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Victory Square Technologies Inc. Management Reports 2025
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Management Reports
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MANAGEMENT DISCUSSION AND ANALYSIS FOR VICTORY SQUARE TECHNOLOGIES INC.
Six months ended June 30, 2025 and 2024
Prepared as of August 29, 2025
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TABLE OF CONTENTS
This MD&A ... 3
Cautionary Statement Regarding Forward-Looking Statements ... 3
Summary of Quarterly Results ... 12
Discussion of Operations ... 14
Liquidity ... 18
Capital Resources ... 19
Off-Balance Sheet Arrangements ... 19
Transactions Between Related Parties ... 19
Critical Accounting Estimates ... 21
Financial Instruments and Other Instruments ... 22
U.S. Income Tax Status ... 22
Subsequent events ... 22
Other Risks and Uncertainties ... 23
Russian invasion of Ukraine ... 29
Disclosure of Internal Controls and Procedures ... 29
Information Available on SEDAR+ ... 29
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This MD&A
This management's discussion and analysis (this "MD&A") of the performance, financial condition, and results of operations of Victory Square Technologies Inc. ("Victory Square", "VST", the "Company", "we" and "our"), should be read in conjunction with the Company's audited annual consolidated financial statements and the related notes thereto for the twelve months ended December 31, 2024 and December 31, 2023 (the "2024 Financial Statements") and the Company's condensed consolidated interim unaudited financial statements for the three and six months ended June 30, 2025 and 2024 (the "Q2 2025 Financial Statements"). The Company's reporting currency is the Canadian dollar, and all dollar amounts in this MD&A are expressed in Canadian dollars, unless otherwise specified. Unless otherwise indicated, the information contained in this MD&A is as of August 29, 2025.
The financial information of the Company contained in this MD&A is derived from the 2024 Financial Statements and Q2 2025 Financial statements which were prepared in accordance with IFRS® Accounting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB"). The accounting policies and methods of computation applied in the Company's Q2 condensed consolidated Financial Statements are the same as those applied as at and for the year ended December 31, 2024.
Additional information relating to the Company, including the Financial Statements, is available at www.sedarplus.ca.
Cautionary Statement Regarding Forward-Looking Statements
Statements that are not reported financial results or other historical information are forward-looking statements or forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"). This MD&A includes forward-looking statements regarding the Company and its Investees (as defined herein) (collectively, the "Group") and the industries in which the Group operates, including statements about, among other things, expectations, beliefs, plans, future operations of the Group and origination of additional companies in which the Company holds an interest and acquisition opportunities for the Group, business and acquisition strategies, opportunities, objectives, prospects, assumptions, including those related to trends and prospects, and future events and performance. Sentences and phrases containing or modified by words such as "anticipate", "plan", "continue", "estimate", "intend", "expect", "may", "will", "project", "predict", "potential", "targets", "projects", "is designed to", "strategy", "should", "believe", "contemplate" and similar expressions, and the negative of such expressions, are not historical facts and are intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Forward-looking statements should not be read as guarantees of future events, future performance or results, and will not necessarily be accurate indicators of the times at, or by which, such events, performance or results will be achieved, if achieved at all. Forward-looking statements are based on information available at the time and/or management's expectations with respect to future events that involve a number of risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. The factors described under the heading "Other Risks and Uncertainties", as well as any other cautionary language in this MD&A, provide examples of risks, uncertainties and events that may cause the Group's actual results to differ materially from the expectations it describes in its forward-looking statements. Readers should be aware that the occurrence of the events described in these risk factors and elsewhere in this MD&A could have an adverse effect on, among other things, the Group's business, prospects, operations, results of operations and financial condition.
Specific forward-looking statements contained in this MD&A may include, among others, statements, management's beliefs, expectations or intentions regarding the following:
- timelines;
- strategic plans;
- the business and operations of the Group;
- the business, operations, strategies and expectations of the Group;
- the inflationary environment and uncertainty created by Russia's invasion of Ukraine;
- the Group's reliance on key management personnel, advisors and consultants;
- the continuation of the Company as a going concern;
- the impacts of changes in the legal and regulatory environment in which the Company operates;
- the Group's business objectives and discussion of trends affecting the business of the Group;
- the funds available to the Group and the principal purposes of those funds;
- anticipated revenues and cash flows from operations and funding requirements of the Group;
- capital, operating and general expenditures;
- expectations regarding the ability to raise capital;
- anticipated revenues to be realized by the Group from future contracts;
- treatment under governmental regulatory regimes and expectations with respect to regulatory approvals; and
- other forward-looking statements including, but not limited to, information concerning the intentions, plans and future actions of the Group.
Forward-looking statements are based on reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such information is made available. Forward-looking statements are inherently subject to known and unknown risks and uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Group to be materially different from those expressed or implied by such forward-looking statements. Although the Company has 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, including the factors and risks described or referred to elsewhere herein, as well as unanticipated and/or unusual events. Many of such factors are beyond the Company's ability to predict or control. Risks and uncertainties that may affect forward-looking statements include, but are not limited to, those which relate to the following:
- the limited operating history of members of the Group, including the Company;
- the current lack of profitability of members of the Group, including the Company;
- the need to obtain additional financing and uncertainty as to the availability and terms of future financing;
- the ability to acquire funds necessary for general working capital and continuing operations;
- reliance on sale of equity or investments to access funds required;
- the possibility that opportunities will arise that require more cash than the Group has or can reasonably obtain;
- uncertainties associated with business opportunities that may be presented to, or pursued by the Group;
- parameters and assumptions underlying future investments and acquisitions;
- risks relating to investments in equity securities;
- the possibility that the Group will be unable to dispose of illiquid securities;
- risks that the asset classes held in the Group's equity portfolio will underperform the market;
- risks associated with investments in blockchain, healthcare, gaming and other technologies;
- risk the Company's portfolio is too concentrated and not sufficiently diversified;
- risks associated with investments in the technology sector;
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- risks associated with investments in small and mid-capitalization companies;
- the Group's operations, investment strategies and profitability may be adversely affected by competition from other similar entities;
- uncertainties related to early stage of technology and product development;
- uncertainties related to regulatory regimes and laws;
- dependence on key personnel;
- fluctuations in the currency markets and stock market volatility;
- going concern considerations;
- conflicts of interest;
- changes in the regulatory environment;
- competition for, among other things, capital, acquisitions, equipment and skilled personnel;
- operating or technical difficulties in connection with business activities;
- the possibility of cost overruns or unanticipated expenses; and
- the other factors discussed under the heading "Other Risks and Uncertainties".
Readers are cautioned that the foregoing list of forward-looking statements should not be construed as being exhaustive.
In making the forward-looking statements in this MD&A, the Company has made assumptions regarding general economic conditions, strength of relationships with Investees, regulatory oversight and such other risks or factors described in this MD&A and from time to time in public disclosure documents of the Group that are filed with securities regulatory authorities.
The Company notes that management can offer no assurance such forward-looking statements will occur or be accurate in the circumstances. Accordingly, readers should not place undue reliance on forward-looking statements, which speaks only to opinions, estimates and assumptions as of the date made. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement and are made as at the date of this MD&A. The Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. If the Company does update one or more forward-looking statements, it is not obligated to, and no inference should be drawn that it will, make additional updates with respect thereto or with respect to other forward-looking statements.
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The Company and Key Milestones
Overview
Victory Square Technologies Inc. ("VST") is a publicly traded venture builder providing investors with liquid access to a diversified portfolio of disruptive technology companies. With 13 subsidiaries and 19 portfolio companies across AI, digital health, fintech, gaming, and climate tech, VST bridges the gap between private venture opportunities and public market accessibility. Our model has generated significant shareholder value through the growth of companies like Hydreight Technologies, while new ventures such as Insu Therapeutics and Pawsible Ventures provide additional pathways for long-term growth.
