parties. If sustained or repeated, a system failure or loss of data could negatively affect the operating results of VERSES.

Since the Company's customers use and will use its services for decisions that are critical to their operation and ability to efficiently function, errors, defects, security vulnerabilities, service interruptions or software bugs in the Company's network could result in losses to its customers. Customers may seek significant compensation from the Company for any losses they suffer or cease conducting business with the Company altogether. Further, a customer could share information about bad experiences on social media, which could result in damage to the Company's reputation. There can be no assurance that provisions included in the Company's agreements with its customers that attempt to limit its exposure to claims would be enforceable or adequate or would otherwise protect it from liabilities or damages with respect to any particular claim. Even if not successful, a claim brought against the Company by any of its customers would likely be time-consuming and costly to defend and could seriously damage its reputation and brand, making it harder for the Company to generate revenue.

<u>Insufficient Insurance Coverage</u>

VERSES maintains property, general liability, errors and omissions and directors and officers' liability insurance on such terms as it deems appropriate. This may result in insurance coverage that, in the event of a substantial loss, would not be sufficient to pay the full current market value or current replacement cost of VERSES' lost investment. This insurance may not remain available to it at commercially reasonable rates. Future increases in insurance costs, coupled with the increase in deductibles, will result in higher operating costs and increased risk. Not all risks faced by VERSES are insured.

<u>Failure to Maintain, Promote and Enhance Brand</u>

VERSES believes that maintaining, promoting and enhancing the VERSES brand is critical to expanding the Company's business and rolling out Genius and related applications. Maintaining and enhancing the VERSES brand will depend largely on the Company's ability to continue to provide high-quality, well-designed, useful, reliable and innovative solutions, which the Company may not do successfully. The Company operates in a space with some of the largest companies in the world that have significantly more resources than VERSES. These companies have the ability to dilute the Company's messaging regarding the Spatial Web which may confuse the market and be detrimental to the continued development and enhancement of the Company's brand.

Errors, defects, data breaches, disruptions or other performance problems with Genius and related applications may harm VERSES' reputation and brand. The Company may introduce new solutions or terms of service that its customers do not like, which may negatively affect the VERSES brand. Additionally, if the Company's customers have a negative experience using VERSES solutions, such an experience may affect the VERSES brand, especially as the Company continues to attract larger customers to Genius.

The Company believes that the importance of brand recognition will increase as competition in VERSES' market increases. In addition, successful promotion of the VERSES brand will depend on the effectiveness of the Company's marketing efforts. VERSES' efforts to market the VERSES brand will involve significant expenses. VERSES' marketing expenditure may not yield increased revenue, and even if it does, any increased revenue may not offset the expenses VERSES incurs in building and maintaining the VERSES brand.

<u>Dependence on Customer Internet Access and Use of Internet for Commerce</u>

The Company's success will depend upon the general public's ability to access the internet, including through mobile devices. The adoption of any laws or regulations that adversely affect the growth, popularity or use of the internet, including changes to laws or regulations impacting internet neutrality, could decrease the demand for Genius and related applications or otherwise adversely affect the Company's business. Given uncertainty around these rules, VERSES could experience discriminatory or anti-competitive practices that could impede both the Company and its customers' growth, increase the Company's costs or adversely affect VERSES' business. If customers become unable, unwilling or less willing to use the internet for commerce for any reason, including lack of access to high-speed communications equipment, congestion of traffic on the internet, internet outages or delays, disruptions or other damage to customers' computers, increases in the cost of accessing the internet and security and privacy risks or the perception of such risks, VERSES' business could be adversely affected.

<u>Privacy and Security of Sensitive Information</u>

VERSES' operations are and will be dependent on the Company's information systems and the information collected, processed, stored, and handled by these systems. Throughout the Company's operations, VERSES will receive, retain and transmit certain confidential information, including personally identifiable information that the Company's customers provide to utilize Genius and related applications, interact with the Company's personnel, or otherwise communicate with VERSES. In addition, for these operations, VERSES will depend in part on the secure transmission of confidential information over public networks. The Company's information systems are and will be subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches, including credit card or personally identifiable information breaches, coordinated cyber attacks, vandalism, catastrophic events and human error. Although VERSES deploys a layered approach to address information security threats and vulnerabilities, including ones from a cyber security standpoint, designed to protect confidential information against data security breaches, a compromise of the Company's information security controls or of those businesses with whom the Company interacts, which results in confidential information being accessed, obtained, damaged, or used by unauthorized or improper persons, could harm VERSES' reputation and expose VERSES to regulatory actions and claims from customers and other persons, any of which could adversely affect the Company's business, financial position, and results of operations. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, VERSES may not be able to anticipate these techniques or to implement adequate preventative measures. In addition, a security breach could require that the Company expends substantial additional resources related to the security of information systems and disrupt the Company's businesses.

<u>Changes in Technology</u>

The Company operates in a competitive industry characterized by rapid technological change and evolving industry standards. The Company's ability to attract new customers and generate revenue from existing customers will depend largely on its ability to anticipate industry standards and trends, respond to technological advances in its industry, and to continue to enhance Genius or to design and introduce new Genius applications on a timely basis to keep pace with technological developments and its customers' increasingly sophisticated needs. The success of any enhancement of Genius and related applications will depend on several factors, including the timely completion and market acceptance of Genius and related applications. Any new application the Company develops or acquires might not be introduced in a timely or cost-effective manner and might not achieve the broad market acceptance necessary to generate significant revenue. If any of the Company's competitors implements new technologies before the Company is able to implement them, those competitors may be able to provide more effective applications and services than the Company at lower prices. Any delay or failure in the introduction of new or enhanced applications and services could harm the Company's business, results of operations and financial condition.

The Company's services and Genius are expected to embody complex technology that may not meet those standards, changes and preferences. The Company's ability to design, develop and commercially launch Genius and related applications depends on a number of factors, including, but not limited to, its ability to design and implement solutions and services at an acceptable cost and quality, its ability to attract and retain skilled technical employees, the availability of critical components from third parties, and its ability to successfully complete the development of Genius and related applications in a timely manner. There is no guarantee that the Company will be able to respond to market demands. If the Company is unable to effectively respond to technological changes or fails or delays to develop services in a timely and cost-effective manner, Genius and related applications may become obsolete, and the Company may be unable to recover its development expenses which could negatively impact sales, profitability and the continued viability of its business.

<u>Competition</u>

Some of VERSES' competitors are better capitalized, hold a larger percentage of the Canadian and international markets, have greater financial, technical and marketing resources than VERSES and have greater name recognition than VERSES. If price competition increases, VERSES may not be able to raise its pricing in response to a rising cost of funds or may be forced to lower the pricing that it is able to charge customers. Price-cutting or discounting may reduce profits. This could have a material adverse effect on VERSES's business, financial condition and results of operations and on the amount of cash available for dividends to Shareholders.

<u>Difficulty in Forecasting</u>

Market opportunity estimates and growth forecasts, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The Company's estimates and forecasts relating to the size and expected growth of its target market, market demand and adoption, capacity to address this demand, and pricing, may prove to be inaccurate. The Company must rely largely on its own market research to forecast sales as detailed forecasts are not generally obtainable from other sources. A failure in the demand for its services to materialize as a result of competition, technological change or other factors could have a material adverse effect on the business, results of operations and financial condition of the Company.

<u>Reputational Risk</u>

Reputational damage can result from the actual or perceived occurrence of any number of events, and could include any negative publicity, whether true or not. The increased usage of social media and other web-based tools used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share opinions and views, whether true or not. Reputation loss may result in decreased customer confidence and an impediment to the Company's overall ability to advance Genius and related applications, thereby having a material adverse impact on its financial performance, financial condition, cash flows and growth prospects.

<u>Loss of Foreign Private Issuer Status</u>

Prior to April 1, 2025, the Company was a "foreign private issuer" under applicable U.S. federal securities laws and, as a result, the Company did not up until April 1, 2025 have to file the same reports that a U.S. domestic issuer files with the United States Securities and Exchange Commission (the "SEC") under the U.S. Exchange Act. As a foreign private issuer, the Company was previously permitted to file with or furnish to the SEC the continuous disclosure documents that the Company was required to file in Canada under Canadian securities laws, with certain limited additional information. In addition, the Company's officers, directors and principal shareholders were exempt from the insider reporting and "short swing" profit recovery provisions of Section 16 of the U.S. Exchange Act. In addition, as a foreign private issuer, the Company was previously exempt from the rules under the U.S. Exchange Act prescribing the furnishing and content of proxy statements. Furthermore, the Company was not required to publish financial statements as promptly as United States companies, could prepare its financial statements under IFRS rather than U.S. generally accepted accounting principles, and such financial statements were audited under Canadian generally accepted auditing standards.

The Company lost its "foreign private issuer" status on April 1, 2025 and is now considered a U.S. domestic issuer Consequently, we are no longer eligible to file foreign issuer forms with the SEC and are now required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. The Company is also required to file its financial statement in accordance with U.S. generally accepted accounting principles, and such Company financial statements must be audited under U.S. generally accepted auditing standards. The regulatory and compliance costs to the Company under U.S. federal securities laws as a U.S. domestic issuer are expected to be significantly more than the costs the Company incurred as a foreign private issuer eligible to take advantage of the reduced disclosure requirements under the U.S. Exchange Act applicable to foreign private issuers.

<u>Global Economy Risk</u>

The volatility of global capital markets over the past several years has generally made the raising of capital by equity or debt financing more difficult. The Company may be dependent upon capital markets to raise additional financing in the future. As such, the Company is subject to liquidity risks in meeting its operating expenditure requirements and future cost requirements in instances where adequate cash positions are unable to be maintained or appropriate financing is unavailable. These factors may impact the ability to raise equity or obtain loans and other credit facilities in the future and on terms favorable to the Company and its management. If these levels of volatility persist or if there is a further economic slowdown, the Company's operations, the Company's ability to raise capital and the trading price of the Company's securities could be adversely impacted.

