v3.26.1
FINANCIAL INSTRUMENTS
 9 Months Ended 12 Months Ended
Dec. 31, 2025
Mar. 31, 2025
Investments, All Other Investments [Abstract]    
FINANCIAL INSTRUMENTS

 

17.FINANCIAL INSTRUMENTS

 

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

 

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

 

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

 

●Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date.
   
●Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active or inactive markets.
   
●Level 3 – Unobservable inputs for the asset or liability, which are used to measure fair value to the extent that observable inputs are not available, and which are significant to the overall fair value measurement.

 

 

As of December 31, 2025  Level 1 ($)   Level 2 ($)   Level 3 ($)   Total ($) 
Assets:                    
Cash and restricted cash   67,954    -    -    67,954 
Accounts receivable   164,000    -    -    164,000 
Due from related parties   70,449    -    -    70,449 
Liabilities:                    
Accounts payable   3,141,081    -    -    3,141,081 
Accrued liabilities   79,891    -    -    79,891 
Provision for legal claim   9,640,094    -    -    9,640,094 
Convertible Debenture   1,832,770    -    -    1,832,770 
Restricted share unit liability   -    611,592    -    611,592 
Loans payable   141,036    -    -    141,036 

 

As of March 31, 2025  Level 1   Level 2   Level 3   Total 
Assets:                    
Cash and restricted cash   4,816,906    -    -    4,816,906 
Due from related parties   68,080    -    -    68,080 
Liabilities:                    
Accounts payable   2,036,916    -    -    2,036,916 
Accrued liabilities   41,736    -    -    41,736 
Provision for legal claim   8,948,085    -    -    8,948,085 
Restricted share unit liability   -    3,911,823    -    3,911,823 
Loans payable   139,039    -    -    139,039 

 

Credit risk

 

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

 

Amounts due from related parties of $70,449 as of December 31, 2025 (March 31, 2025 - $68,080) represent receivables from an unsecured loan to a key member of the management team. The loan has an annual interest rate of 5% and requires principal and interest to be paid in full by May 1, 2033 (Note 8).

 

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

 

Liquidity risk

 

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

 

The Company has historically raised capital to fund operations, primarily through debt and equity investors, although there is no assurance that it will be able to raise funds in the future. The Company will continue to rely on such financings to generate sufficient amounts of cash and cash equivalents to cover its operating costs, satisfy short and long term capital requirements, and meet growth objectives.

 

 

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

 

 

Less than 1 year

  

1 to 2 years

  

2 to 5 years

  

After 5 years

  

Total

 
  

<1 year

$

  

1-2 years

$

  

2-5 years

$

  

>5 years

$

  

Total

$

 
Accounts payable   3,141,081    -    -    -    3,141,081 
Accrued liabilities   79,891    -    -    -    79,891 
Convertible Debenture   -    1,832,770    -    -    1,832,770 
Loans payable   7,752    7,752    23,256    102,276    141,036 
Total   3,228,724    1,840,522    23,256    102,276    5,194,778 

 

As of December 31, 2025, the Company had a working capital deficit of $13,247,462 (March 31, 2025 - $8,923,210).

 

Foreign exchange risk

 

Foreign exchange risk is the risk that the fair value or future cash flows will fluctuate due to changes in foreign exchange rates. The Company has financial assets denominated in Euros and Canadian dollars and is therefore exposed to exchange rate fluctuations. As of December 31, 2025, the Company had the equivalent of $2,321,007 net financial liabilities in Canadian dollars (March 31, 2025 - net financial liabilities of $223,534) and $13,761 in net financial assets denominated in Euros (March 31, 2025 - $104,416).

 

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

 

           +/- 10% fluctuation 
   Currency   Increase/(decrease) 
Financial Instrument Type  CAD$   $   $ impact 
Cash   17,019    12,417    1,242    (1,242)
Tax receivable   1,041,333    759,756    75,976    (75,976)
Prepaid expenses   1,053,483    768,621    76,862    (76,862)
Accounts payable   (751,698)   (548,439)   (54,844)   54,844 
Accrued liabilities   (81,569)   (59,513)   (5,951)   5,951 
Convertible debentures   (2,512,020)   (1,832,770)   (183,277)   183,277 
Restricted share unit liability   (1,087,554)   (793,479)   (79,348)   79,348 
Foreign currency future instrument    (2,321,007)   (1,693,407)   (169,340)   169,340 

 

           +/- 10% fluctuation 
   Currency   Increase/(decrease) 
Financial Instrument Type  EURO   $   $ impact 
Restricted cash   24,427    28,609    2,861    (2,861)
Tax receivable   1,884    2,206    221    (221)
Accounts payable   (12,550)   (14,698)   (1,470)   1,470 
Foreign currency future instrument    13,761    16,117    1,612    (1,612)

 

Interest rate risk

 

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

 

 

Price risk

 

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

17. FINANCIAL INSTRUMENTS

 

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

 

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

 

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

 

  ● Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date.
     
  ● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active or inactive markets.
     
  ● Level 3 – Unobservable inputs for the asset or liability, which are used to measure fair value to the extent that observable inputs are not available, and which are significant to the overall fair value measurement.

 

 

VERSES AI INC.

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in United States dollars)

 

17. FINANCIAL INSTRUMENTS (continued)

 

 

As of March 31, 2025  Level 1   Level 2   Level 3   Total 
Assets:                    
Cash and restricted cash  $4,816,906   $-   $-   $4,816,906 
Due from related parties  $68,080   $-   $-   $68,080 
Liabilities:                    
Accounts payable  $2,036,916   $-   $-   $2,036,916 
Accrued liabilities  $41,736   $-   $-   $41,736 
Provision for legal claim  $8,948,085   $-   $-   $8,948,085 
Restricted share unit liability  $-   $3,911,823   $-   $3,911,823 
Loans payable  $139,039   $-   $-   $139,039 

 

As of March 31, 2024  Level 1   Level 2   Level 3   Total 
Assets:                    
Cash  $892,727   $-   $-   $892,727 
Accounts receivable  $100,000   $-   $-   $100,000 
Due from related parties  $64,936   $-   $-   $64,936 
Liabilities:                    
Accounts payable  $2,782,502   $-   $-   $2,782,502 
Accrued liabilities  $82,500   $-   $-   $82,500 
Promissory notes  $2,000,000   $-   $-   $2,000,000 
Provision for legal claim  $9,921,298   $-   $-   $9,921,298 
Restricted share unit liability  $-   $576,214   $-   $576,214 
Loans payable  $140,904   $-   $-   $140,904 

 

 

VERSES AI INC.

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in United States dollars)

 

17. FINANCIAL INSTRUMENTS (continued)

 

Credit risk

 

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

 

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

 

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

 

Liquidity risk

 

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

 

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

 

    Less than 1 year    1 to 2 years    2 to 5 years    After 5 years    Total 
  

<1 year

$

  

1-2 years

$

  

2-5 years

$

  

>5 years

$

  

Total

$

 
Accounts payable   2,036,916    -    -    -    2,036,916 
Accrued liabilities   41,736    -    -    -    41,736 
Loans payable   7,752    7,752    23,256    15,067,532    15,106,292 
Total   2,086,404    7,752    23,256    15,067,532    17,184,944 

 

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

 

Foreign exchange risk

 

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

 

 

VERSES AI INC.

Notes to the Consolidated Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in United States dollars)

 

17. FINANCIAL INSTRUMENTS (continued)

 

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

 

             
           +/- 10% fluctuation 
   Currency   Increase/(decrease) 
Financial Instrument Type  CAD$   $   $ impact 
Cash   5,445,994    3,788,233    378,823    (378,823)
Tax receivable   870,173    605,293    60,529    (60,529)
Prepaid expenses   408,202    283,946    28,395    (28,395)
Accounts payable   (1,362,055)   (947,445)   (94,745)   94,745 
Accrued liabilities   (60,000)   (41,736)   (4,174)   4,174 
Restricted share unit liability   (5,623,668)   (3,911,824)   (391,182)   391,182 
Foreign currency future instrument    (321,354)   (223,534)   (22,354)   22,354 

 

             
           +/- 10% fluctuation 
   Currency       Increase/(decrease) 
Financial Instrument Type  EURO   $   $ impact 
Restricted cash   113,701    122,740    12,274    (12,274)
Tax receivable   (352)   (380)   (38)   38 
Accounts payable   (16,622)   (17,944)   (1,794)   1,794 
Deferred Grant   (62,615)   (67,732)   (6,773)   6,773 
Foreign currency future instrument    34,111    104,416    3,668    (3,668)

 

Interest rate risk

 

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

 

Price risk

 

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