General
Victory Square is a venture builder focused on investing in and scaling disruptive innovation.
VST was created to fill a critical gap in early-stage investing: providing access for all investors, not just institutions or accredited individuals. Unlike traditional venture capital funds that require long lockups and large commitments, VST offers a liquid, publicly traded vehicle for exposure to a diversified portfolio of high-growth technology companies.
Our investments are concentrated in leading-edge sectors such as artificial intelligence (AI), machine learning (ML), digital health, blockchain, gaming, and climate tech — industries positioned to generate long-term value creation.
Our advantage is twofold:
- Access – We have unparalleled deal flow through our internal incubator, Living Labs, and partnerships with more than 80 global accelerators (including Launch Academy).
- Active Involvement – Our management team and advisors work hands-on with Investees, supporting them with financial, operational, and strategic expertise from incubation through monetization.
With real alignment — management has “skin in the game” — our focus is to increase net asset value (“NAV”) while creating liquidity events for shareholders through spin-outs and monetizations. To fund growth, we primarily use equity swaps and selective divestitures of mature assets, minimizing dilution for shareholders.
VST's portfolio consists of 13 subsidiaries and 19 portfolio companies across digital health, AI, blockchain, gaming, and other verticals.
Key Milestones Since Year-End 2024
Since the end of fiscal 2024, Victory Square Technologies has advanced its portfolio and strategic initiatives across multiple verticals:
- Hydreight Technologies (TSXV: NURS | OTC: HYDTF | FSE: SO6) – Reported record H1 2025 revenue of $13.9 million (+33% YoY), GAAP revenue of $9.9 million (+33% YoY), and its third consecutive quarter of profitability. Hydreight also closed a $10 million convertible note financing with Canaccord Genuity at a 25% premium, further strengthening its balance sheet ahead of planned expansion.
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- Insu Therapeutics – Advanced development of its proprietary oral insulin delivery technology and peptide-based injectables platform. Insu remains a priority asset for VST, with commercialization pathways being explored in diabetes care and weight-loss treatments.
- Pawsible Ventures – Partner and CEO Alex Chieng won the world's largest AI hackathon (Bolt), showcasing global leadership in AI and pet health. This milestone supports the launch of Pawsible's pet wellness platform, where VST holds a significant equity stake.
- Portfolio Strength – VST actively manages 13 subsidiaries and 19 portfolio companies across AI, digital health, fintech, web3, and climate tech. Monetization strategies are underway, including selective spin-outs and liquidity events designed to surface NAV for shareholder
- Capital & Liquidity – Reduced working capital deficit from $5.76M at YE2024 to $1.42M at Q2 2025, driven by financings and asset monetizations. As of June 30, 2025, VST held $6.12M in cash.
Our Approach
What We Do Differently for Start-Ups
VST isn't just capital — we are a co-builder. We focus on start-ups with real solutions (not just concepts) and embed senior talent in product, engineering, customer acquisition, and strategy. This hands-on model accelerates growth, with most companies reaching scale and monetization within 24–48 months.
What We Do Differently for Investors
VST gives public market investors — including non-accredited individuals — a rare opportunity: diversified, transparent exposure to early-stage technology ventures with daily liquidity. This structure allows investors to participate in high-growth sectors without the restrictions of traditional venture funds.
Our portfolio is a bridge between private venture opportunities and public market accessibility
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Philanthropic Contributions
Victory Square is committed to community impact alongside financial performance. Our mandate is to support organizations through contributions of time, talent, and capital. We prioritize initiatives in youth, mental health, special needs, sports, technology, education, marginalized groups, First Nations, and accessibility.
We have supported organizations including:
- Variety – The Children’s Charity of BC
- CKNW Kids’ Fund
- Simon Fraser University Tech Camp
- BC Sports Hall of Fame & Museum
- Covenant House Vancouver
- YWCA Metro Vancouver
- Coast Mental Health
- Cerebral Palsy Association of BC
- BC Children’s Hospital Foundation
This commitment reinforces our belief that long-term success means creating value for shareholders and society.
Strategy Looking Ahead (H2 2025 and Beyond)
- Unlocking NAV – Narrowing the gap between trading price and underlying Net Asset Value (NAV) through spinouts, dividends-in-kind, share buybacks, and other mechanisms to deliver direct value to shareholders.
- Scaling Core Assets – Hydreight and Insu remain top priorities for scaling and monetization, with complementary growth from Pawsible and other emerging portfolio companies.
- Capital Allocation – Proceeds from monetizations and financings are being strategically deployed into high-conviction verticals (AI, digital health, and climate tech) while minimizing dilution. The Company is also evaluating the possibility of implementing a share repurchase program as an additional tool to enhance shareholder value.
- Uplisting Pathway – Evaluating opportunities to broaden the shareholder base and institutional participation through potential uplisting initiatives.
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Subsidiaries
The subsidiaries are controlled by the Company. Control exists when the Company is exposed, or has rights, to the variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date the control ceases. Intercompany balances and transactions, and any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements.
Portfolio Companies
Portfolio companies are recorded as investments (see further details in Note 2 of the 2024 Financial Statements). Investments which are classified as financial instruments under IFRS 9 are initially recorded at the fair value at the time of acquisition. Subsequent measurement depends on the classification of the financial instrument. For those investments in which the Company has significant influence the Company uses the equity method of accounting whereby an equity investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the net profit or loss of the investee. Any distributions received from the investee company reduce the carrying amount of the investment.
The Company reviews certain investments and records their fair value at each financial statement reporting date. For investments in public companies, excluding consolidated subsidiaries, fair value is determined based on the quoted market price. For investments in private companies, certain subjective measures, including recent share transactions, prices for comparable entities, review of cash flow projections and the investee's prospects, financial ratios and discounted cash flows are techniques used to determine fair value. Where possible the Company uses inputs obtained from observable market data for its valuation models. However, if observable market data is not available the Company uses judgement to determine fair value.
Investments in films and games are classified as intangible assets and recorded at the lower of amortized cost or recoverable amount. The valuation of investments in films and games are reviewed when an event or change in circumstances indicates that the fair value of a film or game is less than its unamortized cost. The Company records an impairment charge if the amount is less than the amortized cost.
Victory Square is headquartered in Vancouver, Canada, and the common shares in the capital of the Company are listed on the Canadian Securities Exchange under the symbol "VST" and the Frankfurt Stock Exchange under the symbol "6F6".
Development of the Business
The Company was incorporated as Fantasy 6 Sports Inc. under the Business Corporations Act (British Columbia) on February 10, 2015. On October 19, 2015, the Company acquired Draft Label Technologies Inc. and its subsidiary, PDL USA Inc., pursuant to a share exchange agreement. As a result of this business combination, the Company acquired certain software, source code and cloud hosting services.
On April 29, 2016, the Company filed a long form prospectus with the BCSC, qualifying the distribution of 5,094,000 common shares issuable upon the exercise of special warrants previously issued by the Company for gross proceeds of $509,400. Trading in the common shares commenced on the CSE on May 4, 2016.
On June 9, 2017, the Company changed its name to Victory Square Technologies Inc and changed its trading symbol on the CSE from "FYS" to "VST".