<u>Dependence on Management and Key Personnel</u>

The success of the Company will be largely dependent on the performance of its directors and officers. The loss of the services of any of these persons could have a materially adverse effect on the Company's business and prospects. There is no assurance the Company can maintain the services of its directors, officers or other qualified personnel required to operate its business. As the Company's business activities grow, the Company will require additional key financial, administrative, and technology personnel as well as additional agents and operations staff. There can be no assurance that these efforts will be successful in attracting, training and retaining qualified personnel as competition for persons with these skill sets increase. If the Company is not successful in attracting, training and retaining qualified personnel, the efficiency of its operations could be impaired, which could have an adverse impact on the Company's operations and financial condition.

<u>Government Regulation</u>

VERSES is currently regulated under legislation in all of the jurisdictions in which it conducts business and is licensed or registered in those jurisdictions where licensing or registration is required by law. Changes in regulatory legislation or the interpretation thereof, or the introduction of any new regulatory requirements, could have a negative effect on VERSES and its operating results. There are different regulatory and registration requirements in each of the jurisdictions in Canada. VERSES takes the position that it is appropriately registered in the jurisdictions in which it conducts business. However, it may voluntarily seek additional registration in respect of its activities or from time-to-time regulators may adopt a different view that may require VERSES to seek additional registration. Failure to be appropriately registered could result in enforcement action and potential interruption of certain of VERSES' servicing or other activities and may result in a default under servicing agreements. This could have a material adverse effect on VERSES' business, financial condition and results of operations.

<u>Reporting Issuer Status</u>

As a reporting issuer, the Company is subject to reporting requirements under applicable securities law, the listing requirements of Cboe Canada and other applicable securities rules and regulations. Compliance with these requirements increases legal and financial compliance costs, make some activities more difficult, time consuming or costly, and increase demand on existing systems and resources. Among other things, the Company is required to file annual, quarterly and current reports with respect to its business and results of operations and maintain effective disclosure controls and procedures and internal controls over financial reporting. In order to maintain and, if required, improve disclosure controls and procedures and internal controls over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management's attention may be diverted from other business concerns, which could harm the Company's business and results of operations. The Company intends to hire additional employees to comply with these requirements in the future, which will increase its costs and expenses.

<u>Risks Associated with Acquisitions</u>

If appropriate opportunities present themselves, the Company may complete acquisitions that the Company believes are strategic. The Company currently has no understandings, commitments or agreements with respect to any material acquisition, other than as may be described in this AIF, and no other material acquisition is currently being pursued. There can be no assurance that the Company will be able to identify, negotiate or finance future acquisitions successfully, or to integrate such acquisitions with its current business. The process of integrating an acquired Company or assets into the Company may result in unforeseen operating difficulties and expenditures and may absorb significant management attention that would otherwise be available for ongoing development of the Company's business. Future acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company's business, results of operations and financial condition.

<u>Internal controls</u>

Effective internal controls are necessary for VERSES to provide reliable financial reports and to help prevent fraud. Although VERSES will undertake a number of procedures and will implement a number of safeguards, in each case, in order to help ensure the reliability of its financial reports, including those imposed on VERSES under Canadian securities law, VERSES cannot be certain that such measures will ensure that VERSES will maintain adequate control over financial processes and reporting. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm VERSES's results of operations or cause it to fail to meet its reporting obligations. If VERSES or its auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market's confidence in VERSES's consolidated financial statements and materially adversely affect the trading price of the Subordinate Voting Shares.

<u>Litigation</u>

The Company may become party to litigation from time to time in the ordinary course of business which could adversely affect its business. Should any litigation in which the Company becomes involved be determined against the Company such a decision could adversely affect the Company's ability to continue operating and the market price for the Subordinate Voting Shares and could use significant resources. Even if the Company is involved in litigation and wins, litigation can redirect significant company resources.

**<u>Risks Related to the Company's Securities</u>**

<u>No Established Market for Securities</u>

The Subordinate Voting Shares and Listed Warrants are listed on Cboe Canada; however, there can be no assurance that an active and liquid market for the Subordinate Voting Shares or the Listed Warrants will develop or be maintained and an investor may find it difficult to resell any securities of the Company. If a market does not develop or is not sustained, it may be difficult for investors to sell the Subordinate Voting Shares or Listed Warrants at an attractive price or at all. The Company cannot predict the prices at which the Subordinate Voting Shares or Listed Warrants will trade.

<u>Speculative Nature of Investment Risk</u>

An investment in the Company's securities carries a high degree of risk and should be considered as a speculative investment. The Company has no history of earnings, limited cash reserves, a limited operating history, has not paid dividends, and is unlikely to pay dividends in the immediate or near future. The likelihood of success of the Company must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the establishment of any business. An investment in the Company's securities may result in the loss of an investor's entire investment. Only potential investors who are experienced in high-risk investments and who can afford to lose their entire investment should consider an investment in the Company.

<u>Price may not Represent the Company's Performance or Intrinsic Fair Value</u>

The market price of a publicly traded stock is affected by many variables not directly related to the corporate performance of the Company, including the market in which it is traded, the strength of the economy generally, the availability of the attractiveness of alternative investments, and the breadth of the public market for the stock. The effect of these and other factors on the market price of the Subordinate Voting Shares and Listed Warrants on Cboe Canada in the future cannot be predicted.

<u>Securities or Industry Analysts</u>

The trading market for the Subordinate Voting Shares or Listed Warrants could be influenced by research and reports that industry and/or securities analysts may publish about the Company, its business, the market or its competitors. The Company does not have any control over these analysts and cannot assure that such analysts will cover the Company or provide favourable coverage. If any of the analysts who may cover the Company's business change their recommendation regarding the Company's stock adversely, or provide more favourable relative recommendations about its competitors, the stock price would likely decline. If any analysts who may cover the Company's business were to cease coverage or fail to regularly publish reports on the Company, it could lose visibility in the financial markets, which in turn could cause the stock price or trading volume to decline.

<u>Price Volatility of Publicly Traded Securities</u>

The Subordinate Voting Shares and Listed Warrants are listed and trade on Cboe Canada. Securities of technology companies have experienced substantial volatility in the past, often based on factors unrelated to the companies' financial performance or prospects. These factors include macroeconomic developments in North America and globally and market perceptions of the attractiveness of particular industries.

Other factors unrelated to the Company's performance that may affect the price of the Subordinate Voting Shares or Listed Warrants include the following: the extent of analytical coverage available to investors concerning VERSES' business may be limited if investment banks with research capabilities do not follow the Company; lessening in trading volume and general market interest in the Subordinate Voting Shares or Listed Warrants may affect an investor's ability to trade significant numbers of the securities; the size of the Company's public float may limit the ability of some institutions to invest in the Subordinate Voting Shares or Listed Warrants; and a substantial decline in the price of the Subordinate Voting Shares that persists for a significant period of time could cause the Subordinate Voting Shares or Listed Warrants to be delisted from Cboe Canada, further reducing market liquidity. As a result of any of these factors, the market price of the Subordinate Voting Shares or Listed Warrants at any given point in time may not accurately reflect the Company's long-term value. Securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management's attention and resources.

The market price of the Subordinate Voting Shares and Listed Warrants is affected by many other variables which are not directly related to VERSES' success and are, therefore, not within the Company's control. These include other developments that affect the market for all technology sector securities, the breadth of the public market for VERSES' Subordinate Voting Shares and Listed Warrants and the attractiveness of alternative investments. The effect of these and other factors on the market price of the Subordinate Voting Shares and Listed Warrants is expected to make the price of the Subordinate Voting Shares and Listed Warrants volatile in the future, which may result in losses to investors.

<u>Dilution</u>

Future sales or issuances of equity securities could decrease the value of the Subordinate Voting Shares, dilute Shareholders' voting power and reduce future potential earnings per Subordinate Voting Share. VERSES may sell additional equity securities in subsequent offerings (including through the sale of securities convertible into Subordinate Voting Shares) and may issue additional equity securities to finance the Company's operations, subsidiaries, acquisitions or other business projects. VERSES cannot predict the size of future sales and issuances of equity securities or the effect, if any, that future sales and issuances of equity securities will have on the market price of the Subordinate Voting Shares. Sales or issuances of a substantial number of equity securities, or the perception that such sales could occur, may adversely affect prevailing market prices for the Subordinate Voting Shares. With any additional sale or issuance of equity securities, investors will suffer dilution of their voting power and may experience dilution in VERSES' earnings per Subordinate Voting Share.

<u>Dividends</u>

To date, the Company has not paid any dividends on its outstanding Subordinate Voting Shares. Any decision to pay dividends on the Subordinate Voting Shares of the Company will be made by the Board on the basis of the Company's earnings, financial requirements and other conditions.

See "*Dividends and Distributions*".

<u>Cboe Canada Listing</u>

In the future, the Company may fail to meet the continued listing requirements for the Subordinate Voting Shares and Listed Warrants to be listed on Cboe Canada. If Cboe Canada delists the Subordinate Voting Shares or Listed Warrants from trading on its exchange, the Company could face significant material adverse consequences, including: a limited availability of market quotations for the Subordinate Voting Shares; a determination the Subordinate Voting Shares are a "penny stock" which will require brokers trading in the Subordinate Voting Shares to abide by more stringent rules, possibly resulting in a reduced level of trading activity in the secondary market for the Subordinate Voting Shares; a limited amount of news and analysts coverage for the Company; and a decreased ability to issue additional securities or obtain additional financing in the future.

**DIVIDENDS AND DISTRIBUTIONS**

The Company has not, since the date of its incorporation, declared or paid any dividends or other distributions on its Subordinate Voting Shares and Proportionate Voting Shares, and does not currently have a policy with respect to the payment of dividends or other distributions. The Company does not currently pay dividends and does not intend to pay dividends in the foreseeable future. The declaration and payment of any dividends in the future is at the discretion of the Board and will depend on numerous factors, including compliance with applicable laws, financial performance, working capital requirements of the Company and its subsidiaries, as applicable, and such other factors as its directors consider appropriate. There can be no assurance that the Company will pay dividends under any circumstances. See "*Risk Factors – Risks Related to the Company's Securities – Dividends*".

