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VSBLTY Groupe Technologies Corp. — Management Reports 2026
Feb 12, 2026
47695_rns_2026-02-11_559efc48-d0c5-4ef5-91f9-48a9b6318707.pdf
Management Reports
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Management's Discussion and Analysis of Financial Condition and Results of Operations for the nine months ended September 30, 2025
Background
This management discussion and analysis ("MD&A") of the financial position of VSBLTY Groupe Technologies Corp. ("VSBLTY", the "Company" and "us," "our" or "we") and results of its operations for the nine months ended September 30, 2025, is prepared as at February 10, 2026. This MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements for the nine months ended September 30, 2025, and 2024 and the related notes thereto and the audited consolidated financial statements for the years ended December 31, 2024 and 2023 and the related notes thereto. The audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). All currency amounts are expressed in United States dollars, unless otherwise noted.
Forward-Looking Information
This discussion contains "forward‐looking statements" that involve risks and uncertainties relating to timing of revenue and expectations relating to increased bookings. Such information, although considered to be reasonable by the Company's management at the time of preparation, may prove to be inaccurate and actual results may differ materially from those anticipated in the statements made. This MD&A may contain forward‐looking statements that reflect the Company's current expectations and projections about its future results. When used in this MD&A, words such as "estimate", "intend", "expect", "anticipate" and similar expressions are intended to identify forward‐looking statements, which, by their very nature, are not guarantees of the Company's future operational or financial performance, and are subject to risks and uncertainties and other factors that could cause the Company's actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward‐looking statements. Readers are cautioned not to place undue reliance on these forward‐looking statements, which speak only as of the date of this MD&A or as of the date otherwise specifically indicated herein. Due to risks and uncertainties, including the risks and uncertainties identified above and elsewhere in this MD&A, actual events may differ materially from current expectations. The Company disclaims any intention or obligation to update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise.
Such statements reflect our management's current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and known or unknown risks and contingencies. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements. Please see the risk factors discussed under the heading "Risk Factors" in the Company's annual information form and other public filings made by the Company with Canadian securities regulatory authorities, which are available under the Company's SEDAR profile at www.sedarplus.ca.
This MD&A contains future-oriented financial information and financial outlook information (collectively, "FOFI") regarding the Company's prospective revenue, operating losses, expenses and research and development operations, which are subject to the same assumptions, risk factors, limitations and qualifications as set forth above. FOFI contained in this MD&A was prepared using the same accounting principles that the Company expects to use in preparing its financial statements for the applicable periods covered by such FOFI. FOFI was made as of the date of this MD&A and was provided for the purpose of describing anticipated sources, amounts and timing of revenue generation, and are not an estimate of
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profitability or any other measure of financial performance. In particular, revenue estimates do not take into account the cost of such estimated revenue, including the cost of goods and the cost of sales. VSBLTY disclaims any intention or obligation to update or revise any FOFI contained in this MD&A, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. FOFI contained in this MD&A should not be used for purposes other than for which it is disclosed herein. Please see the risk factors discussed under the heading "Risk Factors" in the Company's annual information form and other public filings made by the Company with Canadian securities regulatory authorities, which are available under the Company's SEDAR profile at www.sedarplus.ca.
Company Overview
The "Company" was incorporated under the Business Corporations Act (British Columbia) on August 1, 2018. The corporate offices of VSBLTY Groupe Technologies, Corp are located at Royal Centre, 1055 W. Georgia Street PO Box 11117, Vancouver, BC V6E 4N7, Canada. The US head office is located at 417 North 8th Street, Suite 300, Philadelphia, Pennsylvania 19123 and its registered office is located at The Corporation Trust Center, 1201 Orange Street, City of Wilmington, New Castle County, DE 19801. The Company is a software provider of artificial intelligence driven security and retail analytics technology. The Company's shares trade on the Canadian Securities Exchange under the symbol "VSBY", the OTCQB Venture Market under the symbol "VSGBF", and the Frankfurt stock exchange under the symbol "5VS".
The unaudited condensed consolidated interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business. As at September 30, 2025, the Company had not yet achieved profitable operations and has an accumulated deficit of \$74,020,258 since its inception. The continuing operations of the Company are dependent upon its ability to develop a viable business and to attain profitable operations and generate funds there from. This indicates the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Management intends to finance operating costs with capital market equity financings. If the Company is unable to continue as a going concern, the net realizable value of its assets may be materially less than the amounts on its statement of financial position.
Overall Performance
As a driver of digital - retail transformation solutions, the Company assists retailers in defining new digital growth and marketing strategies that lead to new revenue streams (Retail Media Networks). While the Company brings specific solutions that help retailers take advantage of digital trends in retail often the team is called upon to provide comprehensive expertise and consulting to educate its customers on how to take advantage of the Company's solutions and their application in transforming retail engagement and measurement. This has positioned the Company as a trusted resource but also slows the selling process and lengthens the selling cycle. Over time, management of the Company believes that the pace of deployment will increase, and sales cycles will shorten as retailers develop an understanding of the technology. However, this creates challenges for the management of the business with respect to accurate projections and forecasting. The Company's goal is to establish a brand that is trusted by retailers and advertisers alike to guide them through the digital revolution in retail and the building of media retail networks. The Company will focus its resources on leveraging this trust to generate contracts and revenue as more retailers take advantage of these new revenue streams.
The digital-out-of-home ("DOOH") market refers to digital advertising that is targeted to consumers outside their homes (particularly in-store where consumers can actually buy a product). Management of the Company believes that as advertisers continue to look for alternative markets, they will continue to seek media and channels that can deliver the same kind of measurability that the Internet can offer. DOOH is
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expected to grow to the extent that it can provide this measurability to major advertisers. Advertisers will pay for impressions delivered that have attribution, accountability and addressability. To date, DOOH has not been able to deliver this to the same extent as the Internet. The Company provides the platform and capability that is intended to deliver this measurability, and with key channel partners, a turnkey solution for retailers and advertisers to build new in-store media networks.