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Our Investees
Our Subsidiaries
The table below sets out our Subsidiaries as at the date hereof.
| Subsidiary | Vertical |
|---|---|
| VS Digital Health Inc. ("VS Digital Health USA") | |
| VS Digital Health Inc. ("VS Digital Health") | Digital Health, Online Pharmacy, Diagnostic Testing, Artificial Intelligence (AI), Machine Learning (ML) |
| Hydreight Canada Holdings Inc. ("HCH") | Digital Health, Online Pharmacy, Diagnostic Testing |
| IV Hydreight Inc. ("Hydreight") | Digital Health, Online Pharmacy, Diagnostic Testing |
| Hydreight Technologies Inc. ("HTI") | Digital Health, Online Pharmacy, Diagnostic Testing |
| Healthcare Prosoft LLC ("Prosoft") | |
| Healthcare Prosoft SW PC ("Prosoft SW") | |
| Healthcare Prosoft CT PC ("Prosoft CT") | |
| Healthcare Prosoft NE PC ("Prosoft NE") | Digital Health, Online Pharmacy, Diagnostic Testing |
| Digital Health GPO LLC ("GPO") | Digital Health, Online Pharmacy, Diagnostic Testing |
| Futura Health & Wellness Inc. ("Futura") | Digital Health, Online Pharmacy, Diagnostic Testing, Artificial Intelligence (AI), Machine Learning (ML) |
| Draft Label Technologies Inc. ("Draft Label") | Digital Health, Online Pharmacy, Diagnostic Testing, Artificial Intelligence (AI), Machine Learning (ML) |
| PDL USA Inc. ("PDL USA") | Custom Software Development |
| XR Immersive Tech Inc., (formerly Fantasy 360 Technologies Inc) ("XR Immersive Tech")^{1} | Virtual Reality ("VR"), Augmented Reality ("AR"), Artificial Intelligence (AI), Machine Learning (ML), Web3 |
| Synthesis VR Inc. ("Synthesis")^{1} | Virtual Reality ("VR"), Augmented Reality ("AR"), Artificial Intelligence (AI), Machine Learning (ML), Game Development, Web3 |
| Pawsible Ventures Inc. (formerly VS Blockchain Assembly Inc. "Pawsible") | Pet Wellness, Telehealth |
| BlockX Capital Corp. ("BlockX")^{2} | Blockchain, Artificial Intelligence (AI), Machine Learning (ML) |
- Deconsolidated as of September 27, 2024, on loss of control
- Deconsolidated as of August 2, 2024, on sale of subsidiary
Subsidiaries are fully consolidated with any applicable non-controlling interest ("NCI") taken in the interim consolidated financial statements for the period ended June 30, 2025.
Our Portfolio Companies
The table below sets out our Portfolio Companies as at the date hereof.
| Portfolio Company | Vertical |
|---|---|
| Victory Square Health Inc. ("VS Health") | Digital Health, Diagnostic Testing, Artificial Intelligence (AI), Machine Learning (ML) |
| Cassia Research Inc., doing business as CoPilot AI ("CoPilot AI") | Artificial intelligence (AI), Sales & Marketing Automation |
| Cloud Benefit Solutions Inc., doing business as Cloud Advisors ("Cloud Advisors") | Insurance Tech, Artificial Intelligence (AI), Machine Learning (ML) |
| MLVX Technologies Inc., doing business as Metaspectral (1) ("Metaspectral") | Artificial intelligence (AI), Machine Learning (ML), Computer Vision |
| FansUnite Entertainment Inc. ("FansUnite")2 | Sports Betting, Gaming, Esports |
| Flo Digital Inc. (1) ("Flo Digital") | Virtual Reality ("VR"), Augmented Reality ("AR"), Metaverse, Web3 |
| Kyn Biosciences Inc. (1) ("Kyn") | Plant-based Science |
| Howyl Ventures Inc., doing business as Capaciti (1) ("Capaciti") | Web3, Future of Work |
| Turnium Technology Group Inc. (formerly Multapplied Networks Inc.) ("Turnium") | Software Defined Wide Area Network Platforms (SD-WAN) |
| Next Decentrum Technologies Inc. ("Next Decentrum") | Web3, Blockchain, NFTs |
| PayVida Solutions Inc. (1) ("PayVida") | Fintech |
| Silota Research and Development Inc. ("Silota") | Web3, Blockchain, DeFi, Data Infrastructure |
| Insu Therapeutics Inc. ("Insu") | Injectables Medicines, Peptide-Based Medicines, Diabetes Treatment, Non-Invasive Oral Insulin Delivery Technology |
| Anonymous Intelligence Company Inc. ("ANON") | Web3, EdTech, Artificial Intelligence (AI), Machine Learning (ML) |
| Stardust Solar Technologies Inc. ("Stardust Solar") | Solar Energy, Renewables, EV Charging |
| Flora Growth Corp. (1) ("Flora Growth Corp.") | Plant-based Science |
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| GameOn Entertainment Technologies Inc. ("GameOn") | Web3, Blockchain, Gaming, NFTs, Sports, Entertainment |
|---|---|
| Edge Total Intelligence Inc. ("EdgeTI") | Artificial Intelligence (AI), Data Science |
| Yocale.ai ("Yocale") | Artificial Intelligence (AI) |
(1) Included in "Other" in the Financial Statements in Note 6 "Investments" in Q2 2025 Financial Statements (Note 8 in 2024 Financial Statements).
(2) FansUnite had a return of capital distribution in September 2024, and shortly thereafter was delisted from the TSX.
Portfolio companies are reflected in the condensed consolidated interim financial statements for the three and six months ended June 30, 2025, in Notes 6 and 7 for movements in each distinct and material investment for the current and prior comparative period. A majority of the Company's portfolio companies are investments in privately held companies, and as such no additional operating information is publicly disclosed beyond what is required for financial statement disclosures.
Summary of Quarterly Results
The table below sets out a summary of certain financial results of the Company over the past eight quarters and is derived from the audited annual consolidated financial statements of the Company.
| Fiscal Quarter Ended | Revenue | Net Income (Loss) for the Period | Comprehensive Income (Loss) for the Period | Basic and Diluted Income (Loss) Per Share |
|---|---|---|---|---|
| June 30, 2025 | 5,376,518 | 410,808 | 533,531 | 0.00 |
| March 31, 2025 | 4,540,122 | (522,019) | (499,251) | (0.01) |
| December 31, 2024 | 3,994,902 | (7,532,636) | (7,612,571) | (0.07) |
| September 30, 2024 | 4,729,593 | 10,661,274 | 10,659,576 | 0.11 |
| June 30, 2024 | 4,433,636 | (1,744,758) | (1,752,270) | (0.02) |
| March 31, 2024 | 3,559,675 | (838,972) | (908,481) | (0.01) |
| December 31, 2023 | 3,325,822 | (12,462,193) | (12,501,552) | (0.10) |
| September 30, 2023 | 3,213,031 | (2,576,681) | (2,799,383) | (0.02) |
The Company invests in early-stage technology companies. Increases and decreases in the value of those companies have the greatest impact on the results of operations of the Company from quarter to quarter. It is within the business cycle to see periods of net losses when first investing in a new company, spending 18-36 months incurring expenses and building the business, and then in subsequent periods realizing the gains and revenues from those early investments. This trend can be seen in the quarterly information above as the Company made major investments through 2021, incurred expenses and losses throughout these periods while investing in those companies and then began to monetize and realize increased revenues and gains as the companies mature and increase in value. The Company's net loss and comprehensive loss per period is materially affected by the fair value adjustments of its publicly listed investees and fourth quarter adjustments when valuing interests in privately held investments for annual audited financial statements.
- The net income for the quarter ended June 30, 2025, was primarily due to fair value adjustments in portfolio investments and increased revenue from Hydreight leading to a positive net income on consolidation.