**DESCRIPTION OF CAPITAL STRUCTURE**

The Company's authorized common share capital consists of an unlimited number of Subordinate Voting Shares and Proportionate Voting Shares without par value. As at the date of this AIF, there were 8,746,491 Subordinate Voting Shares issued and outstanding and no Proportionate Voting Shares outstanding.

**<u>Subordinate Voting Shares</u>**

Except as disclosed directly below, the Subordinate Voting Shares do not have any additional pre-emptive rights, conversion rights or exchange rights and are not further subject to redemption, retraction purchase for cancellation or surrender provisions. There are no additional sinking or purchase fund provisions, no provisions permitting or restricting the issuance of additional securities or any other material restrictions, and there are no additional provisions which are capable of requiring a security holder to contribute additional capital.

<u>Voting</u>

Subordinate Voting Shareholders shall be entitled to receive notice of and to attend and vote at all meetings of shareholders of the Company except a meeting at which only the holders of another class or series of shares is entitled to vote. Each Subordinate Voting Share shall entitle the holder thereof to one vote at each such meeting.

<u>Alteration to Rights of Subordinate Voting Shares</u>

So long as any Subordinate Voting Shares remain outstanding, the Company will not, without the consent of the holders of Subordinate Voting Shares expressed by separate special resolution, alter or amend the Articles of the Company if the result of such alteration or amendment would: (a) prejudice or interfere with any right or special right attached to the Subordinate Voting Shares; or (b) affect the rights or special rights of the Subordinate Voting Shareholders or Proportionate Voting Shareholders on a per share basis as provided for by the Company's Articles.

<u>Dividends</u>

The holders of Subordinate Voting Shares shall be entitled to receive such dividends payable in cash or property of the Company as may be declared thereon by the Board from time to time. The Board may declare no dividend payable in cash or property on the Subordinate Voting Shares unless the Board simultaneously declares a dividend payable in cash or property on the Proportionate Voting Shares, in an amount per Proportionate Voting Share equal to the amount of the dividend declared per Subordinate Voting Share, multiplied by 6.25.

The directors may declare a stock dividend payable in Subordinate Voting Shares on the Subordinate Voting Shares, but only if the Board simultaneously declares a stock dividend payable in: (a) Proportionate Voting Shares on the Proportionate Voting Shares, in a number of shares per Proportionate Voting Share equal to the amount of the dividend declared per Subordinate Voting Share; or (b) Subordinate Voting Shares on the Proportionate Voting Shares, in a number of shares per Proportionate Voting Share equal to the amount of the dividend declared per Subordinate Voting Share, multiplied by 6.25.

<u>Liquidation Rights</u>

In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company to its shareholders for the purposes of winding up its affairs, the holders of the Subordinate Voting Shares shall be entitled to participate *pari passu* with the holders of Proportionate Voting Shares, with the amount of such distribution per Subordinate Voting Share equal to the amount of such distribution per Proportionate Voting Share divided by 6.25.

<u>Subdivision or Consolidation</u>

The Subordinate Voting Shares shall not be consolidated or subdivided unless the Proportionate Voting Shares are simultaneously consolidated or subdivided utilizing the same divisor or multiplier.

<u>Conversion of the Shares Upon An Offer</u>

In the event that an offer is made to purchase Proportionate Voting Shares, and such offer is:

(a) required,
 pursuant to applicable securities legislation or the rules of any stock exchange on which: (i) the Proportionate Voting Shares; or
 (ii) the Subordinate Voting Shares which may be obtained upon conversion of the Proportionate Voting Shares; may then be listed,
 to be made to all or substantially all of the holders of Proportionate Voting Shares in a province or territory of Canada to which
 the requirement applies (such offer to purchase, an "**Offer** "); and

(b) not
 made to the holders of Subordinate Voting Shares for consideration per Subordinate Voting Share equal to 1/6.25 of the consideration
 offered per Proportionate Voting Share;

each Subordinate Voting Share shall become convertible at the option of the holder thereof into Proportionate Voting Shares on the basis of 6.25 Subordinate Voting Shares for one (1) Proportionate Voting Share, at any time while the Offer is in effect until one day after the time prescribed by applicable securities legislation or stock exchange rules for the offeror to take up and pay for such shares as are to be acquired pursuant to the Offer (the "**Subordinate Share Conversion Right**"). For the avoidance of doubt, fractions of Proportionate Voting Shares may be issued in respect of any amount of Subordinate Voting Shares in respect of which the Subordinate Share Conversion Right is exercised which is less than 6.25.

**<u>Proportionate Voting Shares</u>**

On May 30, 2024, 370,370 Class B Proportionate Voting Shares were converted into 2,314,815 Subordinate Voting Shares.

Except as disclosed directly below, the Proportionate Voting Shares do not have any additional pre-emptive rights, conversion rights or exchange rights and are not further subject to redemption, retraction purchase for cancellation or surrender provisions. There are no additional sinking or purchase fund provisions, no provisions permitting or restricting the issuance of additional securities or any other material restrictions, and there are no additional provisions which are capable of requiring a security holder to contribute additional capital.

<u>Voting</u>

The holders of Proportionate Voting Shares shall be entitled to receive notice of and to attend and vote at all meetings of shareholders of the Company except a meeting at which only the holders of another class or series of shares is entitled to vote. Subject to provisions relating to the alteration to rights of Proportionate Voting Shares and to the creation of shares superior to Proportionate Voting Shares, each Proportionate Voting Share shall entitle the holder to 6.25 votes and each fraction of a Proportionate Voting Share shall entitle the holder to the number of votes calculated by multiplying the fraction by 6.25 and rounding the product down to the nearest whole number, at each such meeting.

<u>Alteration to Rights of Proportionate Voting Shares</u>

So long as any Proportionate Voting Shares remain outstanding, the Company will not, without the consent of the holders of Proportionate Voting Shares expressed by separate special resolution alter or amend the Articles of the Company if the result of such alteration or amendment would: (a) prejudice or interfere with any right or special right attached to the Proportionate Voting Shares; or (b) affect the rights or special rights of the holders of Subordinate Voting Shares or Proportionate Voting Shares on a per share basis as provided for herein.

At any meeting of holders of Proportionate Voting Shares called to consider such a separate special resolution, each Proportionate Voting Share shall entitle the holder to one (1) vote and each fraction of a Proportionate Voting Share will entitle the holder to the corresponding fraction of one (1) vote.

<u>Shares Superior to Proportionate Voting Shares</u>

The Company may take no action which would authorize or create shares of any class or series having preferences superior to or on a parity with the Proportionate Voting Shares without the consent of the holders of a majority of the Proportionate Voting Shares expressed by separate ordinary resolution.

At any meeting of holders of Proportionate Voting Shares called to consider such a separate ordinary resolution, each Proportionate Voting Share will entitle the holder to one (1) vote and each fraction of a Proportionate Voting Share shall entitle the holder to the corresponding fraction of one (1) vote.

<u>Dividends</u>

The holders of Proportionate Voting Shares shall be entitled to receive such dividends payable in cash or property of the Company as may be declared by the Board from time to time. The directors may declare no dividend payable in cash or property on the Proportionate Voting Shares unless the Board simultaneously declares a dividend payable in cash or property on the Subordinate Voting Shares, in an amount equal to the amount of the dividend declared per Proportionate Voting Share divided by 6.25.

The directors may declare a stock dividend payable in Proportionate Voting Shares on the Proportionate Voting Shares, but only if the Board simultaneously declares a stock dividend payable in Proportionate Voting Shares on the Subordinate Voting Shares, in a number of shares per Subordinate Voting Share equal to the amount of the dividend declared per Proportionate Voting Share divided by 6.25.

The directors may declare a stock dividend payable in Subordinate Voting Shares on the Proportionate Voting Shares, but only if the Board simultaneously declares a stock dividend payable in Subordinate Voting Shares on the Subordinate Voting Shares, in a number of shares per Subordinate Voting Share equal to the amount of the dividend declared per Proportionate Voting Share divided by 6.25.

Holders of fractional Proportionate Voting Shares shall be entitled to receive any dividend declared on the Proportionate Voting Shares, in an amount equal to the dividend per Proportionate Voting Share multiplied by the fraction thereof held by such holder.

<u>Liquidation Rights</u>

In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company to its shareholders for the purpose of winding up its affairs, the holders of the Proportionate Voting Shares shall be entitled to participate *pari passu* with the holders of Subordinate Voting Shares, with the amount of such distribution per Proportionate Voting Share equal to the amount of such distribution per Subordinate Voting Share multiplied by 6.25.

<u>Subdivision or Consolidation</u>

The Proportionate Voting Shares shall not be consolidated or subdivided unless the Subordinate Voting Shares are simultaneously consolidated or subdivided utilizing the same divisor or multiplier.

<u>Voluntary Conversion</u>

Subject to the conversion limitation set out below, holders of Proportionate Voting Shares shall have the following rights of conversion (the "**Proportionate Share Conversion Right**"):

*Right to Convert Proportionate Voting Shares.* Each Proportionate Voting Share shall be convertible at the option of the holder into such number of Subordinate Voting Shares as is determined by multiplying the number of Proportionate Voting Shares in respect of which the Proportionate Share Conversion Right is exercised by 6.25. Fractions of Proportionate Voting Shares may be converted into such number of Subordinate Voting Shares as is determined by multiplying the fraction by 6.25.

*Foreign Private Issuer Status*. The Company shall not give effect to any voluntary conversion of Proportionate Voting Shares pursuant to its Articles or otherwise, and the Proportionate Share Conversion Right will not apply, to the extent that after giving effect to all permitted issuances after such conversion of Proportionate Voting Shares, the aggregate number of Subordinate Voting Shares and Proportionate Voting Shares (calculated on the basis that each Subordinate Voting Share and Proportionate Voting Share is counted once, without regard to the number of votes carried by such share) held of record, directly or indirectly, by residents of the United States (as determined in accordance with Rules 3b-4 and 12g3-2(a) under the Exchange Act (**"U.S. Residents**") would exceed forty percent (40%) (the "**40% Threshold**") of the aggregate number of Subordinate Voting Shares and Proportionate Voting Shares (calculated on the same basis) issued and outstanding (the "**FPI Restriction**"). The Board may by resolution waive this restriction for any individual transaction or increase the 40% Threshold to a number not to exceed fifty percent (50%), and if any such resolution is adopted, all references to the 40% Threshold herein shall refer instead to the amended percentage threshold set by the Board in such resolution.