In the security category, the Company has a similar issue. Most camera and sensor systems have a human dependency. The guiding philosophy of computer vision with machine learning is that computers and software can be leveraged to interpret live video by making dumb cameras smart. Dissecting, understanding and contextualizing live video is an important capability of the Company. One of the goals of the Company, and others pioneering the category, is to augment human operators interpreting video and flagging security operators to anomalous or suspicious activity.
Since inception, the Company has delivered software solutions that rely heavily upon cloud computing. However, there are many applications, particularly in DOOH and security, which will perform better and more reliably with edge processing. The consumption of algorithms in cloud computing is subject to licensing but the Company believes that it has developed technology that runs with equal reliability on the edge. This model also consumes less third-party licensed algorithms. This migration from cloud to edge will allow the Company to provide solutions in both categories. The Company will support both consumption models and will have different pricing models for each. The Company expects that edge-based solutions will have an enormous impact as this market further defines itself.
On October 25th, 2022, the Company received notice that the U.S. Patent and Trademark Office issued patent No. 11,481,809 for the firm's software platform that allows for specific content to be triggered by biometric and proximity triggers while ensuring the greatest protection for identity and privacy since no data collected is able to be inferred to personally identifiable information. The patent is the first awarded to the Company, initially for use on large form vending, with additional applications to follow.
Utilizing advanced facial detection and classification techniques, the system determines individual customer's facial features to determine whether they will be targeted for specific product or brand messages based on age or gender. The software will trigger ads if the brand is targeting males or females or customers of a particular age group and will serve content automatically based on the customer's particular demographic profile. The software also has the capability to change content based on the customer's proximity to the display. One set of content is designed to attract the customer's attention from thirty feet away. The content then can be triggered again at ten feet from the display to further engage the customer, and finally, once more, at the point the customer interacts with the content by touch or by scanning a QR code.
Management views the Company's past performance of net operating losses and negative cash flow as a stage in the process of developing the product lines and obtaining market share for the various business segments. Field trials of products at little to no cost are necessary to develop products. The Company has conducted several field trials of the various product lines and is now marketing those products to clients at retail pricing models.
Winkel Media
This Joint Venture, which was entered into between the Company, Retailigent Media and Modelo (a subsidiary of AB In Bev), operates under the name Winkel Media, S.A.P.I. de C.V. ("Winkel Media") and is a strategic engagement for VSBLTY. Winkel Media is both a customer and a key partner. VSBLTY derives license revenue from Winkel Media but also participates in the media revenue from the Joint Venture. The objective of the Joint Venture is to create a high-performing retail media network that will allow for digital advertising in up to 50,000 locations over the life of the Joint Venture. The rationale for
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VSBLTY providing initial financing for the Joint Venture, as well as delaying payment on SaaS fees, is to allow for the performance of activities intended to create critical mass in the market. That is, the structure is based on the underlying rationale that media cannot be sold unless it reaches a certain distribution or reach. The other parties to the Joint Venture create value in non-tangible ways, while VSBLTY agreed to fund the initial costs of the network build-out with the expectation that both the revenue and the initial start up operating and equipment costs will be paid out as the entity approaches cash flow positive.
Winkel Media is growing and is expected to provide a large portion of the Company's revenues. As of June 30, 2024, the Joint Venture has generated approximately \$4.0M in revenue, a large portion of which has been reversed for collectability, primarily for the sale of equipment. At the end of the second quarter 2022, Austin GIS took over equipment sales and related financing duties with Winkel. The Company expects that more technology will be licensed by Winkel Media as the services expand into related, technology enabled, advertising markets. Any change in VSBLTY's relationship with this partner in the future could have a material adverse effect on its business, financial condition and results of operations. See "Risk Factors - Dependence on a Small Number of Channel Partners" in the July 2022 Prospectus.
On May 3, 2022, the Company entered into a monthly SaaS agreement with Winkel Media to begin a phase one installation of Golden Record in its convenience store media network throughout Latin America. The initial rollout has started in Mexico, Peru, Ecuador, Colombia and the Dominican Republic, and is expected to expand with new installations as Winkel Media grows its planned 50,000-store network. Winkel Media is an in-store media technology company that is a joint venture of the Company, its Latin American partner Retailigent, S.A. de C.V. and Cerveceria Modelo de Mexico, S. de R.L. de C.V. that is already operational. The technology company developed the first retail DOOH network in Latin America Golden Record uses free guest Wi-Fi in stores to improve the customer experience. The initial term of the agreement is for a period of twenty-four (24) months; however, the parties will have the right to extend the term for an additional twenty-four (24) month period if the applicable shareholders' agreement terminates. After the initial term or applicable extension period, the agreement will automatically be renewed for successive three (3) month periods unless Winkel provides notification in writing at least thirty (30) days prior to the end of the then-current term or renewal term. In the event of a material breach of any provision of the agreement, the non-breaching party may terminate the agreement by giving thirty (30) days prior written notice to the breaching party; provided, however, that the agreement shall not terminate if the breaching party has cured the breach prior to the expiration of such thirty (30) day period.
It was determined in the past months to hold off expansion of this program until Winkel Media achieves positive cash flow from its growing advertising base expected in 2026.
Starting in mid-October, programmatic advertising capability was deployed throughout the network. The team has been integrating with all major DSP's including Place Exchange, Hivestack and key global agencies' programmatic buying entities, enabling Winkel Media to now accept advertising placement using live, Real Time Bidding. Programmatic is expected to represent 30% of all advertising sales.
