VenHub Global, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS VENHUB GLOBAL, INC.’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Throughout this section, unless otherwise noted “we,” “us,” “our,” “Company,” “VenHub,” refers to VenHub Global, Inc., and its consolidated subsidiaries. You should read the following discussion and analysis in conjunction with VenHub’s consolidated financial statements, which VenHub has prepared in accordance with GAAP, included elsewhere in this proxy statement. This discussion contains forward-looking statements that involve risks and uncertainties. VenHub’s actual results and timing of events could differ materially from those anticipated in these forward-looking statements due to various factors, including those set forth under “Risk Factors” and elsewhere in this proxy statement/prospectus. Overview Business Model VenHub Global, Inc. is a fully autonomous and robotic-operated store that utilizes advanced technologies such as artificial intelligence (AI) and smart inventory management systems to offer a seamless shopping experience for customers. The Company intends VenHub technology to combine the convenience of a store with the efficiency of robotics. This will be achieved by providing customers with a unique shopping experience that will be fully autonomous and that operates 24/7. The Company believes that with its use of advanced sensors, artificial intelligence, and robotics, VenHub is designed to ensure that customers will always have access to products with a few taps on their smartphones. From scanning and purchasing products to bagging and delivering them, VenHub’s robots will be able to take care of everything in a seamless and efficient manner. The store’s artificial intelligence algorithm will be able to keep track of customer preferences, allowing it to tailor its offering to meet individual customer’s tastes and preferences. The Company has four subsidiaries: VenHub, LLC to manage manufacturing, assembly and installation of units. VenHub, Services LLC to provide software-as-a-service (SaaS) and ongoing maintenance services. VenHub IP, LLC to hold and manage the Company’s intellectual property. VenHub Stores LLC, to manage all Company owned stores. By eliminating the need for employees, VenHub offers store owners labor cost savings, paving the way for potential increased profits. Leveraging sensors, artificial intelligence, and robotics, VenHub promises a shopping adventure that is not only seamless but also deeply personal. With a tap of a smartphone, and let VenHub’s robots whisk you through a journey, from scanning and purchasing products to bagging and delivering them with planned precision. The VenHub was first displayed publicly on October 25, 2023, in Pasadena at the unveiling of its Alpha Smart Store with approximately 150 attendees. The Company has since launched a full assembly production facility in Las Vegas, Nevada to meet the market demand. At the core of VenHub will be an intelligent algorithm that understands your unique preferences, by tracking customer tastes and curating a selection that caters specifically to the customer. VenHub aims to revolutionize the way people shop for their daily necessities, its vision is to create a world where shopping is effortless, convenient and accessible. As of September 30, 2025, the Company has over 1,400 preorders from potential customers. The Company started fulfilling its orders in the first quarter of 2025, selling its first three stores in North Hollywood, Glendale and Hollywood California respectively. On June 6, 2025 the Company launched its flagship company owned store at the LAX/Metro Transit Station at Los Angels International Airport. 2 Key Factors Affecting Our Performance Our Company is brand new and has limited operating history. The Company was formed as a corporation in 2023. We have limited established business operations, and it is unclear at this point which, if any, of our current and intended plans may come into fruition and, if they do, which ones will be a success. The Company has incurred a net loss and has generated minimal revenue since its inception. There is no assurance that the Company will ever be able to establish successful business operations, become profitable or generate sufficient revenues to operate our business or pay dividends. Defects, failures or security breaches in and inadequate upgrades of, or changes to, our vending machines and its accompanying software could harm our business. The operation of our business depends on sophisticated software, hardware, computer networking and communication services that may contain undetected errors or may be subject to failures or complications. These errors, failures or complications may arise particularly when new, changed or enhanced products or services are added. Future upgrades, improvements or changes that may be necessary to expand and maintain our business could result in delays or disruptions or may not be timely or appropriately made, any of which could seriously harm our operations. Further, certain aspects of the operating systems relating to our business are provided by third parties, including telecommunications. Accordingly, the effectiveness of these operating