- The net loss for the quarter ended March 31, 2025, is primarily due to fair value losses on investments, partially offset by increased revenue from Hydreight and gain on intangible asset sale.
- The net loss for the quarter ended December 31, 2024, is primarily due to operating losses from consolidated subsidiaries, fair value losses on investments, partially offset by increased revenue from Hydreight.
- The net income for the quarter ended September 30, 2024, is primarily due to the accounting gain on deconsolidation of subsidiary XRI and the fair value gain on investments, offset by operating losses and non-cash accretion and interest charges on loans payable.
- The net loss for the quarter ended June 30, 2024, is primarily due to operating losses and non-cash accretion and interest charges on loans payable.
- The net loss for the quarter ended March 31, 2024, is primarily due to operating losses and non-cash accretion and interest charges on loans payable.
- The net loss for the quarter ended December 31, 2023, is primarily due to operating losses from consolidated subsidiaries, impairment of non-financial assets and partially offset by increased revenue from Hydreight.
- The net loss for the quarter ended September 30, 2023, was mainly attributed to operating losses from consolidated subsidiaries, partially offset by increased revenue from Hydreight and a decrease in revenue from XRI.
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Discussion of Operations
The Q2 2025 Consolidated Financial Statements comprise the financial statements of the Company plus the financial statements of the subsidiaries of the Company described in the table below:
| Percentage Ownership as at | ||
|---|---|---|
| June 30, 2025 | December 31, 2024 | |
| Futura (2) | 58.46% | 58.46% |
| VS Blockchain Assembly | 100.00% | 100.00% |
| VS Digital Health | 100.00% | 100.00% |
| VS Digital Health USA | 100.00% | 100.00% |
| HTI(1) | 57.36% | 64.31% |
1 HCH, Hydreight, Prosoft, GPO are wholly owned subsidiaries of HTI. Prosoft CT, Prosoft NE, and Prosoft SW are consolidated into the results of HTI on the basis of contractual control.
2 Draft Label and PDL USA are wholly owned subsidiaries of Futura. VST owned 100% of Draft Label and PDL USA prior to share exchange agreement.
The Company's consolidated results of operations is summarized below, with discussion on material line item variances:
| Three months ended June 30, | Six months ended June 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Revenue | $ 5,376,518 | $ 4,433,636 | $ 9,916,640 | $ 7,993,311 |
| Cost of goods sold | 3,446,317 | 2,542,071 | 6,481,974 | 4,688,343 |
| 1,930,201 | 1,891,565 | 3,434,666 | 3,304,968 | |
| Expenses | ||||
| Amortization and depreciation | 120,077 | 496,683 | 234,030 | 556,184 |
| Foreign exchange loss (gain) | 32,391 | (22,747) | 34,020 | (21,971) |
| General and administration | 634,902 | 544,999 | 1,170,935 | 1,120,488 |
| Professional and consulting fees | 587,286 | 919,128 | 999,202 | 1,560,439 |
| Research and development | 25,175 | 45,724 | 51,032 | 48,090 |
| Sales and marketing | 143,751 | 85,481 | 246,293 | 199,480 |
| Share based payments | 298,304 | 220,158 | 339,809 | 440,477 |
| Wages | 713,260 | 571,081 | 1,394,900 | 1,152,135 |
| Equity loss on investments - equity accounted | - | 208,536 | 101,776 | 410,708 |
| Fair value loss (gain) on investments | (993,729) | 705,477 | 149,176 | 422,737 |
| Accretion, Interest and amortization of debt | 60,746 | 255,908 | 121,487 | 548,592 |
| Movement in provision | (101,170) | - | (180,418) | - |
| Interest and other income | (43,113) | (17,463) | (141,841) | (23,345) |
| (1,477,880) | (4,012,965) | (4,520,401) | (6,414,014) | |
| Gain on sale of intangible assets | - | - | 880,000 | - |
| Other gains (loss) | (41,513) | 376,642 | 94,524 | 525,316 |
| (41,513) | 376,642 | 974,524 | 525,316 | |
| Net income (loss) for the period | 410,808 | (1,744,758) | (111,211) | (2,583,730) |
Revenue
Revenue for the three and six months ended June 30, 2025, was $5,376,518 and $9,916,640 compared to $4,433,636 and $7,993,311 for the three and six months ended June 30, 2024. The increase in revenues is primarily related to substantial growth in Hydreight revenues and user base resulting in increasing subscription, pharmacy and net commission revenues.
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Cost of Goods Sold
Cost of goods sold for the three and six months ended June 30, 2025, was $3,446,317 and $6,481,974 compared to $2,542,071 and $4,688,343 for the comparative period. The increase in cost of goods sold is related to the above-described changes in revenues, primarily due to the cost of pharmacy purchases associated with the increased pharmacy sales of Hydreight.
Gross Margin
The gross margin for the three and six months ended June 30, 2025, was $1,930,201 and $3,434,666 compared to $1,891,565 and $3,304,968 for the comparative period. The current period gross margin is driven primarily by the online pharmacy sales of Hydreight. Also, Hydreight revenue includes subscription revenue earned over time, which doesn't have a corresponding cost of expense as with pharmacy purchases.
Expenses
For the three and six months ended June 30, 2025, total expenses were $1,477,880 and $4,520,401 compared to $4,012,965 and $6,414,014 for the three and six months ended June 30, 2024. Material variances over this period are discussed below.
Amortization and Depreciation
Amortization and depreciation for the three and six months ended June 30, 2025, were $120,077 and $234,030 compared to $496,683 and $556,184 for the three and six months ended June 30, 2024. The decrease is due to the final period of amortization of an intangible asset property recorded in the comparative period, partially offset by higher amortization in Hydreight due to increases in intangible asset investment and capitalization over the prior two years.
General and Administration
General and administration expenses include insurance, investor relations and capital markets, management fees and rent, which were reported separately in the prior year.
For the three and six months ended June 30, 2025, total general and administration expenses were $634,902 and $1,170,935 compared to $544,999 and $1,120,488 for the three and six months ended June 30, 2024. Excluding the items reported separately in the prior year discussed below, general and administration expenses decreased. The decrease was due to a general decrease in overhead costs at the VST level and a sharp decrease in general and administration expenses in XRI due to the deconsolidation of SVR at the start of the third quarter of 2024. This was partially offset by higher general and administration expenses in Hydreight to support organic growth in the business.
Expense line items reported separately in the prior year Financial Statements:
Insurance
For the three and six months ended June 30, 2025, insurance expense was $26,498 and $54,225 compared to $28,109 and $56,088 for the three and six months ended June 30, 2024. There were no material changes in insurance premiums and coverage over the comparative period.
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Investor Relations, Capital Markets, and Regulatory
For the three and six months ended June 30, 2025, investor relations, capital markets, and regulatory expense was $126,311 and $207,471 compared to $61,526 and $167,960 for the three and six months ended June 30, 2024. The increase over the comparative period is due to higher investor and public relations fees, including investor conferences, incurred in Hydreight.
Rent
For the three and six months ended June 30, 2025, rent expense was $54,670 and $122,886 compared to $47,149 and $120,120 for the three and six months ended June 30, 2024. The increase in rent expense is primarily related to Hydreight's modest increase in its US office rent, partially offset by lower warehouse rent expense over the comparative period.
Software, Office, and Other
For the three and six months ended June 30, 2025, software, office, and other expense was $173,107 and $325,991 compared to $211,490 and $404,512 for the three and six months ended June 30, 2024. The decrease over the comparative period is due to the contractual end of a monthly administrative contract in Hydreight that is reflected in the comparative period, but not the current period.