Winkel has also continued to grow its advertising base among direct clients including global brands such as Bimbo, PepsiCo, Unilever and others with 2023 annual contracts expected to grow along with the expansion of new store installations and the continued success that brands are realizing from these in-store media campaigns. Winkel also expects to see growth in advertising sales made directly through the AB Inbev app, BEES as store owners are learning to coordinate brand advertising support of weekly store promotions.
This joint venture is now deployed in 4 countries and in approximately 2000 store locations.
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Retail and Security Sectors
Although the goal of the Company is to secure as many SaaS subscriptions as possible, there are many components to successfully securing and growing a customer subscription base in the markets and channels the Company serves. There are two broad categories in which the Company participates, which include: (i) the retail sector; and (ii) the security sector. Each of the retail and security sectors have slightly different deployment and revenue models, which are further described in the following paragraphs.
Retail: In the retail sector, the objective of VSBLTY, through the deployment of its software, is to generate greater visibility and promotion for consumer products in physical retail locations. This objective is addressed through the process of activation. For example, the Company's VisionCaptor product is optimized to deliver a visual or interactive experience for consumers who are in aisle at retail locations. The objective of the digital activation is to engage the customer in a specific message that is customized to the promotion or to the consumer (e.g., specific to the consumer's age and gender). The efficacy of the message is measured by counting persons, dwell time, engagement, interaction, and lift (which refers to the amount of incremental product sold due to the activation). In the experience of management of the Company, consumer packaged goods brands will pay for the opportunity to place messaging in retail locations because they expect that such positioning will enhance the branding of their product, will generate more product sales, and will provide consumer engagement metrics, unlike other retail solutions previously provided. Brands use this data to fine tune their messaging and to optimize target marketing and customer engagement. The activation itself (the visual display combined with measurement) provides an effective way of reaching consumers out of home with relevant brand messaging at the point where an actual purchase can be made and, in the experience of management of the Company, results in a far greater return on investment as a media buy. This will increase the value of the shelf space because it becomes an advertising platform with instant and granular measurement data. In summary, the Company is recognized for pioneering the implementation of the Store as a Medium program that enables brands to reach customers when and where buying decisions are being made while producing a new revenue stream for both the Company and leading retailers around the world.
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- The Company generates retail revenue by creating a new interactive advertising medium that is both interactive and measurable. VSBLTY generates revenue not only by providing the professional services that surround the deployment of the technology, but also through the creative execution and the SaaS licenses, which are foundational to the actual platform. A typical deployment in retail will be funded either by the brand (e.g., a company that displays and sells their products within a retail store) or the retailer (e.g., a company that owns the retail location within which products are displayed and sold) and deployed in a selected number of stores. Each deployment for each store can constitute 1 to 4 "endpoints". VSBLTY licenses its retail software on a "per end point per month" basis. A deployment that is executed across an entire retailer could be several thousand endpoints. As the Company generates more end points in retail locations (e.g., more smart digital shelves or displays) and the benefits of the Company's products are further demonstrated, management expects that the market demand for the Company's products will increase.
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- Security: VSBLTY's security solution is based on the idea that too many cameras can overwhelm operators, leading to circumstances wherein the operators, charged with the responsibility of monitoring hundreds of video feeds, miss critical events or information. The camera networks tend to be used primarily to understand and decode what may have happened, as opposed to acting as a critical early warning system or a real time analytics augmentation to the operator. While the forensic value of a camera network is significant, the idea of conducting proactive analytics without operator intervention brings surveillance into a new category. VSBLTY's software can monitor
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hundreds of thousands of camera feeds for meaningful data in the video stream, which includes data with respect to objects that should not be there, such as weapons or unauthorized persons in a restricted area, significantly reducing the cost of monitoring and enhancing overall security solutions.
Both the DataCaptor and VECTOR software modules process algorithms. This is the artificial intelligence process that determines, as an example, the age of a person, the gender of a person, the type of an object (e.g., a beverage) or the identity of a person. DataCaptor and VECTOR can run one or many algorithms simultaneously on edge processors (not cloud). In the security context, for instance, this means that the VECTOR software can query a local database and determine if a person in the field of view matches a biometric entry on the database. If the software determines a match, there will be a report with probability of a match (e.g., the person is matching to a database entry).
VSBLTY generates revenue from the security market by selling both DataCaptor (Anonymous video analytics) and VECTOR (Facial Recognition). Each camera is licensed, as is each algorithm. The more algorithms that run on the processor, the more licenses are required. As the Company deploys camera networks with its security partners, VSBLTY will run analytics on a sub-set or on the entire camera population. The license revenue will be generated in that manner.
A typical security deployment would include a number of cameras deployed within a city or community and, depending upon the kind and number of algorithms deployed, each camera would be licensed per month. In a smart city deployment, the number of cameras running analytics in a camera network could number in the thousands.
Critical Accounting Estimates and Policies
The preparation of the consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The significant accounting estimates and judgments are set out in Note 4 to the audited consolidated financial statements for the year ended December 31, 2024.
Material Accounting Policies
The material accounting policies applied in the preparation of the financial statements are in Note 3 of the audited financial statements for the year ended December 31, 2024.
Initial adoption of new accounting standards
Adoption of new accounting standards have been disclosed in Note 3 of the Company's consolidated financial statements for the year ended December 31, 2024, and 2023.
Future accounting standards issued but not yet in effect
Pronouncements that may have a significant impact to the Company have been disclosed in Note 3 of the Company's consolidated financial statements for the year ended December 31, 2024, and 2023.
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Share Capital
Authorized share capital of the Company consists of an unlimited number of common shares with no par value ("Common Shares").
During the nine months ended September 30, 2025, the Company issued an aggregate of:
- 23,235,185 common shares in the capital of the Company for proceeds of \$2,134,956 (CAD\$3,065,000).