systems is, to a certain degree, dependent on the actions and decisions of third parties over whom we may have limited control. The Company depends on key personnel and faces challenges recruiting needed personnel. The Company’s future success depends on the efforts of a small number of key personnel. In addition, due to its limited financial resources and the specialized expertise required, it may not be able to recruit the individuals needed for its business needs. There can be no assurance that the Company will be successful in attracting and retaining the personnel the Company requires to operate and be innovative. We are dependent on the timely review and processing of regulatory filings and approvals by various U.S. federal agencies, including the Securities and Exchange Commission (“SEC”), in connection with our capital-raising activities and ongoing reporting obligations. Periods of federal government shutdown or reduced agency operations could delay the SEC’s review of our registration statement or other required filings, which may postpone our ability to raise capital when needed or complete future offerings. Such delays could impact our liquidity position and the timing of our growth and expansion plans. Additionally, a prolonged or recurring shutdown could indirectly affect our operations by slowing macroeconomic activity, constraining consumer confidence, and disrupting supply chains or technology certifications critical to the continued development of our smart store platform. Management continues to monitor these risks and the potential timing and liquidity impacts associated with future government shutdowns as part of its ongoing evaluation of known trends and uncertainties that may affect our financial condition and results of operations. For the three months ended September 30, 2025, and 2024 Revenues and cost of goods sold There was $295,357 and $219,939 of revenue and cost of goods sold for the three months ended September 30, 2025. $250,000 of revenue and $190,390 was related to store sales and cost of goods sold respectively. $45,357 and $29,549 related to product sales and costs of goods sold from our Company owned flagship store at LAX/Metro. For the three months ended September 30, 2024, we had no revenue or cost of goods sold. General and administrative expenses For the three months ended September 30, 2025 Our total operating expenses were $19,243,743. This was comprised of $17,192,340 in share based compensation, $565,166 in contractor expense, $317,500 in accrued compensation, $237,531 in advertising related to our crowdfunding, $191,245 in travel, $246,345 in legal and professional expense, $114,865 in rent, $93,438 in research and development, , $64,189 in dues and subscriptions, $50,000 in bonus payments to contractors for completing certain milestones, $40,314 in depreciation, $37,404 in software expense, $37,199 in utilities, and $56,207 in miscellaneous expense. 3 We incurred $167,896 in interest expense and $12,899 of change in fair value of convertible note for the three months ended September 30, 2025. As a result of the foregoing, we had a net loss of $ $19,349,120. For the three months ended September 30, 2024 Our total operating expenses were $2,070,349. This was comprised of $822,037 in share based compensation, $317,500 in accrued compensation, $286,121 in research and development, $232,626 in advertising related to our crowdfunding, $180,562 in contractor expense, $49,660 in legal and professional expense, $45,312 in travel, $32,324 in dues and subscriptions, $24,995 in rent $14,701 in software expense, $11,575 in depreciation, $9,821 in utilities, and $43,115 in miscellaneous expense. We incurred $60,000 in interest expense and $38,336 of change in fair value of convertible note for the three months ended September 30, 2024. As a result of the foregoing, we had a net loss of $ $2,168,685. Comparative Operating Expense Table Three Months Ended September 30, 2025, and 2024 Expense Category 2025 ($) 2024 ($) Change ($) Key Notes Share-based compensation $ 17,192,340 $ 822,037 $ 16,370,303 Non-cash expense recognized under ASC 718; large 2025 issuances to employees, directors, and contractors with immediate vesting. Contractor expense 565,166 180,562 384,604 Increase reflects expanded engineering, software, and marketing consulting for smart-store deployments. Accrued compensation 317,500 317,500 — Accrued officer and employee salaries under deferred-compensation arrangements. Legal and professional fees 246,345 49,660 136,235 Driven by SEC filing preparation, audit review, and counsel fees. Advertising / Crowdfunding 237,531 232,626 4,905 Ongoing digital-media and investor-relations campaigns associated with Regulation CF and Reg A offerings. Travel and entertainment 191,245 45,312 145,933 Increase due to nationwide site-selection, investor, and partner meetings. Rent and occupancy 114,865 24,995 89,870 Addition of new corporate and warehouse facilities; accounted for under ASC 842. Research and development 93,438 286,121 (192,683 ) Lower prototype and software-development spending after initial product completion. Dues and subscriptions 64,189 32,324 31,865 Increase from additional cloud-based and professional software licenses. Contractor bonuses (milestones) 50,000 — 50,000 One-time bonuses for meeting design and deployment milestones. Depreciation and amortization 40,314 11,575 16,377 Increased fixed assets related to facilities and equipment, capitalized Company stores and software. Software expense 37,404 14,701 22,703 Increase in SaaS platform and productivity-tool costs. Utilities 37,199 9,821 27,378 Growth in office and warehouse utility usage. Miscellaneous expense 56,207 43,115 25,274 Office supplies, insurance, and administrative incidentals. Total Operating Expenses $ 19,243,743 $ 2,070,349 $ 17,173,394 Increase largely reflects non-cash share-based compensation and corporate-scale growth. 