*Conversion Limitation.* In order to give effect to the FPI Restriction, the number of Subordinate Voting Shares issuable to a holder of Proportionate Voting Shares upon exercise by such holder of the Proportionate Share Conversion Right will be subject to the 40% Threshold based on the number of Proportionate Voting Shares held by such holder as of the date of issuance of Proportionate Voting Shares to such holder, and thereafter at the end of each of the Company's subsequent fiscal quarters (each, a "**Determination Date**"), calculated as follows:

X = [A x 40% - B] x (C/D)

Where, on the Determination Date:

X = Maximum Number of Subordinate Voting Shares which may be issued upon exercise of the Proportionate Share Conversion Right.

A = Aggregate number of Subordinate Voting Shares and Proportionate Voting Shares issued and outstanding.

B = Aggregate number of Subordinate Voting Shares and Proportionate Voting Shares held of record, directly or indirectly, by U.S. Residents.

C = Aggregate Number of Proportionate Voting Shares held by such holder.

D = Aggregate Number of all Proportionate Voting Shares.

An officer designated by the Board (or a committee thereof) shall determine as of each Determination Date, in his or her sole discretion acting reasonably, the aggregate number of Subordinate Voting Shares and Proportionate Voting Shares held of record, directly or indirectly, by U.S. Residents, the maximum number of Subordinate Voting Shares which may be issued upon exercise of the Proportionate Share Conversion Right, generally in accordance with the formula set forth immediately above. Upon request by a holder of Proportionate Voting Shares, the Company will provide each holder of Proportionate Voting Shares with notice of such maximum number as at the most recent Determination Date, or a more recent date as may be determined by the Conversion Limitation Officer in its discretion. To the extent that issuances of Subordinate Voting Shares on exercise of the Proportionate Share Conversion Right would result in the 40% Threshold being exceeded, the number of Subordinate Voting Shares to be issued will be pro-rated among each holder of Proportionate Voting Shares exercising the Proportionate Share Conversion Right.

Notwithstanding the provisions set out above, the Board may by resolution waive the application of the conversion restriction to any exercise or exercises of the Proportionate Share Conversion Right to which the conversion restriction would otherwise apply, or to future conversion restrictions generally, including with respect to a period of time.

**<u>Restricted Securities</u>**

Part 12 of NI 41-101 and Ontario Securities Commission Rule 56-501 – *Restricted Shares* (collectively, the "**Restricted Share Rules**") regulate the creation and distribution of "restricted shares"(as defined in OSC Rule 56-501) and "restricted securities" (as defined in NI 41-101) by reporting issuers in Canada. The definitions of "restricted shares" and "restricted securities" include equity shares which have voting rights exercisable in all circumstances, irrespective of the number or percentage of shares owned, that are less, on a per share basis, than the voting rights attached to any other shares of an outstanding class of shares of the issuer. A "subject security" under NI 41-101 means a security that results, or would result if and when issued, in an existing class of securities being considered restricted securities. According to these definitions, the Subordinate Voting Shares are "restricted shares"(as defined in OSC Rule 56-501) and "restricted securities"(as defined in NI 41-101). As of the date of this AIF, all of the voting rights attached to the Company's securities are represented by Subordinate Voting Shares.

**<u>Options to Purchase Securities</u>**

<u>Omnibus Plan</u>

As of the date of this AIF, there are 803,712 Options and 718,706 RSUs issued and outstanding. There are no other equity securities that will become options to acquire Subordinate Voting Shares or Proportionate Voting Shares, whether under any equity compensation plan or otherwise. The Company has established the Omnibus Plan providing for the grant of Options, RSUs, PSUs, and DSUs. The purpose of the Omnibus Plan is to provide the Company with a share related mechanism to attract, retain and motivate qualified directors, employees and consultants of the Company and its subsidiaries, to reward such persons for their contributions toward the long-term goals and success of the Company and to enable and encourage such persons to acquire Subordinate Voting Shares as long-term investments and proprietary interests in the Company.

A subsidiary of the Company may also adopt an incentive stock option plan to provide for the issuance of equity-based incentive awards (a "**Subsidiary Plan**"); provided however, that any Subsidiary Plan will be subject to the terms and conditions of the Omnibus Plan, as they relate to the Subsidiary Plan.

The Board adopted the Omnibus Plan on June 9, 2022 and the Company most recently obtained Shareholder approval of the Omnibus Plan on September 13, 2024.

The material features of the Omnibus Plan are summarized below, which summary is qualified in its entirety by the full text of the Omnibus Plan. Any capitalized terms used in the following summary, but not otherwise defined, shall have the meanings ascribed thereto in the Omnibus Plan. A complete copy of the Omnibus Plan may be obtained without charge upon request from the Company's registered and records office located at 1111 West Hastings Street, 15th Floor, Vancouver, BC V6E 2J3.

---

| | |
|:---|:---|
| **Key Terms** | **Summary** |
| **Key Definitions** | "**Code**" the United States Internal Revenue Code of 1986 as amended.<br>"**Date of Grant**" means, for any Award, the date specified by the Plan Administrator at the time it grants the Award or if no such date is specified, the date upon which the Award was granted.<br>**"Participant**" means a person to whom an Award has been granted under this Plan or a Subsidiary Plan, as applicable.<br>|

---

---

| | |
|:---|:---|
|  | "**Market Price**" means, on any particular date, (a) the closing price of the Subordinate Voting Shares on the NEO on the last Trading Day prior to such particular date; or (b) if the Subordinate Shares are not then listed on the NEO, the value as is determined solely by the Board, acting reasonably and in good faith, and, with respect to an Award made to a U.S. Taxpayer, in accordance with Section 409A of the Code and such determination shall be conclusive and binding on all Persons.<br>"**Market Value**" means, on any particular date, the product obtained by multiplying the Market Price by the total issued and outstanding Subordinate Voting Shares, expressed in dollars.<br>"**MVA Amount**" means, with respect to a subsidiary of the Company on any particular date, the product obtained by multiplying such subsidiary's MVA Ratio by the Market Value on such particular date.<br>"**MVA Ratio**" means the ratio for allocating Market Value to each subsidiary of the Corporation, calculated in accordance with Omnibus Plan.<br>"**U.S. Securities Act**" means the United States Securities Act of 1933, as amended.<br>"**U.S. Taxpayer**" shall mean a Participant who, with respect to an Award, is subject to taxation under the applicable U.S. tax laws |
| **Administration** | The Omnibus Plan will be administered, in its exclusive discretion, by the Plan Administrator, who will initially be the Board.<br>To the extent permitted by applicable law, the Board may, from time to time, delegate to a committee of the Board, all or any of the powers conferred on the Plan Administrator under the Omnibus Plan.<br>Awards granted under the Omnibus Plan are subject to any listing, registration or qualification requirements under Securities Laws, and any required consent or approval of the NEO or any securities commissions or similar securities regulatory bodies having jurisdiction over the Company. Additionally, all Awards shall be issued pursuant to the registration requirements of the U.S. Securities Act, or pursuant to an exemption or exclusion from such registration requirements. |
| **Eligibility** | All Directors, Employees or Consultants of the Company or a subsidiary of the Company ("**Eligible Persons**") are eligible to participate in the Omnibus Plan, subject to certain exceptions set out in the Omnibus Plan (i.e. termination, death, disability, retirement, etc). Participation in the Plan is voluntary and eligibility to participate does not confer upon any Eligible Person any right to receive any grant of an Award pursuant to the Omnibus Plan. |
| **Award Agreements** | Each Award granted under the Omnibus Plan will be evidenced by a written agreement, in a form approved by the Plan Administrator. |
| **Market Value Allocation** <br>| No later than 30 days after the Company files Annual Audited Financial Statements with respect to the most recent Fiscal Year, the Plan Administrator shall determine the Market Value allocation ratio (the "MVA Ratio") with respect to each subsidiary of the Company using the formula set out below:<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**MVA Ratio of a subsidiary** = <u>DCF of subsidiary</u> <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DCF of all subsidiaries<br>where "**DCF**" means discounted cash flow.<br>|
| **Subsidiary Plan Requirements** | Any Subsidiary Plan adopted by a subsidiary of the Company shall include the following terms and conditions:<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The
 aggregate number of Subsidiary Shares reserved for issuance under a Subsidiary Plan shall not exceed 20% of the subsidiary's
 total issued and outstanding Subsidiary Shares.

(ii) Subsidiary
 Shares covered by Subsidiary Options which have been settled, exercised or terminated shall be available again for subsequent grants.

(iii) The
 exercise price with respect to a Subsidiary Option shall be established at the time each Subsidiary Option is granted, and shall
 not be less than the price per Subsidiary Share calculated by dividing, at the time of grant, the MVA Amount by the subsidiary's
 total issued and outstanding Subsidiary Shares.

---

| | |
|:---|:---|
| **Reserve** | Subject to adjustment as provided in the Omnibus Plan, and any subsequent amendment to the Omnibus Plan, the aggregate number of Subordinate Voting Shares reserved for issuance under the Omnibus Plan shall not exceed 25% of the Company's total issued and outstanding Subordinate Voting Shares from time to time.<br>Subordinate Voting Shares covered by Awards which have been settled, exercised, expired or terminated shall again be available for subsequent grants under the Omnibus Plan, and the number of Awards available to grant increases as the number of issued and outstanding Subordinate Voting Shares increases. |
| **Limits** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate number of Subordinate Voting Shares:<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) issuable
 to Insiders at any time, under all of the Company's Security Based Compensation Arrangements, shall not exceed 20% of the Company's
 issued and outstanding Subordinate Voting Shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) issued
 to Insiders within any one (1) year period, under all of the Company's Security Based Compensation Arrangements, shall not exceed
 20% of the Company's issued and outstanding Subordinate Voting Shares.