- 952,380 common shares in the capital of the Company at a fair value of \$92,757 per share to settle \$100,000 worth of debt. A loss of \$23,215 was recognized.
- 2,234,000 units upon conversion of convertible debentures with a face value of \$110,000. The fair value Upon conversion, 2,234,000 common shares and common share purchase warrants were issued with fair values of \$164,321 and \$140,838 respectively.
- 2,850,833 common shares in the capital of the Company as compensation for services with a fair value of \$248,645.
Summary of Quarterly Results
The following table provides selected quarterly unaudited financial data for the eight most recently completed interim quarters:
| Three months ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30, 2025 |
June 30, 2025 |
March 31, 2025 |
December 31, 2024 |
September 30, 2024 |
June 30, 2024 |
March 31, 2024 |
December 31, 2023 |
|
| Revenue | \$ 472,552 |
\$ 1,041,910 |
\$ 343,470 |
\$ 546,263 |
\$ 348,240* |
\$ 440,110* |
\$ 179,301* |
\$ 550,531 |
| Net loss for the period |
\$ (1,182,512) | \$ (1,941,184) | \$ (1,832,988) | \$ (3,784,262) | \$ (1,688,775)* | \$ (1,017,041)* | \$ (1,753,303)* | \$ (3,072,280) |
| Basic and diluted loss per share |
\$ (0.01) |
\$ (0.02) |
\$ (0.03) |
\$ (0.04) |
\$ (0.03) |
\$ (0.03) |
\$ (0.03) |
\$ (0.09) |
*These numbers factor in subsequent year-end adjustments
Summary of Results During Prior Eight Quarters
Net loss for the quarter ended September 30, 2025, decreased by \$758,672 as compared to the previous quarter. The decreased loss is primarily due to a decrease in general and administrative expenses of \$714,825.
Net loss for the quarter ended June 30, 2025, increased by \$108,196 as compared to the previous quarter. The increased loss is primarily due to an increase in general and administrative expenses of \$314,090, partially offset by a decrease in finance costs of \$62,048, and an increase in gross profit of \$152,342.
Net loss for the quarter ended March 31, 2025, decreased by \$1,358,639 as compared to the previous quarter. This decreased loss is primarily due to a transaction expense of \$944,858, change in fair value of convertible debenture of \$447,619 and intangible asset amortization expense of \$300,035 (compared to
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\$116,897 during the current quarter), a decrease in general and administrative expenses of \$449,701 which were recognized in connection with the Winkel MSA acquisition in the previous quarter. These decreases were partially offset by an increase in sales and marketing expenses of \$240,681, and an increase in sharebased payments of \$444,060.
Net loss for the quarter ended December 31, 2024, increased by \$2,095,487 as compared to the previous quarter. This increased loss is primarily due to a transaction expense of \$944,858, intangible asset amortization expense of \$300,035, both recognized in connection with the Winkel MSA acquisition, a loss on joint venture of \$592,635 being the Company's share of Winkel's loan with Tech Mahindra, and change in fair value of convertible debenture of \$447,619. The general and administrative expenses also increased by \$309,744 as compared to the previous quarter, which contributed to the increase. These increases were partially offset by a decrease in sales and marketing expenses of \$320,090, a decrease in share-based payments of \$382,750 and a reversal of impairment of receivables of \$170,000 as compared to the previous quarter.
Net loss for the quarter ended September 30, 2024, increased by \$671,734 as compared to the previous quarter. This increased loss is primarily due to a decrease in revenue of \$91,870 as compared to the previous quarter. Connectivity and professional services revenue decreased by \$104,125 and \$55,866 in the current quarter as compared to the previous quarter. Share-based payments increased by \$211,004, financing costs increased by \$106,813, and a gain on settlement of contingent consideration of \$189,871 in the second quarter did not repeat in the third.
Net loss for the quarter ended June 30, 2024, decreased by \$736,262 as compared to the previous quarter. This decreased loss is primarily due to an increase in revenue of \$260,809 as compared to the previous quarter from the new connectivity sales of \$260,313 ,an \$80,000 loss on loan impairment, a gain in the settlement of contingent consideration of \$189,871 both in the first quarter not occurring in the second quarter in and a decrease in share-based payments expense by \$35,299 as a result of options and RSUs having vested in previous periods.
Net loss decreased by \$1,318,977 for the three months ended March 31, 2024 as compared to the previous quarter. This decrease is primarily due to the fact that in the previous quarter, an impairment to goodwill was recorded for \$1,274,174, along with a decrease in the fair value of financial instruments of \$1,000,000. These expenses decreases were partially offset by decreases in revenue of \$500,000 in software license development which only occurred in the prior quarter.
Net loss increased by \$151,413 for the three months ended December 31, 2023 as compared to the previous quarter. This increase is primarily due to the fact that in the current quarter, an impairment was recorded to goodwill from the acquisition of Shelf Nine LLC of \$1,274,174 and a decrease in the fair value of financial instruments of \$1,000,000 related to Austin GIS. These expense increases were partially offset by a reversal that was recorded on the value of previously issued warrants for \$1,335,769, which was recorded in sharebased compensation for the quarter ended December 31, 2023, an increase in revenue of \$409,525 which is primarily from revenue obtained from software license development of \$500,000 for the current quarter and an impairment loss on a receivable from Winkel of \$400,000 that was recorded in the previous quarter.