Professional and Consulting Fees
For the three and six months ended June 30, 2025, professional and consulting fees were $587,286 and $999,202 compared to $919,128 and $1,560,439 for the three and six months ended June 30, 2024. The decrease is due to regular variances in the composition of professional fees as well as the deconsolidation of XRI in the latter half of the comparative year.
Sales and Marketing
For the three and six months ended June 30, 2025, sales and marketing expense were $143,751 and $246,293 compared to $85,481 and $199,480 for the three and six months ended June 30, 2024. The increase in sales and marketing expense is due to a increase in expenditures in advertising promotion in Hydreight sales and marketing expense to support continued growth.
Share Based Payments
Share based payments for the three and six months ended June 30, 2025, were $298,304 and $339,809 compared to $220,158 and $440,477 for the three and six months ended June 30, 2024. The increase in the quarter ended June 30, 2025, is attributable to equity incentive instruments granted by the Company in the quarter that vested and were expensed immediately. The decrease in the six months ended June 30, 2025, is due to higher share based payments expense from Hydreight from instruments that vested primarily in 2024.
Wages
For the three and six months ended June 30, 2025, wage expense was $713,260 and $1,394,900 compared to $571,081 and $1,152,135 for the three and six months ended June 30, 2024. The increase in wages expense is due to an increasing headcount in Hydreight.
Fair Value Movement Equity loss, Impairment, Provision, and Other Losses
For the three and six months ended June 30, 2025, the Company recorded a total gain of $1,094,899 and a total loss of $70,534 compared to a loss of $914,013 and $833,445 for the three and six months ended June 30, 2024, in the following expenses:
- Equity loss on investments – equity accounted
- Fair value loss on investments – fair value
- Movement in provision
The Company records the gain or loss of publicly traded investments at each quarterly reporting period and material private investments on an annual basis. The Company records the equity gain or loss on its equity accounted investee at each quarterly reporting period. The movement in provision is primarily due to the recovery of an amount of GST refund previously written off due to uncertainty of collectability.
Accretion, Interest and Amortization of Debt
For the three and six months ended June 30, 2025, accretion, interest and amortization of debt expense was $60,746 and $121,487 compared to $255,908 and $548,592 for the three and six months ended June 30, 2024. The decrease is due to the deconsolidation of XRI and related interest and accretion expense on XRI debt that is reported in the comparative period, but not the current period. Also, the comparative period reflects interest and accretion at a higher level on VST debt due to a principal balance outstanding and accretion expense being recorded until the maturity of debt later in 2024.
Interest and Other Income
Interest and other income was $43,113 for the three months ended June 30, 2025, as compared to $17,463 for the comparative period. For the six months ended June 30, 2025, interest and other income was $141,841 compared to $23,345 for the comparative period. The increase in the current period is due to an increase in interest income from larger cash balances in Hydreight as well as the derecognition and reclassification to other income of stale-dated payments to former Hydreight partners older than twelve months and for which management has judged will not be claimed.
Gain on Sale of Intangible Assets and Other Gains
The gain on sale of intangible assets of $880,000 is the fair value of consideration received from the sale of certain software technologies to an arm's length party, that had $Nil carrying value being fully depreciated. Other gains are the net of proceeds from digital token sales and gains and losses on portfolio investment disposals.
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Segmented Operations
The Company operates in several segments, broken down by entity as follows:
| Legal Entities | Segment |
|---|---|
| Draft Label | Health Tech |
| PDL USA | Health Tech |
| Futura Health and Wellness Inc. | Health Tech |
| Victory Square Technologies (1) | Investments |
| Pawsible | Health Tech |
| VS Digital Health | Health |
| VS Digital Health (Delaware) | Health |
| Hydreight Technologies Inc. | Health |
| Hydreight Canada Holdings Inc. | Health |
| IV Hydreight Inc. | Health |
| GPO | Health |
| Prosoft, Prosoft CT, Prosoft NE, Prosoft SW | Health |
Segmented information as at June 30, 2025:
| Investments | Health Tech | Health | Intercompany Eliminations | Total | |
|---|---|---|---|---|---|
| Current assets | $ 899,743 | $ 3,349 | $ 6,661,650 | $ (883,597) | $ 6,681,145 |
| Non-current assets | 10,905,473 | 208,231 | 1,981,241 | (3,525,881) | 9,569,064 |
| $ 11,805,216 | $ 211,580 | $ 8,642,891 | $ (4,409,478) | $ 16,250,209 | |
| Current liabilities | $ 3,144,104 | $ 292,705 | $ 4,473,685 | $ 189,384 | $ 8,099,878 |
| Non-current liabilities | - | 200,000 | 755,721 | (885,543) | 70,178 |
| $ 3,144,104 | $ 492,705 | $ 5,229,406 | $ (696,159) | $ 8,170,056 |
Segmented information for the six months ended June 30, 2025:
| Investments | Health Tech | Health | Intercompany Eliminations | Total | |
|---|---|---|---|---|---|
| Revenue | $ 84,572 | $ - | $ 9,916,640 | $ (84,572) | $ 9,916,640 |
| Cost of goods sold | - | - | (6,481,974) | - | (6,481,974) |
| Gross margin | 84,572 | - | 3,434,666 | (84,572) | 3,434,666 |
| Expenses | (1,258,291) | (4,142) | (3,496,826) | 238,858 | (4,520,401) |
| Other gains | 974,524 | - | - | - | 974,524 |
| Net income (loss) | (199,195) | (4,142) | (62,160) | 154,286 | (111,211) |
| Non-controlling interest | - | 1,720 | (30,507) | - | (28,787) |
| Net income (loss) attributable to parent | $ (199,195) | $ (2,422) | $ (92,667) | $ 154,286 | $ (139,998) |
Liquidity
As at June 30, 2025, the Company had a working capital deficiency of $1,418,733 (December 31, 2024 - $5,758,901) comprised of total current assets of $6,681,145 (December 31, 2024 - $1,643,264) and total current liabilities of $8,099,878 (December 31, 2024 - $7,402,165).
As at June 30, 2025, the Company had total current assets of $6,681,145 (December 31, 2024 - $1,643,264) comprised of $6,117,193 (December 31, 2024 - $1,230,344) in cash, $289,410 (December 31, 2024 - $251,743) in prepaids and other deposits, $234,542 (December 31, 2024 - $111,311) in trade and other receivables, and $40,000 in loans receivable (December 31, 2024 - $49,866).
As at June 30, 2025, the Company had total current liabilities of $8,099,878 (December 31, 2024 - $7,402,165), comprised of $1,875,741 (December 31, 2024 - $1,621,548) in trade payables, $1,541,621 (December 31, 2024 - $1,701,499) in accrued liabilities, $2,200,549 (December 31, 2024 - $1,732,685) in current portion of contract liabilities, $246,967 (December 31, 2024 - $151,433) in related party loans, $1,640,000 (December 31, 2024 - $1,600,000) in current portions of loans payable, $395,000 (December 31, 2024 - $395,000) and $200,000 (December 31, 2024 - $200,000) in current portion of convertible debt.