---

| | |
|:---|:---|
| **Awards** | The following are the Awards available for issuance under the Omnibus Plan.<br>**Options**. Each Option entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price determined by the Board.<br>**RSUs**. Each RSU is a unit equivalent in value to a Subordinate Voting Share, credited by means of a bookkeeping entry in the books of the Company in accordance with Article 5 of the Omnibus Plan. Upon the settlement, each RSU will consist of a right to receive a Subordinate Voting Share, cash payment, or a combination thereof.<br>**PSUs**. Each PSU is a unit equivalent in value to a Subordinate Voting Share, credited by means of a bookkeeping entry in the books of the Company in accordance with Article 6 of the Omnibus Plan. Each PSU will consist of a right to receive a Subordinate Voting Share, cash payment, or a combination thereof upon the achievement of certain Performance Goals during such performance periods as the Plan Administrator shall establish.<br>**DSUs**. Each DSU is a unit equivalent in value to a Subordinate Voting Share, credited by means of a bookkeeping entry in the books of the Company in accordance with Article 7 of the Omnibus Plan. Upon settlement, each DSU will consist of a right to receive one Subordinate Voting Share or a cash payment. |
| **Grant and Market Value** | **Options.** The Plan Administrator will establish the Exercise Price at the time each Option is granted, at the sole discretion of the Plan Administrator, subject to applicable securities laws and Exchange rules and provided that the Exercise Price must not be less than the Market Price at the time of granting the Option.<br>**RSUs.** The Plan Administrator may, from time to time, subject to the provisions of the Omnibus Plan and such other terms and conditions as the Plan Administrator may prescribe, grant RSUs to any Participant in respect of a bonus or similar payment in respect of services rendered by the applicable Participant in a taxation year (the "**RSU Service Year**"). The number of RSUs granted at any particular time will be calculated by dividing (i) the amount of any bonus or similar payment that is to be paid in RSUs, as determined by the Plan Administrator, by (ii) the Market Price on the Date of Grant.<br>**PSUs.** The Plan Administrator may grant PSUs to any Participant in respect of a bonus or similar payment in respect of services rendered by the applicable Participant in a taxation year (the "**PSU Service Year**"). The Performance Goals to be achieved during any performance period, the length of any performance period, the amount of any PSUs granted, the effect of termination of a Participant's service and the amount of any payment or transfer to be made pursuant to any PSU will be determined by the Plan Administrator and by the other terms and conditions of any PSU.<br>**DSUs.** The Board may fix, from time to time, a portion of the Director Fees that is to be payable to Directors in the form of DSUs. Additionally, each Director has the right to elect to participate in the grant of additional DSUs in an amount, as elected by the Director, between 0% and 100% of any Director Fees that would otherwise be paid in cash, which election will be deemed to apply to all periods in calendar years following the calendar year for which it is made until it is terminated under section 7.1(d) of the Omnibus Plan. The number of DSUs granted at any particular time will be calculated by dividing (i) the amount of Director Fees that are to be paid as DSUs, as determined by the Plan Administrator or Director Fees that are to be paid in DSUs (including any Elected Amount), by (ii) the Market Price on the Date of Grant. |

---

---

| |
|:---|
| **Vesting** |
| **Expiry and Settlement Date** **Options.** The expiry date of each Option will be determined by the Plan Administrator, (subject to any accelerated termination) but cannot be later than 10 years from the Date of Grant and, if not specified, is 10 years from the Date of Grant.<br>**RSUs.** The settlement date of each RSU will be determined by the Plan Administrator, provided that no settlement date for any RSU shall occur, and no Subordinate Voting Share shall be issued or cash payment shall be made in respect of any RSU, any later than the final Business Day of the 3<sup>rd</sup> calendar year following the applicable RSU Service Year.<br>**PSUs.** The settlement date of each PSU will be determined by the Plan Administrator, provided that no settlement date for any PSU shall occur, and no Subordinate Voting Share shall be issued or cash payment shall be made in respect of any PSU, any later than the final Business Day of the 3<sup>rd</sup> calendar year following the applicable PSU Service Year.<br>**DSUs.** The settlement date will be determined by the Plan Administrator, and if not established, for a Participant who is not a U.S. Taxpayer the settlement date shall be the date determined by the Participant (which date shall not be earlier than the Termination Date), and for a Participant who is a U.S. taxpayer, the settlement date shall be the date determined by the Participant in accordance with the Election Notice. |

---

---

| | |
|:---|:---|
| **Settlement** | **Options.** At the election of the Plan Administrator, each vested Option can be settled in:<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) one
 Subordinate Voting Share,

(ii) a
 cash payment equal to the In the Money Amount, or

(iii) a
 combination of Subordinate Voting Shares and cash.

---

| |
|:---|
| If permitted by the Plan Administrator, a Participant may, in lieu of exercising an Option, elect to surrender such Option to the Company in consideration for an amount from the Company equal to: (x) the Market Price of the Subordinate Voting Shares issuable on the exercise of such Option (or portion thereof) as of the date such Option (or portion thereof) is exercised, less (y) the aggregate Exercise Price of the Option (or portion thereof) surrendered relating to such Subordinate Voting Shares. |
| **RSUs.** Upon settlement, each vested RSU shall be redeemed at the election of the Participant but subject to the approval of the Plan Administrator, for: |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) one
 Subordinate Voting Share,

(ii) a
 cash payment, or,

(iii) a
 combination of Subordinate Voting Shares and cash.

---

| |
|:---|
| Any cash payments made shall be calculated by multiplying the number of RSUs to be redeemed for cash by the Market Price per Subordinate Voting Share as at the settlement date. |
| **PSUs.** Upon settlement, each vested PSU shall be redeemed at the election of the Participant but subject to the approval of the Plan Administrator, for:<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) one
 Subordinate Voting Share;

(ii) a
 cash payment, or

(iii) a
 combination of Subordinate Voting Shares and cash.

---

| |
|:---|
| Any cash payments made shall be calculated by multiplying the number of PSUs to be redeemed for cash by the Market Price per Subordinate Voting Share as at the settlement date. |
| **DSUs.** Upon settlement, subject to the approval of the Plan Administrator, each vested DSU shall be redeemed for: |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) one
 Subordinate Voting Share; or

(ii) a
 cash payment.

Any cash payments made shall be calculated by multiplying the number of DSUs to be redeemed for cash by the Market Price per Subordinate Voting Share as at the settlement date.

---

| | |
|:---|:---|
| **Dividend Equivalents** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless determined by the Plan Administrator, an Award of RSUs, PSUs and DSUs include the right for such RSUs, PSUs and DSUs to be credited with dividend equivalents in the form of additional RSUs, PSUs and DSUs, respectively, as of each dividend payment date in respect of which normal cash dividends are paid on Subordinate Voting Shares.<br>Dividend equivalents shall be computed by dividing:<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 amount obtained by multiplying the amount of the dividend declared and paid per Subordinate Voting Share by the number of RSUs, PSUs
 and DSUs, as applicable, held, by

(ii) the
 Market Price at the close of the first Business Day immediately following the dividend record date.

---

| | |
|:---|:---|
| **Restricted Period** | With respect to U.S. Taxpayers, except if such extension is prohibited by Section 409A of the Code, in the event that an Award expires, at a time when a scheduled restricted period is in place or an undisclosed material change or material fact in the affairs of the Company exists, the expiry of such Award will be the date that is 10 Business Days after which such scheduled restricted period terminates or there is no longer such undisclosed material change or material fact. |

---

---

| | |
|:---|:---|
| **Non-Transferability** | Except to the extent that certain rights may pass to a beneficiary or legal representative upon death of a Participant, by will or as required by law, no assignment or transfer of Awards, whether voluntary, involuntary, by operation of law or otherwise, vests any interest or right in such Awards whatsoever in any assignee or transferee and immediately upon any assignment or transfer, or any attempt to make the same, such Awards will terminate and be of no further force or effect. To the extent that certain rights to exercise any portion of an outstanding Award pass to a beneficiary or legal representative upon death of a Participant, the period in which such Award can be exercised by such beneficiary or legal representative shall not exceed one year from the Participant's death |
| **Termination or Cessation** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Voluntary Resignation or Termination for Cause.** Any Award that has not been exercised, surrendered or settled as of the Termination Date shall be immediately cancelled as of the Termination Date;<br>**Termination Without Cause.** Any vested Options may be exercised by the Participant at any time during the period that terminates on the earlier of:<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 Expiry Date of such Option; and

(ii) the
 date that is 90 days after the Termination Date.

---

| |
|:---|
| Otherwise, the Option shall be immediately cancelled for no consideration upon the termination of such period. |
| **Disabled.** Any vested Options may be exercised by the Participant at any time during the period that terminates on the earlier of: |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 Expiry Date of such Option; and

(ii) the
 date that is 180 days after the Termination Date.

---

| |
|:---|
| Otherwise, the Option shall be immediately cancelled for no consideration upon the termination of such period. |
| **Death.** Any vested Options may be exercised by the Participant's beneficiary or legal representative at any time during the period that terminates on the earlier of: |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 Expiry Date of such Option; and

(ii) the
 first anniversary of the date of the death of such Participant.

---

| |
|:---|
| Otherwise, the Option shall be immediately cancelled for no consideration upon the termination of such period. |
| **Retirement.** Subject to certain limitations, any vested Option may be exercised by the Participant at any time during the period that terminates on the earlier of: |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 Expiry Date of such Option; and

(ii) the
 3<sup>rd</sup>anniversary of the Participant's date of Retirement.

Otherwise, the Option shall be immediately cancelled for no consideration upon the termination of such period. <br>The foregoing is subject to any acceleration of vesting or waiver of termination made by the Plan Administrator.