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Results of Operations – For the three and nine months ended September 30, 2025 and 2024
The results of operations for the three and nine months ended September 30, 2025, and 2024 are summarized below:
| Three months ended September 30, 2024 |
2025 | Nine months ended September 30, 2024 |
||||
|---|---|---|---|---|---|---|
| Revenue | ||||||
| License fees | \$ | 17,656 | \$ 28,687 |
\$ 34,975 |
\$ | 80,350 |
| Media management | 231,611 | 255,188 | 694,836 | 609,160 | ||
| Professional services | 213,085 | 63,530 | 1,075,721 | 262,937 | ||
| Hardware and other | 10,200 | 835 | 52,400 | 15,204 | ||
| 472,552 | 348,240 | 1,857,932 | 967,651 | |||
| Cost of sales | (502,193) | (165,712) | (1,798,481) | (732,011) | ||
| Gross profit | (29,641) | 182,528 | 59,451 | 235,640 | ||
| Sales and marketing expenses General and administrative |
(232,141) | (352,091) | (804,681) | (1,317,639) | ||
| expenses | (234,871) | (711,047) | (1,820,173) | (1,939,544) | ||
| Research and development | ||||||
| expenses | (406,285) | (275,081) | (1,047,387) | (926,333) | ||
| Share-based payments | (3,044) | (221,235) | (523,224) | (276,996) | ||
| Operating loss | (905,982) | (1,376,927) | (4,136,014) | (4,224,872) | ||
| Finance costs | (272,627) | (304,173) | (793,476) | (589,430) | ||
| Loss on loan impairment | - | - | - | (80,000) | ||
| Loss on derivative liability | - | (13,841) | - | (13,841) | ||
| (Loss) gain on settlement of | ||||||
| payables | (185) | 3,784 | (23,839) | 3,784 | ||
| Gain on settlement of | ||||||
| contingent consideration | - | - | - | 189,871 | ||
| Interest income | 1,494 | 3,760 | 1,494 | 3,760 | ||
| Foreign exchange gain (loss) | (5,212) | 2,406 | (4,849) | (4,140) | ||
| Net loss for the period | (1,182,512) | (1,688,775) | (4,956,684) | (4,714,868) | ||
| Foreign currency translation | 13,548 | (10,331) | (127,088) | 2,402 | ||
| Comprehensive loss for the | ||||||
| period | \$ | (1,168,964) | \$ (1,699,106) |
\$ (5,083,772) |
\$ | (4,712,466) |
| Loss per share – Basic and | ||||||
| diluted | \$ | (0.01) | \$ (0.03) |
\$ (0.07) |
\$ | (0.09) |
| Weighted average shares outstanding – Basic and |
||||||
| diluted | 85,199,520 | 53,519,687 | 77,638,935 | 49,783,695 |
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Revenue
During the three months ended September 30, 2025, and 2024, the Company generated revenue of \$472,552 and \$348,240, respectively. The revenue increase was driven by new revenue streams from the acquisition of the Winkel MSA, which contributed \$231,611 and was reflected for the first full quarter in the three months ended March 31, 2025.
During the nine months ended September 30, 2025, and 2024, the Company generated revenue of \$1,857,932 and \$967,651, respectively. The revenue increase was driven by new revenue streams from the acquisition of the Winkel MSA, which contributed \$694,836 and was reflected for the first full quarter in the three months ended March 31, 2025. The Company also generated substantial professional services revenue of \$1,075,721 as a result of completing engineering design projects during the nine months ended September 30, 2025.
Cost of sales
During the three months ended September 30, 2025, and 2024, cost of sales was \$502,193 and \$165,712, respectively. The increase in cost of sales of \$336,481 was mainly due to costs associated with large equipment installations which weren't present in the prior comparable period.
During the nine months ended September 30, 2025, and 2024, cost of sales was \$1,798,481 and \$732,011, respectively. The increase in cost of sales of \$1,066,470 was mainly due to costs associated with large equipment installations which weren't present in the prior comparable period.
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Operating expenses
| Three months | Three months | Nine months | Nine months | |
|---|---|---|---|---|
| ended September 30, |
ended September |
ended September 30, |
ended September 30, |
|
| 2025 | 30, 2024 | 2025 | 2024 | |
| Marketing expenses | \$ 23,268 |
\$ 55,340 |
\$ (3,728) |
\$ 319,155 |
| Meals and entertainment | - | 2,188 | 474 | 6,646 |
| Salaries and wages | 208,873 | 294,563 | 807,935 | 991,838 |
| Total sales and marketing expense | \$ 232,141 |
\$ 352,091 |
\$ 804,681 |
\$ 1,317,639 |
| General and administrative expenses | \$ 135,568 |
\$ 141,150 |
\$ 524,159 |
\$ 486,561 |
| Professional fees | 116,332 | 110,603 | 470,718 | 383,639 |
| Consulting fees | 105,430 | 143,293 | 542,031 | 495,391 |
| Rent | 21,839 | 4,034 | 67,456 | 19,698 |
| Salaries and wages | 48,098 | 14,473 | 134,585 | 98,632 |
| Travel | 1,795 | 17,564 | 16,685 | 22,940 |
| Depreciation | 1,942 | 189,051 | 9,581 | 209,516 |
| Lease-related depreciation | - | 7,351 | - | 25,531 |
| Utilities | 612 | 7,978 | 15,938 | 33,683 |
| Bad debt expenses | (213,436) | 64,877 | 11,483 | 121,835 |
| Transfer agent and filing fees | 16,691 | 10,673 | 27,537 | 42,118 |
| Total general and administrative | \$ 234,871 |
\$ 711,047 |
\$ 1,820,173 |
\$ 1,939,544 |
| expense | ||||
| Consulting fees | \$ 152,764 |
\$ 113,725 |
\$ 431,519 |
\$ 373,182 |
| Contract development and materials | ||||
| expense | 111,021 | 18,856 | 188,368 | 73,151 |
| Salaries and wages | 152,764 | 142,500 | 427,500 | 480,000 |
| Total research and development expenses |
\$ 406,285 |
\$ 275,081 |
\$ 1,047,387 |
\$ 926,333 |
{11}------------------------------------------------
The above table provides a breakdown of the various expense categories, by nature, for the three and nine months ended September 30, 2025, and 2024. Operating expenses decreased by \$464,922 during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This decrease in operating expenses consists of a decrease in general and administrative costs of \$476,176, and a decrease in sales and marketing costs of \$119,950, partially offset by an increase in research and development costs of \$131,204.