The Company's ability to meet its ongoing obligations and activities depends on its ability to generate cash flow through the issuance of common shares of the Company pursuant to equity financings and short-term or long-term loans. Capital markets may not be receptive to future offerings of new equity from treasury or debt, whether by way of private placements or public offerings. Future funding is available through sale of shares in publicly held companies that are unrestricted, non-core assets, as well as liquidation of digital asset tokens.
| Contractual Obligations
As at June 30, 2025 | Total | Less than 1 year | 1-3 years | 3-5 years | After 5 years |
| --- | --- | --- | --- | --- | --- |
| Trade payables and accrued liabilities | $ 3,417,362 | $ 3,417,362 | $ - | $ - | $ - |
| Related party loans | 246,967 | 246,967 | - | - | - |
| Convertible debt | 200,000 | 200,000 | - | - | - |
| Loans payable | 1,740,000 | 1,740,000 | - | - | - |
| CEBA Loans | 62,096 | - | 62,096 | - | - |
| Total Contractual Obligations | $ 5,666,425 | $ 5,604,329 | $ 62,096 | $ - | $ - |
Capital Resources
As at June 30, 2025 and at the date of this MD&A, there were 100,964,971 common shares outstanding. As at the date of this MD&A, there are 100,964,971 common shares outstanding. As at June 30, 2025 and the date of this MD&A, there were 3,100,000 stock options outstanding.
As at June 30, 2025, and the date of this MD&A, there are no share purchase warrants outstanding.
There are no other sources of financing arranged but not yet used by the Company. There are no commitments for capital expenditures.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial performance or financial condition, including with respect to revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Transactions Between Related Parties
Related Party Transactions
During the three and six months ended June 30, 2025, and 2024, the Company entered into the following transactions with related parties:
| Three months ended June 30, | Six months ended June 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Professional and consulting fees | $ 56,731 | $ 109,818 | $ 115,246 | $ 157,783 |
| Executive compensation | $ 103,853 | $ 225,265 | $ 344,687 | $ 459,790 |
| Share-based compensation - subsidiaries | $ 5,294 | $ 138,151 | $ 14,816 | $ 163,285 |
Key Management Compensation
The Company's key management personnel have authority and responsibility for overseeing, planning, directing, and controlling the activities of the Company and consist of the Company's Board of Directors and the Company's executive leadership team. Such compensation for the three and six months ended June 30, 2025, was comprised of
- $103,853 and $344,687 (three and six months ended June 30, 2024 - $225,265 and $459,790) in executive compensation to the CEO and Chief Growth Officer ("CGO") of VST and Hydreight and the CEO of Hydreight;
- $56,731 and $115,246 (three and six months ended June 30, 2024 - $109,818 and $157,783) in professional fees to a company controlled by the CFO, for controller, bookkeeping, corporate secretarial and CFO services; and
- $5,294 and $14,816 (three and six months ended June 30, 2024 - $138,151 and $163,285) in share-based compensation related to HTI RSUs granted to CEO, directors and officers of HTI.
HTI and a director of HTI entered into a medical consultation agreement for telemedicine consulting services. The director is the medical director of HTI and contracts with and assigns physicians for the provision of telehealth services. The director is paid a base fee of USD $3,000 per month and a percentage-based fee for every transaction generated by HTI, from which physicians contracted under the director are compensated. The medical consultation agreement will remain in effect until terminated according to provisions in the agreement. Included professional and consulting fees is $177,966 (period ended June 30, 2024 - $216,289) related to fees paid out under this agreement.
Due from Related Parties
| June 30, 2025 | December 31, 2024 | |
|---|---|---|
| Due from a Director | $ 250 | $ 250 |
| Due from Subsidiary Management | 78,793 | 84,618 |
| Due from GameOn Entertainment | 220,971 | 220,971 |
| Due from GameOn Entertainment - Allowance | (220,971) | (220,971) |
| Other | 22,509 | - |
| Due from XRI¹ | 1,092,194 | 1,092,194 |
| Due from XRI - Allowance | (1,092,194) | (1,092,194) |
| Due from Victory Square Health | 33,000 | 33,000 |
| Due from Cassia, dba CoPilot | 2,095 | 2,095 |
| $ 136,647 | $ 119,963 |
The Company has not recorded an expected credit loss ("ECL") allowance due to amounts assessed as fully collectible.
The amount due from Cassia relates to payment of supplier invoices on behalf of the entity. The balance does not have a fixed repayment date and is non-interest bearing.
Amounts, other than above, are unsecured, non-interest bearing, and due on demand.
Due to Related Parties
| June 30, 2025 | December 31, 2024 | |
|---|---|---|
| Due to Insu | $ 121,976 | $ 113,015 |
| Due to CEO | $ 124,991 | $ 38,418 |
| $ 246,967 | $ 151,433 |
These related party loans are unsecured, due on demand, and non-interest bearing.
As at June 30, 2025, the Company has $124,991 (December 31, 2024 - $38,418) in related party loans due to the CEO. This related party loan is unsecured, due on demand, and bears interest at 3%.
These related party loans are unsecured, due on demand, and non-interest bearing.
Critical Accounting Estimates
The Company's material accounting estimates are presented in Note 2 in the notes to the December 31, 2024, Consolidated Financial Statements. The preparation of the Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting period presented and reported amounts of expenses during the same period. Actual outcomes could differ from these estimates. The 2024 Financial Statements include estimates, which, by their nature, are uncertain. The impact of such estimates may require accounting adjustments based on future occurrences. Any revisions to accounting estimates are recognized in the period in which the estimate is revised and in future periods if the revision affects the future. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectation of future events that are believed to be reasonable under the circumstances.
Significant assumptions about the future and other sources of estimation uncertainty at the end of the reporting period that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made include, but are not limited to, the following:
- The preparation of the 2024 Financial Statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, and expenses.
- The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
- Critical judgements are made in particular with regard to assessment of impairment to the carrying value of the Company's assets.
- At the end of each reporting period the carrying amounts of the Company's assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount and the impairment loss is recognized in the statement of income (loss) and comprehensive income (loss) for the period.
- Changes in any of the assumptions used in impairment testing could materially affect the result of the analysis.
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Financial Instruments and Other Instruments
Fair Value
The Company has determined the estimated fair values of its financial instruments based on appropriate valuation methodologies, as disclosed below. However, considerable judgment is required to develop certain of these estimates. Accordingly, these estimated values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair value amounts can be materially affected by the use of different assumptions or methodologies. The methods and assumptions used to estimate the fair value of each class of financial instruments are discussed below.
The different levels for valuation of financial instruments carried at fair value have been defined as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Quoted market prices for an identical asset or liability represent a Level 1 valuation. When quoted market prices are not available, the Company maximizes the use of observable inputs within valuation models. When all significant inputs are observable, the valuation is classified as Level 2. Valuations that require the use of significant unobservable inputs are considered Level 3.
Private company investments and derivative liabilities are considered Level 3.
The Company's financial instruments consist of cash, trade and other receivables, loans receivable, marketable securities, certain investments, amounts due from related parties, trade payables, accrued liabilities, loans payable, other payables, convertible debt and related party loans. The carrying value of financial instruments approximates the fair value as at June 30, 2025.
U.S. Income Tax Status
U.S. federal tax legislation was enacted in 2004 to address perceived U.S. tax concerns in "corporate inversion" transactions. A "corporate inversion" generally occurs when a non-U.S. corporation acquires "substantially all" of the equity interests in, or the assets of, a U.S. corporation or partnership, if, after the acquisition, former equity holders of the U.S. corporation or partnership own a specified level of stock in the non-U.S. corporation. The tax consequences of these rules depend upon the percentage identity of stock ownership that results. Generally, in the "80-percent identity" transactions, i.e. former equity holders of the U.S. corporation owns 80% or more of the equity of the non-U.S. acquiring entity (excluding certain equity interests), the tax benefits of the inversion are limited by treating the non-U.S. acquiring entity as a domestic entity for U.S. tax purposes. Note, the ownership percentage is computed under section 7874 which varies from legal ownership.
Management is of the view that a corporate inversion has resulted from HTI's RTO transaction completed in November 2022. Management has determined that HTI is subject to the "80 percent" identity with respect to the transactions undertaken. The tax implication resulting from this transaction would be annual filing of US corporate income tax return and additional withholding tax payment to IRS on future distribution to minority shareholders.