---

| | |
|:---|:---|
| **Change of Control** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms of the Omnibus Plan, the Plan Administrator may, without Participant consent, take such steps as it deems necessary or desirable, including to cause:<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 conversion or exchange of any outstanding Awards into rights or other securities of substantially equivalent value, in any entity
 participating in or resulting from a Change in Control;

(ii) outstanding
 Awards to vest, or restrictions applicable to an Award to lapse, prior to or upon consummation of a Change in Control, and terminate
 upon or immediately prior to the effectiveness of such Change in Control;

(iii) the
 termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained
 upon the exercise or settlement of such Award;

(iv) the
 replacement of an Award with other rights or property, where such replacement would not adversely affect the holder; or

(v) any
 combination of the foregoing.

---

| | |
|:---|:---|
| **U.S. Taxpayer Restrictions** | Any Awards granted to a U.S. Taxpayer must comply with Section 409A of the Code and all regulations, guidance, compliance programs, and other interpretive authority issued thereunder, to the extent it is applicable.<br>Options granted under the Omnibus Plan to U.S. Taxpayers may be non-qualified stock options or incentive stock options qualifying under Section 422 of the Code ("**ISO**s").<br>The aggregate number of Subordinate Voting Shares reserved for issuance in respect of granted ISOs shall not exceed 10,000,000, and the terms and conditions of any ISOs granted to a U.S. Taxpayer on the Date of Grant hereunder, including the eligible recipients of ISOs, shall be subject to the provisions of Section 422 of the Code.<br>At the discretion of the Plan Administrator, ISOs may only be granted to an individual who is an employee of the Company, or of a "parent corporation" or "subsidiary corporation" of the Company, as such terms are defined in Sections 424(e) and (f) of the Code.<br>if an ISO is granted to a person who owns shares representing more than 10% of the voting power of all classes of shares of the Company or of a "parent corporation" or "subsidiary corporation", as such terms are defined in Section 424(e) and (f) of the Code, on the Date of Grant, the term of the Option shall not exceed five years from the time of grant of such Option and the Exercise Price shall be at least 110% of the Market Price of the Subordinate Voting Shares subject to the Option.<br>To the extent the aggregate Market Price as at the Date of Grant of the Subordinate Voting Shares for which ISOs are exercisable for the first time by any person during any calendar year (under all plans of the Company and any "parent corporation" or "subsidiary corporation", as such terms are defined in Section 424(e) and (f) of the Code) exceeds USD$100,000, such excess ISOs shall be treated as non-qualified stock options. |
| **Amendments** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to certain express permitted amendments, as set out in the Omnibus Plan, the Plan Administrator may from time to time, without notice and without shareholder consent, subject to applicable Securities Laws and policies of the NEO, amend, modify, change, suspend or terminate the Omnibus Plan or any Awards granted pursuant to the Omnibus Plan as it, in its discretion determines appropriate, provided, however, that:<br>|

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) no
 such amendment, modification, change, suspension or termination of the Omnibus Plan or any Awards may materially impair any rights
 of a Participant or materially increase any obligations of a Participant under the Omnibus Plan without the consent of the Participant,
 unless the Plan Administrator determines such adjustment is required or desirable in order to comply with any applicable Securities
 Laws or NEO requirements; and

(ii) any
 amendment that would cause an Award held by a U.S. Taxpayer to be subject to income inclusion under Section 409A of the Code shall
 be null and void ab initio with respect to the U.S. Taxpayer unless the consent of the U.S. Taxpayer is obtained.

**MARKET FOR SECURITIES**

**<u>Trading Price and Volume</u>**

The following table sets out information relating to the monthly trading of the Subordinate Voting Shares and the Listed Warrants on Cboe Canada for the year ended March 31, 2025. The Subordinate Voting Shares trade under the symbol "VERS", the Listed Series A Warrants under "VERS.WT.A" (the **"2022 Listed Warrants"**), and the Listed Series B Warrants under "VERS.WT.B" (the **"2023 Listed Warrants"**).

*Subordinate Voting Shares*

 

---

| | | | |
|:---|:---|:---|:---|
| **Month** | **High**<br>(Cdn$) | **Low**<br>(Cdn$) | **Volume**<br>(# of Subordinate Voting Shares) |
| April 2024 | 41.58 | 24.57 | 212593 |
| May 2024 | 34.29 | 24.03 | 143025 |
| June 2024 | 35.10 | 24.84 | 182448 |
| July 2024 | 32.94 | 25.11 | 144533 |
| August 2024 | 36.72 | 23.49 | 270419 |
| September 2024 | 27.00 | 17.01 | 231072 |
| October 2024 | 19.71 | 9.87 | 279754 |
| November 2024 | 14.85 | 9.45 | 192882 |
| December 2024 | 45.63 | 9.99 | 885658 |
| January 2025 | 63.45 | 31.32 | 1038500 |
| February 2025 | 46.98 | 26.46 | 396739 |
| March 2025 | 37.53 | 20.10 | 305161 |

---

 

 

*2022 Listed Warrants*

 

---

| | | | |
|:---|:---|:---|:---|
| **Month** | **High**<br>(Cdn$) | **Low**<br>(Cdn$) | **Volume**<br>(# of Listed Warrants) |
| April 2024 | 13.50 | 1.62 | 5384 |
| May 2024 | 8.51 | 1.76 | 4623 |
| June 2024 | 8.91 | 3.24 | 5933 |
| July 2024 | 9.45 | 3.39 | 4247 |
| August 2024 | 13.50 | 3.51 | 1018 |
| September 2024 | 3.66 | 3.24 | 444 |
| October 2024 | 3.24 | 3.24 | 203 |
| November 2024 | 3.51 | 2.70 | 4589 |
| December 2024 | 18.09 | 2.70 | 50521 |
| January 2025 | 33.75 | 13.50 | 27550 |
| February 2025 | 22.95 | 8.10 | 4635 |
| March 2025 | 21.60 | 6.75 | 12784 |

---

 

*2023 Listed Warrants*

 

---

| | | | |
|:---|:---|:---|:---|
| **Month** | **High**<br>(Cdn$) | **Low**<br>(Cdn$) | **Volume**<br>(# of Listed Warrants) |
| April 2024 | 11.76 | 1.89 | 3444 |
| May 2024 | 3.24 | 1.89 | 870 |
| June 2024 | 4.05 | 2.70 | 2084 |
| July 2024 | 4.05 | 1.89 | 15312 |
| August 2024 | 3.51 | 0.15 | 3382 |
| September 2024 | 4.05 | 0.15 | 13139 |
| October 2024 | 1.89 | 1.35 | 7944 |
| November 2024 | 1.89 | 1.35 | 1658 |
| December 2024 | 12.15 | 1.62 | 11105 |
| January 2025 | 25.65 | 10.80 | 14065 |
| February 2025 | 20.25 | 8.10 | 2353 |
| March 2025 | 16.20 | 10.80 | 3410 |

---

**<u>Prior Sales</u>**

The following table summarizes the issuances during the year ended March 31, 2025 of securities of the Company that are outstanding but not listed or quoted on a marketplace.

---

| | | | |
|:---|:---|:---|:---|
| **Date of Issuance** | **Type of Security** | **Number of Securities** | **Issue/Exercise Price Per Security** |
| 15-Apr-2024 | Options | 9352<sup>(1)</sup> | $30.78 |
|  |  | 2337<sup>(1)</sup> | $36.45 |
|  | RSUs | 1852<sup>(1)</sup> | N/A |
| 18-Apr-2024 | Special Warrants | 259259<sup>(2)</sup> | $27.00 |
|  | Finder Warrants | 3348<sup>(2)</sup> | $27.00 |
| 30-Apr-2024 | Special Warrants | 86122<sup>(2)</sup> | $27.00 |
|  | Finder Warrants | 6673<sup>(2)</sup> | $27.00 |
| 17-May-2024 | Special Warrants | 24989<sup>(2)</sup> | $27.00 |
|  | Finder Warrants | 1699<sup>(2)</sup> | $27.00 |
| 20-June-2024 | Debentures | 370370<sup>(3)</sup> | N/A |
|  | Warrants | 255185<sup>(3)</sup> | $40.50 |
|  | RSUs | 37037<sup>(3)</sup> | N/A |
| 3-July-2024 | Options | 156525<sup>(1)</sup> | $28.89 |
|  |  | 3242<sup>(1)</sup> | $36.45 |
|  | RSUs | 359817<sup>(1)</sup> | N/A |
| 13-Aug-2024 | Warrants | 43062<sup>(11)</sup> | $40.50 |
| 17-Aug-2024 | Warrants | 129631<sup>(11)</sup> | $40.50 |
| 17-Sep-2024 | Warrants | 12494<sup>(11)</sup> | $40.50 |
| 26-Sep-2024 | Warrants | 115739<sup>(4)</sup> | $32.40 |
|  | Broker Warrants | 10562<sup>(4)</sup> | $21.60 |
| 9-Oct-2024 | Options | 56361<sup>(1)</sup> | $14.31 |
| 8-Nov-2024 | Life Unit Warrants | 107551<sup>(5)</sup> | $13.50 |
|  | Broker Warrants | 7679<sup>(5)</sup> | $13.50 |
|  | Special Warrants | 133333<sup>(5)</sup> | $13.50 |
|  | Broker Warrants | 6765<sup>(5)</sup> | $13.50 |
| 15-Nov-2024 | Life Unit Warrants | 18994<sup>(5)</sup> | $18.90 |
|  | Broker Warrants | 2229<sup>(5)</sup> | $18.90 |
| 9-Dec-2024 | Warrants | 28518<sup>(9)</sup> | $18.90 |
|  | Finder Unit Warrants | 3707<sup>(9)</sup> | $13.50 |
| 8-Jan-2025 | Finder Warrants | 28<sup>(10)</sup> | $40.50 |
| 23-Dec-2024 | Options | 136297<sup>(1)</sup> | $30.51 |
|  | RSUs | 296296<sup>(1)</sup> | N/A |
| 7-Jan-2025 | Unit Warrants | 235906<sup>(6)</sup> | $52.92 |
|  | Broker Warrants | 26420<sup>(6)</sup> | $42.39 |
| 25-Feb-2025 | Warrants | 255185<sup>(3)</sup> | $52.92 |
| 9-March-2025 | Warrants | 66667<sup>(8)</sup> | $18.90 |
| 28-April-2025 | Unit Warrants | 572708<sup>(7)</sup> | $15.00 |
|  | Corporate Finance Fee Warrants | 50000<sup>(7)</sup> | $12.00 |
|  | Broker Warrants | 20334<sup>(7)</sup> | $12.00 |
| 26-May-2025 | Options | 33334<sup>(1)</sup> | $12.57 |
|  | RSUs | 33333<sup>(1)</sup> | N/A |

---

**Notes:**

(1) Granted
 to certain directors, employees and consultants of the Company pursuant to the Omnibus Plan.