Operating expenses decreased by \$511,275 during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. This decrease in operating expenses consists of a decrease in sales and marketing costs of \$512,958, and a decrease in general and administrative costs of \$119,371, partially offset by an increase in research and development costs of \$121,054.
During the three months ended September 30, 2025, sales and marketing expenses decreased by \$119,950 primarily due to a decrease in marketing and promotional activity compared to the three months ended September 30, 2024, resulting in a decrease in marketing-related salaries of \$85,691.
During the nine months ended September 30, 2025, sales and marketing expenses decreased by \$512,958 primarily due to a decrease in marketing and promotional activity compared to the nine months ended September 30, 2024, resulting in a decrease in marketing expenses of \$322,883.
During the three months ended September 30, 2025, research and development costs increased by \$131,204 during the period as a result of an increase in contract development and materials of \$92,165 and consulting fees also increased by \$39,039.
During the nine months ended September 30, 2025, research and development costs increased by \$121,054 during the period as a result of an increase in contract development and materials expense of \$115,217 as well as an increase of \$58,337 in consulting fees with both increases resulting from additional research and development activity during the nine months ended September 30, 2025.
During the three and nine months ended September 30, 2025, general and administrative expenses decreased by \$476,176 and \$119,371 respectively. The decrease was primarily as a result of a decrease in depreciation of \$187,109 and \$199,925 and bad debt expense of \$110,352 and \$278,313 for the three and nine months ended September 30, 2025, respectively.
Share-based payments
Share-based payments relating to options vesting during the three and nine months ended September 30, 2025 using the Black- Scholes option pricing model was \$2,751 (2024 - \$5,229) and \$287,695 (2024 - \$45,761) respectively. The increase in the options share-based payments expense for the nine months ended September 30, 2025 was as a result of the issuance of 3,919,404 options in the period.
Share-based payments relating to Restricted Share Units ("RSUs") vesting during the three and nine months ended September 30, 2025, using the Black-Scholes option pricing model was \$293 (2024 - \$5,002) and \$235,529 (2024 - \$10,000), respectively. The increase in the RSU share-based payments expense for the nine months ended September 03, 2025 was as a result of the issuance of 3,000,000 RSUs which vested immediately.
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Other income and expenses
Other expenses for the three and nine months ended September 30, 2025, consisted mainly of finance costs of \$272,627 and \$793,476, respectively (2024 - \$304,173, and \$589,430, respectively), interest income of \$1,494 and \$1,494, respectively (2024 – \$3,760, and \$3,760, respectively). The finance costs increased due to an increase in promissory notes, a loan obtained as part of the acquisition of Shelf Nine, and a loan obtained during the acquisition of the Winkel MSA by SPV1.
Use of Proceeds from Financing Activities
On January 27, 2025, the Company closed the first tranche of a private placement of units of the Company ("Units"), issuing 2,050,000 Units at a price of CAD \$0.10 per Unit for a total of \$136,444 (CAD\$196,200) net of share issuance costs of \$6,120 (CAD\$8,800).
On April 17, 2025, the Company closed an additional private placement of units of the Company ("Units"), issuing 21,185,185 Units at a price of CAD \$0.135 per Unit for a total of \$1,998,512 (CAD\$2,860,000).
The Company will use the net proceeds from the private placement for general corporate purposes.
Liquidity and Capital Resources
The accompanying financial statements have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company anticipates that it may not have sufficient resources to meet the working capital requirements of the Company for at least the next 12 months based on current operating requirements. The Company may have to raise funds to continue operations through either debt or equity financings and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future.
During the nine months ended September 30, 2025, working capital deficit increased to \$12,638,470 from \$10,917,353 as at December 31, 2024. The \$1,721,117 increase in working capital is mainly attributable to an increase in accounts payable and accrued liabilities of \$2,526,056, partially offset by an increase in trade and other receivables of \$242,477.
Cash Flows
Historically and prospectively, our primary sources of liquidity and capital resources have been and will continue to be proceeds from the issuance of debt and Common Shares. The Company's ability to continue its operations and to realize assets at their carrying values is dependent upon its ability to generate profits and positive cash flows from operations in order to cover its operating costs. Management intends to fund any shortfalls through debt or equity financings. However, we cannot be certain that our business will generate sufficient cash flow from operations, that our anticipated earnings from operations will be realized, or that future borrowings will be available or otherwise to enable us to service our indebtedness or to make anticipated capital expenditures. Our future operating performance and our ability to service our debt will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. See "Financial Risk Management" of this MD&A for a discussion of the risks related to our liquidity and capital structure.
As at September 30, 2025, the Company had cash of \$23,394 (December 31, 2024 - \$23,074). The decrease in cash and cash equivalents compared to the balance at December 31, 2024 was primarily due to operational costs.
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Net cash used in operating activities for the nine months ended September 30, 2025 was \$1,834,072 (2024 - \$1,759,811). The Company continued to generate net losses and negative cash flows from operating activities due to the expenses we are incurring related to development as well as general and administrative expenses. During the nine months ended September 30, 2025, the Company incurred \$3,672,241 (2024 - \$4,183,516) of general and administrative, research and development and sales and marketing expenses. Cash used in operations for the current period was affected by decreases in these expense categories. The Company has had continuing net losses and negative cash flow from operating activities, including a loss from operations of \$4,136,014 for the nine months ended September 30, 2025 (2024 - \$4,224,872).