Subsequent events
On July 1, 2025, the Company agreed to a third loan amendment agreement with the lender to extend the loan maturity date to October 1, 2025.
On July 14, 2025, Hydreight announced that it has entered into a binding letter of intent dated July 11, 2025 (the "LOI") with Perfect Scripts LLC ("Perfect Scripts"), an arm's length limited liability company based in Texas, in respect of a strategic partnership. Pursuant to the LOI, the parties have agreed that: (a) Hydreight will acquire an initial 5% interest in the issued and outstanding common stock in the capital of Perfect Scripts in consideration for 2,250,000 common shares in the capital of Hydreight (the "Hydreight Compensation Shares"), with each Hydreight Compensation Share issued at a deemed price equal to the greater of $2.30 per share and the lowest price permitted by the policies of TSX Venture Exchange (the "Exchange"), (b) Hydreight and Perfect Scripts will partner to start a 503B pharmacy in the United States, (c) Hydreight will receive the lowest pricing for all products sold or made available by Perfect Scripts or its subsidiaries on the terms and conditions to be set out in a pharmacy services agreement to be entered into by the parties (the "Pharmacy Agreement"), and (d) Hydreight will be granted a right to (i) maintain its pro rata interest in the issued and outstanding common stock of Perfect Scripts, and (ii) acquire up to an aggregate 40% interest in the issued and outstanding securities of Perfect Scripts (collectively, the "Transaction").
Subsequent to the period ended June 30, 2025, Hydreight issued 721,300 common shares on the exercise of purchase warrants for cash proceeds of $1,442,600 and issued 184,698 common shares on the exercise of compensation warrants for cash proceeds of $286,282.
Subsequent to the period ended June 30, 2025, Hydreight issued 450,000 RSUs in relation to a tranche of RSUs granted on July 18, 2023 that vested on July 18, 2025.
Subsequent to the period ended June 30, 2025, Hydreight granted 10,000 RSUs to an employee that vest in one year's time.
Other Risks and Uncertainties
The Company is in the investment management business and as such is exposed to a number of risks and uncertainties that are not uncommon to other companies in the same business. The Company has no material ongoing revenue or income from operations. The Company has limited capital resources and must rely upon the sale its assets or sale of its common shares for cash required to make new investments and to fund the administration of the Company.
These risks may not be the only risks faced by the Company. Additional risks and uncertainties not presently known by the Company, or which are presently considered immaterial may also adversely impact the Company's business, results of operations and financial performance. The most significant risks and uncertainties faced by the Company are set out below.
Financial Risk Management
The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:
Credit Risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's primary exposure to credit risk is on its cash held in bank accounts. The cash is deposited in bank accounts in Canada and the USA. As most of the Company's cash is held by one bank there is a concentration of credit risk. This risk is managed by using a bank that is a high credit quality financial institution as determined by rating agencies. The Company's exposure to credit risk on cash is assessed as low.
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The Company's receivables consist of trade receivables, government sales tax receivable, and due from related parties. Based on the evaluation of receivables, both current and past due as at June 30, 2025, the Company believes that its receivables are collectable, and management has determined credit risk to be low.
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall 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 ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash.
Historically, the Company's main source of funding has been the issuance of equity securities through private placements and loans from related parties. The Company's access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.
The Company's exposure to liquidity risk is assessed as high.
Foreign Exchange Risk
Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company does not hedge its exposure to fluctuations in foreign exchange rates. The Company is not exposed to significant foreign exchange risk.
Limited Operating History
The Company has limited operating history as an investment company and no operating history as a portfolio manager in making investments in the technology industry. The Company and its business prospects must be viewed against the background of the risks, expenses and problems frequently encountered by companies in the early stages of their development, particularly companies in new and rapidly evolving markets.
Limited History of Profitability
Fiscal 2020 was the first year that the Company had made profits since its incorporation. Its future profitability will depend upon its success in making strategic investments in and monetize those investments. Because of the limited operating history and the uncertainties regarding the development of certain technologies and industries in which the Company invests, there are significant risks associated with the Company's investment strategy.
Going-Concern Risk
The 2024 Financial Statements have been prepared on a going-concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. The Company's future operations are dependent upon the identification and successful completion of equity or debt financing and the achievement of profitable operations at an indeterminate time in the future. There can be no assurances that the Company will be successful in completing equity or debt financing or in achieving profitability. The 2024 Financial Statements do not give effect to any adjustments relating to the
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carrying values and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern.
Negative Cash Flow
The Company has a limited history of operations, and very little history of earnings, positive cash flows, or profitability. The Company has had negative operating cash flow since inception, and the Company will continue to have negative operating cash flow for the foreseeable future. No assurance can be given that the Company will ever attain positive cash flow or profitability or that additional funding will be available for operations.
Additional Requirements for Capital
Substantial additional financing may be required if the Company is to be successful in developing a diversified and material portfolio of investments. No assurances can be given that the Company will be able to raise the additional capital that it may require for its anticipated future development. Any additional equity financing may be dilutive to investors and debt financing, if available, may involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to the Company, if at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated investments.
Risks Relating to Existing and Future Investments
The Company may, in the future, make investments that may, in part, be financed by the Company. Existing investments and future investments made by the Company should be considered speculative and there is no guarantee that any such investment will earn any positive return in the short term or long term. Businesses that the Company invests in may also request additional funding from the Company to support their operations and growth, and there is no assurance that such funding will be available to the Company from external sources on acceptable terms or at all.
The Company intends to pursue opportunities outside of the Company's existing business segments that would diversify the asset base, the success of which will depend, in part, on its ability to: identify suitable investments; negotiate the purchase of such investments on terms acceptable to it; complete the investments within expected time frames; and capitalize on such investments. Further, the profitability of such investments will be dependent upon a variety of potential factors depending on the underlying industry, for example, the market price of commodities, the level of interest rates, global economic conditions, political conditions, speculative activities, stability of exchange rates and other factors beyond the control of the Company. Investments in companies with publicly traded securities may experience substantial volatility and would be subject to market trends and macroeconomic conditions generally, notwithstanding any potential success of such companies in creating revenues, cash flows or earnings and may not accurately reflect the long-term value of such companies. There can be no assurance that continual fluctuations in price will not occur in such instances. The Company invests in and may make future investments in securities of private companies. In some cases, the Company may be restricted by contract or by applicable securities laws from selling such securities for a period of time. Such securities may not have a ready market and the inability to sell such securities or to sell such securities on a timely basis or at acceptable prices may impair the Company's ability to exit such investments when the Company considers it appropriate. Foreign investments that may be made by the Company in specific sectors such as natural resource, industrial or technology may be subject to political risks, risks associated with changes in foreign exchange rates, foreign exchange control risks and other similar risks. The Canadian dollar equivalent of the Company's net denominated assets and dividends would be adversely affected by reductions in the value of the applicable foreign currencies relative to the Canadian dollar and would be positively affected by increases in the value of the applicable foreign currencies relative to the Canadian dollar.
The Company invests in and may make future investments in securities of companies that the Company does not control. These investments will be subject to the risk that the company in which the investment is
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made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or management of the Company may take risks or otherwise act in a manner that does not serve the Company's interests. If any of the foregoing were to occur, the values of investments by the Company could decrease and the Company's financial condition and cash flow could suffer as a result. The due diligence process undertaken by the Company in connection with investments it makes or that it wishes to make may not reveal all relevant facts in connection with an investment. Before making investments, the Company will conduct due diligence investigations that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence investigations, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants, and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. The due diligence investigations that are carried out with respect to any investment opportunity may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such investigation will not necessarily result in the investment being successful.