(2) Issued
 in connection with the 2024 Special Warrant Financing. See "*General Development of the Business – Three Year History – Financings and Share Issuances* ".

(3) Issued
 in connection with the G42 Financing. See "*General Development of the Business – Three Year History – Development of the Business* ".

(4) Issued
 in connection with the September 2024 Offering. See "*General Development of the Business – Three Year History – Financings and Share Issuances* ".

(5) Issued
 in connection with the November 2024 Financing. See "*General Development of the Business – Three Year History – Financings and Share Issuances* ".

(6) Issued
 in connection with the January 2025 Offering. See "*General Development of the Business – Three Year History – Financings and Share Issuances* ".

(7) Issued
 in connection with the April 2025 Offering. See "*General Development of the Business – Three Year History – Financings and Share Issuances* ".

(8) Conversion
 of Special Warrants November 8, 2024

(9) December
 financing

(10) Conversion
 of Broker Units

(11) Conversion
 Special Warrant April 2024

**ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER**

As of the date of this AIF, no securities of the Company are held, to the knowledge of the Company, in escrow or are subject to a contractual restriction on transfer.

**DIRECTORS AND EXECUTIVE OFFICERS**

**<u>Name, Occupation and Security Holding</u>**

The following table sets forth information with respect to the directors and executive officers of the Company as at the date of this AIF, including their respective provinces or states and countries of residence, their position(s) and office(s) with the Company, their principal occupation(s) for the last five years, the dates on which they first became directors or officers of the Company and the number of the Subordinate Voting Shares and Proportionate Voting Shares beneficially owned, directly or indirectly, or over which control or direction is exercised, by such persons or such persons' respective associates or affiliates.

The directors hold office until the next annual meeting of shareholders of the Company. The term of office of the executive officers expires at the discretion of the Board.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name and Residence** | **Position(s) and Office(s) with the Company** | **Principal Occupation(s) During the Past Five Years** | **Period as Director and/or Officer** | **Number and Percentage of Shares Held<sup>(1)</sup>** |
| Gabriel René<br>*California, USA* | Chief Executive Officer and Director | CEO of VERSES since September 2018.<br>Self-Employed Business Consultant from December 2016 – September 2018. | Director since July 19, 2021.<br>Chief Executive Officer since September 27, 2021. | 1,158,333 Subordinate Voting Shares (13.24%) |
| Dan Mapes<br>*California, USA* | Director, President Emeritus, and Director of Global Development | President of VERSES from September 2019 to April 2025. | Director since July 19, 2021.<br>President Emeritus since April 17, 2025.<br>Director of Global Development since April 17, 2025. | 1,158,333 Subordinate Voting Shares (13.24%) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name and Residence** | **Position(s) and Office(s) with the Company** | **Principal Occupation(s) During the Past Five Years** | **Period as Director and/or Officer** | **Number and Percentage of Shares Held<sup>(1)</sup>** |
| Kevin Wilson<br>*California, USA* | Chief Accounting Officer and Secretary | CFO of VERSES from September 2021 to March 2025.<br>Secretary of VERSES since September 2021.<br>Self-employed as a fractionalized CFO for various companies from November 2015- December 2021. | Secretary since September 27, 2021.<br>Chief Accounting Officer since March 25, 2025. | 4,032 Subordinate Voting Shares (0.05%) |
| Gordon Scott Paterson<sup>(2)(3)(4)</sup><br>*Ontario, Canada* | Director | President of Patstar Inc. since July 1988. | Since June 15, 2022. | 15,740 Subordinate Voting Shares (0.18%) |
| Jonathan De Vos<sup>(2)(3)(4)</sup><br>*London, United Kingdom* | Director | Self-employed as a business advisor and private investor since May 2020.<br>Senior Analyst at Invesco UK Ltd. from May 2015 – May 2020. | Since April 14, 2022. | 7,244 Subordinate Voting Shares (0.08%) |
| Michael Blum<br>*Nevada, USA* | Director | President of Hedgeye Risk Management, LLC from January 2008 – ongoing<br>President of Hedgeye Asset Management, LLC from July 2024 – Ongoing<br>Sierpinski Capital Management, President, from 2019 to June 2024 | Since September 9, 2024. | Nil Subordinate Voting Shares |
| James Christodoulou<br>*New Jersey, USA* | Chief Financial Officer | CFO of KDV Law from August 2020 – March 2021.<br>CFO and Consultant of Ryze Renewables, Inc from April 2021 – November 2022.<br>CFO of Collectable Technologies Inc. from September 2022 – February 2024.<br>Head of Capital Markets of Exodus Movement, Inc. from July 2024 – December 2024.<br>CFO of Verses Solutions Inc. since February 2025. | Since March 25, 2025. | Nil Subordinate Voting Shares |
| James Hendrickson<br>*Pennsylvania, USA* | President and Chief Operating Officer | Director of Product and Offering Management of Honeywell International Inc. from September 2018 – October 2025<br>Head of Strategic Partnerships & Global Alliances of Berkshire Grey<br>from October 2020 to January 2022<br>President & GM of VERSES from January 2022 to June 2024 | Since April 17, 2025. | 13 Subordinate Voting Shares (0.0001%) |

---

**Notes**:

(1) Based
 on 8,746,491 Subordinate Voting Shares issued and outstanding as at the date of this AIF.

(2) Member
 of the Audit Committee.

(3) Member
 of the Compensation Committee.

(4) Member
 of the Nominating & Corporate Governance Committee.

**<u>Aggregate Ownership of Securities</u>**

To the Company's knowledge as at the date of this AIF, its directors and executive officers as a group beneficially own, or control or direct, directly or indirectly, 2,343,695 Subordinate Voting Shares representing approximately 26.80% of the outstanding Subordinate Voting Shares on a non-diluted basis.

**<u>Cease Trade Orders, Bankruptcies, Penalties or Sanctions</u>**

<u>Cease Trade Orders</u>

To the Company's knowledge, at the date of this AIF, no director or executive officer of the Company is, or was within 10 years prior to the date of this AIF, a director, chief executive officer or chief financial officer of any company (including the Company) that:

&nbsp;&nbsp;&nbsp;&nbsp;(i) was
 subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any
 exemption under Securities Legislation, that was in effect for a period of more than 30 consecutive days, that was issued while the
 director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer of the relevant
 company; or

(ii) was
 subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any
 exemption under Securities Legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the
 director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from
 an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

<u>Bankruptcies</u>

To the Company's knowledge, and other than as disclosed herein, no director or executive officer of the Company or any shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company:

&nbsp;&nbsp;&nbsp;&nbsp;(i) is
 as at the date of this AIF, or has been within the 10 years before the date hereof, a director or executive officer of any company,
 including the Company, that, while that person was acting in that capacity, or within a year of that person ceasing to act in that
 capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted
 any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;
 or

(ii) has,
 within the 10 years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or
 insolvency, or became subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver
 manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

Kevin Wilson was appointed as Chief Financial Officer and director of DigitalTown, Inc. ("**DigitalTown**") in May 2019. DigitalTown sought a restart of its business following 2019, however, due to failed negotiations with a former Chief Executive Officer in relation to a disclosed lawsuit, DigitalTown applied for a Chapter 11, Subchapter V reorganization bankruptcy in September 2020 to reorganize its debt. This petition was denied and the case was converted into Chapter 7 Bankruptcy. The Chapter 7 Bankruptcy case for DigitalTown closed on April 6, 2022, following which, DigitalTown became a discharged bankrupt.

<u>Penalties or Sanctions</u>

To the Company's knowledge, and other than as disclosed herein, no director or executive officer of the Company or any shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to:

&nbsp;&nbsp;&nbsp;&nbsp;(i) any
 penalties or sanctions imposed by a court relating to provincial and territorial Securities Legislation or by a provincial and territorial
 securities regulatory authority or has entered into a settlement agreement with a provincial and territorial securities regulatory
 authority; or

&nbsp;&nbsp;&nbsp;&nbsp;(ii) any
 other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable
 investor in making an investment decision.

G. Scott Paterson, Director of the Company, reached a voluntary settlement with the Ontario Securities Commission in December 2001 in respect to administrative proceedings which included a suspension of his registration for two years and a voluntary payment. There were no allegations that Mr. Paterson had violated any securities law, statute, regulation or policy statement pursuant to the aforesaid administrative proceedings.

**<u>Conflicts of Interest</u>**

To the best of the Company's knowledge, except as disclosed elsewhere in this AIF, the Company is not aware of any existing or potential material conflicts of interest between the Company and any of its directors or officers as of the date hereof. However, certain of the Company's directors and officers are, or may become, directors or officers of other companies with businesses which may conflict with its business. Accordingly, conflicts of interest may arise which could influence these individuals in evaluating possible acquisitions or in generally acting on the Company's behalf. See also "*Risk Factors – Risks Relating to the Company – Conflicts of Interest*".

Pursuant to the BCBCA, directors and officers of the Company are required to act honestly and in good faith with a view to the best interests of the Company. Generally, as a matter of practice, directors who have disclosed a material interest in any contract or transaction that the Board is considering will not take part in any board discussion respecting that contract or transaction. If on occasion such directors do participate in the discussions, they will refrain from voting on any matters relating to matters in which they have disclosed a material interest. In appropriate cases, the Company will establish a special committee of independent directors to review a matter in which directors or officers may have a conflict.

See also "*Interests of Management and Others in Material Transactions*".

**PROMOTERS**

Gabriel René, Chief Executive Officer and Director of the Company and Dan Mapes, President and Director of the Company are considered to be promoters of the Company as they took the initiative in substantially reorganizing certain aspects of the business of the Company.