Net cash used in investing activities for the nine months ended September 30, 2025 was \$1,095 (2024 - \$80,000). The movement in the nine months ended September 30, 2025, relates to the acquisition of equipment. The movement in the prior period mostly relates to a loan provided by the Company to Winkel.
Net cash provided by financing activities for the nine months ended September 30, 2025 was \$1,930,008 (2024 - \$1,832,875). The current period's funds were made up of funds from proceeds from financings of \$2,139,956 and proceeds from the issuance of promissory notes of \$359,178, partially offset by the repayment of mature debt and promissory notes of \$569,126, respectively. During the nine months ended September 30, 2024, funds were made up of the SPV1 loan and other promissory notes issued by the Company amounting to \$1,148,781, proceeds from the second tranche financing from the prior year which was received amounting to \$373,364, and the issuance of convertible debt of \$424,916, partially offset by the repayment of mature debt of \$98,257.
Other Factors Affecting Liquidity
The Company may also raise additional equity or debt capital or enter into arrangements to secure necessary financing to fund the completion of development projects, to meet obligations or for the general corporate purposes of the Company. Such arrangements may take the form of loans, strategic agreements, joint ventures or other agreements. The sale of additional equity could result in additional dilution to the Company's existing stockholders, and financing arrangements may not be available to us, or may not be available in sufficient amounts or on acceptable terms.
From time to time, we may pursue various strategic business opportunities. These opportunities may include proposed development and/or management of, investment in or ownership of additional businesses through direct investments, acquisitions, joint venture arrangements and other transactions. We are not currently exploring such opportunities. We can provide no assurance that we will successfully identify such opportunities or that, if we identify and pursue any of these opportunities, any of them will be consummated.
Related Party Transactions
VSBLTY, Inc. is party to a contract with Think-Traffic, LLC ("Think-Traffic") for the provision of marketing and support services. VSBLTY, Inc. can terminate this contract at any time. VSBLTY, Inc. expects to continue making payments to Think-Traffic in the normal course of business. Jan Talamo is the Chief Creative Officer of both Think-Traffic and VSBLTY.
VSBLTY is a party to a contract with Radar USA Inc. ("Radar USA"). VSBLTY owns 23.6% of the common shares of Radar USA.
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Key management compensation
| Three months ended September |
30, | months ended | |||||
|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | ||||
| Management fees1 | \$ 284,400 |
\$ | 229,400 | \$ | 778,200 | \$ | 778,200 |
| Share-based compensation | - | 15,485 | 342,836 | 31,076 | |||
| \$ 284,400 |
\$ | 244,885 | \$ | 1,121,036 | \$ | 809,276 |
Other related party transactions
During the three and nine months ended September 30, 2025, and 2024, other related party transactions consisted of the following:
| Three months ended September 30, 2025 |
Three months ended September 30, 2024 |
Nine months ended September 30, 2025 |
Nine months ended September 30, 2024 |
|||||
|---|---|---|---|---|---|---|---|---|
| Revenue earned from Winkel MSA | \$ | 231,612 | \$ | 231,612 | \$ | 694,836 | \$ | 416,500 |
| Marketing expenses paid to Traffic Marketing, included in sales and marketing expenses |
\$ | 8,087 | \$ | 6,228 | \$ | 12,150 | \$ | 38,457 |
| Director fees, included in general and administrative expenses2 Rental expenses paid to Think-Traffic, included in general and administrative expenses |
\$ \$ |
- 21,840 |
\$ \$ |
- 21,840 |
\$ \$ |
- 67,456 |
\$ \$ |
- 66,298 |
| Interest expense for convertible debt and notes payable to related parties, excluding discount accretion3 |
\$ | 43,846 | \$ | 49,056 | \$ | 126,149 | \$ | 143,711 |
Related party balances
As of September 30, 2025, an amount of \$663,500 was owing to directors and management and was included in the loans payable balance (December 31, 2024 - \$515,500). These loans accrue interest at rates between 18% and 60% per annum, and they are secured against the Company's accounts receivables. The accrued interest relating to these loans of \$410,981 is included in accounts payable and accrued liabilities (December 31, 2024 - \$248,547).
1 Key management includes Jay Hutton Chief executive officer, Thomas Hays Chief financial officer, Fred Potok Chief sales officer, Jan Talamo Chief creative officer, Linda Rosanio Chief operating officer and Gary Gibson Chief technology officer
2 Directors include, Amin Shahidi, David Roth, Muhammad Ajmal, and Alnesh Mohan. Jay Hutton is also a director and Chief Executive Officer and is compensated through management fees. Thomas Hays is also a director and Chief Financial Officer and is compensated through management fees.
3 Note holders include: Alnesh Mohan, Director; Thomas Hays, Director and Chief Financial Officer; and Fred Potok, Chief Sales Officer.
{15}------------------------------------------------
As at September 30, 2025, \$1,791,8411 (December 31, 2024 - \$1,461,170) was due to related parties and is included in accounts payable and accrued liabilities. The amounts were non-interest bearing and due on demand.
As at September 30, 2025, \$46,339 (CAD\$64,500) was due from Felipe Costa Romero de Barros, the previous Executive Chairman, for the subscription of units during the private placement (December 31, 2024 - \$44,874 (CAD\$64,500)).
As at September 30, 2025, \$2,566,833 (December 31, 2024 - \$1,853,855) was due from Winkel and is included in trade and other receivables.
During the nine months ended September 30, 2025, the Company advanced \$nil (2024 - \$400,000) to Winkel under the bridge loan agreement and received \$Nil (2024 - \$320,000). The balance of the bridge loan of \$2,409,731 (December 31, 2024 - \$2,409,731) was determined not be collectible and impaired to \$Nil.