Equity Investment Risk
Equities such as common shares give the holder part ownership in a company. The value of an equity security changes with the fortunes of the company that issued it. General market conditions and the health of the economy can also affect equity prices. Certain securities may be particularly sensitive to general market movements, which may result in a greater degree of price volatility for such securities and for securities of companies that invest in such securities under specific market conditions and over time. Equity related securities that provide indirect exposure to the equity securities of an issuer, such as convertible debentures, can also be affected by equity risk.
Liquid Securities
If the Company is unable to dispose of some or all of the securities held by it, the Company may experience a delay in the receipt of the proceeds of disposition until such time as it is able to dispose of such securities or may be able to do so only at prices which may not reflect the true value of such investments.
Asset Class Risk
The equity investments held by the Company may underperform the returns of other securities that have exposure to other countries, regions, industries, asset classes or sectors. Various asset classes tend to experience cycles of outperformance and under performance in comparison to the general securities markets.
Digital Assets Risk
The Company holds digital currencies or service tokens. Prices of digital currencies are volatile, and they are affected by various forces including global supply and demand, interest rates, exchange rates, inflation or deflation and the global political and economic conditions. The digital assets are accounted for under IAS 28 at the cost to the Company, being $Nil. The Company may not be able to liquidate its inventory of digital currency at its desired price if required.
The Company may hold some or all of the Company's digital assets in wallets directly controlled by the Company or through third party custodian services. Such wallets may be susceptible to cyber-attacks and/or mishandling which could cause the loss of funds.
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Technology Sector Risk
The Company obtains exposure to the securities of technology companies. General risks of technology companies include the risks of rapidly changing technologies, short product life cycles, fierce competition, aggressive pricing and reduced profit margins, loss of patent, copyright and trademark protections, cyclical market patterns, evolving industry standards and frequent new product introductions. Certain technology companies may be smaller and less experienced companies, with markets or financial resources and fewer experienced management or marketing personnel.
Small and Mid-Capitalization Companies Risk
Certain of the equity securities to which the Company obtains exposure may be small and/or mid-capitalization company common shares. Such common shares have customarily involved material investment risk. Small and mid-capitalization companies may have limited product lines, markets or financial resources; may lack management depth or experience; and may be more vulnerable to adverse general market or economic developments than large companies. Some of these companies may distribute, sell or produce products which have recently been brought to market and may be dependent on key personnel.
The prices of small and mid-capitalization company securities are often more volatile than prices associated with large company issues, and can display abrupt or erratic movements at times, due to limited trading volumes and less publicly available information. Also, because small and mid-capitalization companies normally have fewer common shares outstanding and these common shares trade less frequently than those of large companies, it may be more difficult for the Company to buy and sell significant amounts of such common shares. The securities of small and mid-capitalization companies are often traded on "over the counter" markets and may not be traded in the volumes typical of a national securities exchange.
Regulatory Risks
Changes in, or more aggressive enforcement of, laws and regulations could adversely impact companies involved in the health, digital health, insurance, gaming, and cryptocurrency businesses. Failure or delays in obtaining necessary approvals, changes in government regulations and policies and practices could have an adverse impact on such businesses' future cash flows, earnings, results of operations and financial condition.
Dependence on Internet Infrastructure; Risk of System Failures, Security Risks and Rapid Technological Change
The success of any developer of technology platforms will depend by and large upon the continued development of a stable public infrastructure, with the necessary speed, data capacity and security, and the timely development of complementary products such as high-speed modems for providing reliable internet access and services. Technology platforms have experienced and are expected to continue to experience significant growth in the number of users, amount of content and bandwidth availability. It cannot be assured that the infrastructure will continue to be able to support the demands placed upon it by this continued growth or that the performance or reliability of the technology will not be adversely affected by this continued growth.
Intellectual Property Rights
Companies involved in the development and operation of technologies may be dependent on intellectual property rights; the loss of which could harm its business, results of operations and its financial condition. There can be no assurance that any company's products will not violate proprietary rights of third parties or that third parties will not assert or claim that such violation has occurred. Any such claims and disputes arising may result in liability for substantial damages which in turn could harm the underlying business, results of operations and financial condition of the Company.
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Cyber Security Risks
The Company is dependent on information technologies to conduct its operations, including management information systems and computer control systems. Business and supply chain disruptions, plant and utility outages and information technology system and network disruptions due to cyber-attacks could seriously harm operations and materially adversely affect operation results, Cyber security risks include attacks on information technology and infrastructure by hackers, damage or loss of information due to viruses, the unintended disclosure of confidential information, the issue or loss of control over computer control systems, and breaches due to employee error.
The Company's exposure to cyber security risks includes exposure through third parties on whose systems it places significant reliance for the conduct of its business. There can be no assure that the Company has the resources or technical sophistication to anticipate, prevent, or recover from rapidly evolving types of cyber-attacks. Compromises to its information and control systems could have severe financial and other business implications.
Competition
The market for investment opportunities is highly competitive. The Company will compete with a large number of other investors focused on similar investments, such as private equity funds, mezzanine funds, investment banks, and other equity and non-equity based public and private investment funds. Competitors may have a lower cost of funds and may have access to funding sources that are not available to the Company. In addition, certain competitors of the Company may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships and build their respective market common shares. As a result of this competition, there can be no assurance that the Company will be able to locate suitable investment opportunities, acquire such investments on acceptable terms, or achieve an acceptable rate of return on the investments it does make. The competitive pressures faced by the Company may have a material adverse effect on its activities, financial condition, and results of operations.
Key Personnel
The Company is dependent upon the continued availability and commitment of its management, whose contributions to immediate and future operations of the Company are of significant importance. The loss of any such management could negatively affect the Company's business operations. From time to time, the Company will also need to identify and retain additional skilled management to efficiently operate its business. Recruiting and retaining qualified personnel is critical to the Company's success and there can be no assurance of its ability to attract and retain such personnel. If it is not successful in attracting and training qualified personnel, the Company's ability to execute its business model and growth strategy could be affected, which could have a material and adverse impact on its profitability, results of operations and financial condition.
Conflicts of Interest
Certain of the Company's directors and officers may, from time to time, serve as directors or officers of other companies involved in similar businesses to the Company and, to the extent that such other companies may participate in the same ventures in which the Company may seek to participate, such directors and officers may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. Such conflicts of the Company's directors and officers may result in a material and adverse effect on the Company's results of operations and financial condition.
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Share Price Volatility Risk
External factors outside of the Company's control may have a significant impact on the market price of the common shares. Global stock markets have experienced extreme price and volume fluctuations from time to time. There can be no assurance that an active or liquid market will develop or be sustained for the common shares.
Russian invasion of Ukraine
In February 2022, Russia commenced a military invasion of Ukraine which generated a response in the form of strict economic sanctions from multiple countries and corporations around the world, including Canada. Although the Company does not have operations in Russia or Ukraine, the global impact of this conflict in commodity prices, foreign currency exchange rates, supply chain challenges and increased fuel prices may have adverse impacts on our costs of doing business.
Disclosure of Internal Controls and Procedures
In connection with National Instrument 52-109 – Certification of Disclosure in Issuer's Annual and Interim Filings ("NI 52-109"), the Chief Executive Officer and Chief Financial Officer of the Company will file a Venture Issuer Basic Certificate with respect to the financial information contained in the Financial Statements and this MD&A. The Venture Issuer Basic Certification does not include representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI 52-109.
Information Available on SEDAR+
Additional information about the Company, including historical financial statements and management discussion and analyses, is available on SEDAR+ at www.sedarplus.ca.