Mr. René has ownership and control of 1,158,333 Subordinate Voting Shares, representing 13.24% of the issued and outstanding Subordinate Voting Shares as of the date of this AIF. Mr. Mapes also has ownership and control of 1,158,333 Subordinate Voting Shares, representing 13.24% of the issued and outstanding Subordinate Voting Shares as of the date of this AIF.

Pursuant to an employment contract between the Company (through VERSES, Inc., an Indirect Subsidiary) and Gabriel René, Mr. René is paid an annual salary of $300,000 in addition to potential compensation received from equity compensation plans, health benefits and performance bonuses. Pursuant to an employment contract (through VERSES, Inc., an Indirect Subsidiary) between the Company and Dan Mapes, Mr. Mapes is paid an annual salary of $264,000 in addition to potential compensation received from equity compensation plans, health benefits and performance bonuses. For further information, please see "*Statement of Executive Compensation - Employment Agreements and Termination and Change of Control Benefits*".

**LEGAL PROCEEDINGS AND REGULATORY ACTIONS**

Except for the claims set out under "*Risk Factors – Risks Related to the Company's Business – Claims and Legal Proceedings*", there are no outstanding legal proceedings material to the Company to which the Company is a party or in respect of which its respective business is subject, nor are there any such proceedings known to the Company to be contemplated.

**INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS**

No director, executive officer or Subordinate Voting Shareholder or Proportionate Voting Shareholder that beneficially owns, or controls or directs, directly or indirectly, more than 10% of the issued Subordinate Voting Shares or Proportionate Voting Shares, respectively, or any of their respective associates or affiliates, has any material interest, direct or indirect, in any transaction within the three years before the date of this AIF which has materially affected or is reasonably expected to materially affect the Company or any subsidiary of the Company.

**TRANSFER AGENTS AND REGISTRARS**

The registrar and transfer agent for the Subordinate Voting Shares is Endeavor Trust Corporation having its principal office at Suite 702 – 777 Hornby Street, Vancouver, British Columbia, V6Z 1S4.

**MATERIAL CONTRACTS**

The following is a summary of each material contract, other than contracts entered into in the ordinary course of the Company business, that was entered into in the financial year ended March 31, 2025, or up to the date of this AIF, that is still in effect:

---

| | |
|:---|:---|

|  | Pursuant to the Cyberlab Purchase Agreement, VTU agreed to provide Cyberlab a royalty payment (the "**Cyberlab Royalty**") upon the occurrence of a liquidity event of a subsidiary of VTU, which included: an initial public offering; acquisition for cash or third-party shares or a combination of cash and third-party shares; or any other event resulting in a capital gain to the shareholders of the subsidiary and the financial assets associated. Payments under the Cyberlab Royalty, when triggered, will equal 10% of VTU's interest in an applicable liquidity event and shall be made as soon as practical following a liquidity event. |
| 3. | Warrant indenture between the Company and Endeavor Trust Corporation, as warrant agent, dated April 28, 2025 for the issue of 458,333 April 2025 Warrants. |

---

**INTERESTS OF EXPERTS**

No person or company whose profession or business gives authority to a report, valuation, statement or opinion made by the person or company are named in this AIF as having prepared or certified any of the aforementioned documents or any part thereof described in this AIF.

Smythe LLP, Chartered Professional Accountants, the current auditor of the Company, prepared an auditor's report dated June 30, 2025 on the Company's annual consolidated financial statements as at and for the year ended March 31, 2025 and has advised the Company that it is independent of the Company in accordance with the Code of Professional Conduct of the Chartered Professional Accountants of British Columbia.

**AUDIT COMMITTEE**

**Audit Committee Charter**

The full text of the Audit Committee Charter is attached to this AIF as Schedule "A".

The primary function of the Audit Committee, under the supervision of the Board, will be to assist the Board in fulfilling its oversight responsibilities regarding the integrity of the Company's accounting and financial reporting processes and provision of financial information to the shareholders and others, the systems of internal controls and disclosure controls, the Company's internal and external audit process, the Company's policies with regard to ethics and business practices, and monitoring compliance with the Company's legal and regulatory requirements with respect to its financial statements.

The Audit Committee will be accountable to the Board. In the course of fulfilling its specific responsibilities hereunder, the Audit Committee will be expected to maintain open communications between the Company's external auditor, senior management and the Board. The Audit Committee will not plan or perform audits or warrant or attest to the accuracy or completeness of the Company's financial statements or financial disclosure or compliance with generally accepted accounting procedures as these are the responsibilities of management and the Company's auditor.

**Composition of the Audit Committee**

The Company has formed an Audit Committee comprised of Michael Blum (Chair), Jonathan De Vos and G. Scott Paterson, all of whom are "financially literate" as defined in NI 52-110. Mr. Blum, Mr. De Vos and Mr. Paterson are "independent" as defined in NI 52-110.

The Company is currently considering the appointment of an additional independent director to ensure that there are adequate independent directors presiding on the Audit Committee. There is however no certainty that such additional independent director will be identified or appointed at all.

**Relevant Education and Experience**

Each member of the Audit Committee has adequate education and experience that is relevant to their performance as an Audit Committee member and, in particular, the requisite education and experience that have provided the member with:

(a) an
 understanding of the accounting principles used by the Company to prepare its financial statements and the ability to assess the
 general application of those principles in connection with estimates, accruals and reserves;

(b) experience
 preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues
 that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's
 financial statements or experience actively supervising individuals engaged in such activities; and

(c) an
 understanding of internal controls and procedures for financial reporting.

A summary of the experience and education of the Audit Committee members is set out below.

*Michael Blum* – Mr. Blum is a co-founder and president of Hedgeye Risk Management, an independent investment research house whose customer base advises more than $10 trillion in assets and operates in close to 100 countries. In 2014 Mr. Blum co-founded Firefly Space Systems which designed and developed space launch vehicles for small payloads working with, among others, NASA, DARPA and Boeing. Previously, Mr. Blum was the co-founder and chief operating officer of hedge fund Falconhedge Partners LLC. Prior to this, he spent seven years in Silicon Valley, including at Paypal, developing business and product strategy. Mr. Blum received his Bachelor of Arts in Economics and International Studies (honors) from Yale University.

*Jonathan De Vos –* Mr. De Vos is an investment professional based in London, UK. He was previously a generalist investment manager on the Global Emerging Markets team at Invesco, where he was responsible for deep analysis of companies across all sectors as well as portfolio management responsibilities on the Latin American and emerging Europe strategies. Prior to joining Invesco in 2015, Mr. De Vos spent 13 years at Raymond James & Associates, first as a sell-side equity analyst covering industrials and then as head of institutional sales and trading for Raymond James Ltd. in Europe. Mr. De Vos has extensive knowledge of the European asset management industry, with a particular emphasis on growth equities and placed more than $1 billion of new issuance for the firm's corporate clients. Mr. De Vos holds an Honours Business Administration degree and an Honours Bachelor of Science in Pharmacology and Toxicology degree, both from Western University.

*G. Scott Paterson –* G. Scott Paterson is a Toronto-based technology and media venture capitalist who has been active for 30 years in the investment banking industry. Mr. Paterson worked at Dominion Securities Pitfield as a retail broker in 1985. Paterson was recruited by Richardson Greenshields in 1987 and in 1990 was invited to the then recently formed Midland Walwyn where he held the position of senior investment banker for four years. Mr. Paterson focused on banking technology and media companies while at Midland Walwyn becoming the firm's most productive banker (as measured by fees generated). In April 1995, Mr. Paterson was recruited to Yorkton Securities where he led the firm's transformation from a mining-focused brokerage firm to technology investment bank focused on technology, internet, biotechnology and film & television. Paterson served as CEO of Yorkton Securities from 1998 to 2001.

**Reliance on Certain Exemptions**

At no time since the commencement of the Company's current financial year has the Company relied on any exemption provided by section 2.4, Part 3 or Part 8 of NI 52-110.

**Pre-Approval Policies and Procedures**

The Audit Committee will nominate and engage the Company's auditor to audit the financial statements, and approves all audit, audit-related services, tax services and other services provided by the Company's independent registered public accounting firm, Smythe LLP, Chartered Professional Accountants. Any significant services provided by Smythe that are not specifically included within the scope of the audit must be pre-approved by the audit committee prior to any engagement. The Audit Committee will be permitted to approve certain fees for audit-related services, tax services and other services pursuant to a de minimis exception before the completion of the engagement.

**External Auditor Service Fees (By Category)**

The fees billed by the Company's current auditor, Smythe LLP, for the financial year ended March 31, 2025 and the period ending March 31, 2024, for audit and non-audit related services provided to the Company or its subsidiaries (if any) were as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Financial Period Ending** | **Audit Fees** | **Audit Fees** | **Audit Related Fees<sup>(1)</sup>** | **Audit Related Fees<sup>(1)</sup>** | **Tax Fees<sup>(2)</sup>** | **Tax Fees<sup>(2)</sup>** | **All Other Fees<sup>(3)</sup>** | **All Other Fees<sup>(3)</sup>** |
| March 31, 2025 | USD$ | 97167 | USD$ | 30733 | USD$ | 10215 | USD$ | 11794 |
| March 31, 2024 | USD$ | 95000 | USD$ | 54000 | USD$ | 27392 | USD$ | 6628 |

---

**Notes:**

&nbsp;&nbsp;&nbsp;&nbsp;(1) Fees
 charged for assurance and related services that are reasonably related to the performance of an audit or review of the Company's
 financial statements, and not included under Audit Fees.

(2) Fees
 charged for tax compliance, tax advice and tax planning services.

(3) Fees
 for services other than disclosed in any other column.

**ADDITIONAL INFORMATION**

Additional information relating to the Company may be found under the Company's profile on SEDAR+ at <u>www.sedarplus.ca.</u>

Additional financial information is provided in the Company's audited annual financial statements and accompanying management's discussion and analysis ("**MD&A**") for the years ended March 31, 2025 and 2024.

**SCHEDULE "A"**

**AUDIT COMMITTEE CHARTER**

*(see attached)*