During the year ended December 31, 2024, Winkel acquired a loan of \$1,777,904 for which the Company is a co-obligor for along with the other shareholders of Winkel. The Company has recognized a liability of \$592,635 within loans payable representing the Company's prorated ownership of Winkel, was recognized in the statement of loss within loss on joint venture. As at the reporting date, the Company's exposure in respect of this arrangement is limited to its proportionate share of the obligation.
Except as disclosed above, VSBLTY, Inc. does not have any ongoing contractual or other commitments resulting from transactions with related parties.
Financial Risk Management
The Company is exposed to varying degrees to a variety of financial instrument related risks:
Foreign exchange risk
Foreign exchange risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in foreign exchange rates. Foreign exchange risks are closely monitored, and attempts are made to match foreign cash inflows and outflows. As at September 30, 2025, the Company is primarily exposed to foreign exchange risk through its cash and cash equivalents and accounts payable denominated in Canadian dollars. The Company mitigates foreign exchange risk by monitoring foreign exchange rate trends and evaluating reinvestment opportunities when possible. The Company is not exposed to significant foreign exchange risk.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company's cash and trade and other receivables are exposed to credit risk. The Company reduces its credit risk on cash by placing these instruments with institutions of high credit worthiness. The Company mitigates credit risk by evaluating the creditworthiness of customers
1 This includes Arrowstone Ventures Ltd, Traffic Marketing LLC, Radar USA, Austin GIS, David Roth, Thomas Hays, Gary Gibson, Jan Talamo, Linda Rosanio and Fred Potok
{16}------------------------------------------------
prior to conducting business with them and monitoring its exposure for credit losses with existing customers.
Trade and other receivables also include refundable goods and services tax which bears minimal credit risk as it is receivable from the Canadian government. For trade receivables, the Company applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade receivables. The expected loss rates are based on the payment profiles of sales over a period of 12 months before September 30, 2025, and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect the current forward-looking information on economic factors affecting the ability of customers to settle receivables. Accounts receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, business failure, the failure of a debtor to engage in a repayment plan, and a failure to make contractual payments over the negotiated contract period.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Company is exposed to interest rate risk on its variable-rate borrowings. At September 30, 2025, the Company had a variable-interest loan with an outstanding balance of \$2,797,861. A 1% increase (decrease) in market interest rates, with all other variables held constant, would have resulted in an increase (decrease) in interest expense and a corresponding decrease (increase) in profit before tax of approximately \$28,000 for the period.
The sensitivity analysis has been prepared based on the variable-rate debt outstanding at the reporting date and assumes the balance remained outstanding for the entire period.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company manages liquidity risk by maintaining sufficient cash balances to enable settlement of transactions on the due date. The Company addresses its liquidity by raising capital through the issuance of debt and equity. While the Company has been successful in securing financings in the past, there is no assurance that it will be able to do so in the future.
Off-Balance Sheet Arrangements
None.
Proposed Transactions
There were no proposed transactions as of the date of this MD&A.
Contingencies
In the ordinary course of business, the Company and its subsidiary may become involved in various legal and regulatory actions. The Company establishes legal provisions when it becomes probable that the Company will incur a loss and the amount can be reliably estimated.
Interknowlogy
{17}------------------------------------------------
During the year ended December 31, 2020, a demand letter was received by the Company from Interknowlogy, LLC ("Interknowlogy"), a formerly related company, pertaining to outstanding payment and corresponding late charges. The Company contested the work performed by Interknowlogy and plans to vigorously defend the suit and file a substantial counter claim for failure to deliver as well as damages incurred.
On October 10, 2022, Interknowlogy filed a claim in the State of California against the Company for a breach of contract related to the above demand letter. In the claim, Interknowlogy is claiming damages totaling \$1,268,499 relating to unpaid invoices of \$509,999 and interest of \$758,500.
As at March 31, 2025, an amount of \$587,759 is recognized in accounts payable and accrued liabilities, including interest of \$77,760. The likelihood of Interknowlogy claim being successful cannot be assessed at this time. Management is of the view that it is improbable there will be a material financial impact to the Company as a result of this claim. Consequently, no provision has been recorded in these Financial Statements.
Alpha Modus
In December 2024, Alpha Modus Corp. filed a lawsuit in the United States District Court against the Company and one of its customers, alleging patent infringement. On March 12, 2025, the parties reached a settlement agreement; however, no payment has been made as of the date of these financial statements. As the financial impact could not be measured reliably at the reporting date, no provision has been recognized.
Tech Mahindra
The Company is a Co-Obligor, along with the other shareholders of Winkel, of Winkel's \$1,777,904 obligation to Tech Mahindra.
Disclosure of Outstanding Share Data
The following is a breakdown of the Company's equity instruments issued and outstanding:
| Equity instrument | As of September 30, 2025 |
As of the date of this MDA |
|---|---|---|
| Common shares | 88,476,121 | 88,476,126 |
| Stock options | 5,382,436 | 5,322,437 |
| Restricted share units | 3,000,000 | 3,000,000 |
| Warrants | 54,123,645 | 54,123,645 |
Subsequent Events
Promissory notes
Subsequent to September 30, 2025, the Company issued promissory notes for a total principal amount of \$311,000. These promissory notes mature in two or less months to one year, accrue effective interest from of 10% to 18% per annum, and most are secured against the Company's accounts receivables
Non-brokered private placement of convertible debenture
The Company issued 10% convertible unsecured debentures for up to \$2,000,000 with an additional \$2,000,000 gross proceeds available at the lender's sole discretion. The debt is convertible into a unit at
{18}------------------------------------------------
| \$0.10 USD. Each unit will consist of one common share and one common share purchase warrant at a price of USD \$0.15 per warrant share for a period of three years. |
|---|