4 For the nine months ended September 30, 2025 and 2024 Revenues and cost of goods sold There was $808,972 and $550,156 of revenue and cost of goods sold for the nine months ended September 30, 2025. $750,000 of revenue and $513,778 was related to store sales and cost of goods sold respectively. $58,972 and $36,378 related to product sales and costs of goods sold from our Company owned flagship store at LAX/Metro. For the nine months ended September 30, 2024, we had no revenue or cost of goods sold. General and administrative expenses For the nine months ended September 30, 2025 Our total operating expenses were $30,723,778. This was comprised of $25,105,979 in share based compensation, $1,389,544 in contractor expense, $952,500 in accrued compensation, $990,916 in legal and professional expense, $641,894 in advertising expense related to our crowdfunding, $525,809 in research and development, $367,416 in travel, $307,501 in rent, $98,139 in software, $82,126 in dues and subscriptions, $73,559 in utilities, $64,612 in depreciation, $45,699 in office supplies and $78,084 in miscellaneous expense. We incurred $18,288,430 in settlement expense, $395,929 in interest expense and $78,313 of change in fair value of convertible note for the nine months ended September 30, 2025. As a result of the foregoing, we had a net loss of $49,227,634. For the nine months ended September 30, 2024 Our total operating expenses were $7,605,307. This was comprised of $4,212,809 in share based compensation, $952,500 in accrued compensation, $730,226 in advertising related to our crowdfunding, $615,894 in research and development, $418,517 in contractors, $158,645 in legal and professional expense, $153,274 in travel, $92,653 in office supplies, $74,984 in rent, $49,687 in software costs, $38,445 in dues and subscriptions, $34,725 in depreciation, $20,832 in utilities and $52,116 in miscellaneous expense. We incurred $60,000 in interest expense and $38,336 of change in fair value of convertible note for the nine months ended September 30, 2025. As a result of the foregoing, we had a net loss of $7,703,643 for the nine months ended September 30, 2024. 5 Comparative Operating Expense Table Nine Months Ended September 30, 2025, and 2024 Expense Category 2025($) 2024($) Change ($) Key Notes Share-based compensation $ 25,105,979 $ 4,212,809 $ 20,893,170 Major non-cash expense under ASC 718; reflects expanded equity awards to executives, employees, and advisors. Contractor expense 1,389,544 418,517 971,027 Higher use of outside engineering, design, and technology contractors supporting smart-store rollout. Legal and professional fees 990,916 158,645 771,821 Increase due to legal, audit, and SEC-filing readiness costs Accrued compensation 952,500 952,500 — Accrued salaries and deferred officer compensation; stable year-over-year Advertising / Crowdfunding 641,894 730,226 (88,332 ) Slight decline as 2025 campaigns became more targeted and efficient. Research and development 525,809 615,894 (90,085 ) Lower prototype and AI-software build costs after initial product completion Travel and entertainment 367,416 153,274 214,142 Reflects increased national travel for site selection, partnerships, and investor outreach. Rent and occupancy 307,501 74,984 232,517 New office and warehouse leases recognized under ASC 842 Software expense 98,139 49,687 48,452 Growth in cloud infrastructure and SaaS development tools. Dues and subscriptions 82,126 38,445 43,681 Expansion of enterprise-software and professional-association memberships. Utilities 73,559 20,832 52,727 Increase from larger facilities footprint. Depreciation and amortization 64,612 34,725 29,887 Reflects higher property, equipment, and leasehold improvements. Office supplies / Admin 45,699 92,653 (46,954 ) Reduced procurement as supply purchases stabilized post-launch. Miscellaneous expense 78,084 52,116 25,968 Insurance, office maintenance, and other admin costs. Total Operating Expenses $ 30,723,778 $ 7,605,307 $ 23,058,021 Increase driven by non-cash share-based compensation and professional-service costs related to expansion and SEC compliance. Liquidity and Capital Resources As of September 30, 2025, we had negative working capital of $1,408,859 consisting of $1,340,186 in cash, $1,442,605 in inventory, $175,330 of prepaid expenses offset by $739,742 in accounts payable, $1,695,966 in accrued payroll and compensation, $1,500,000 in deferred revenue, $174,254 in current operating lease liability, $164,145 in customer deposits, $66,708 in interest payable – current and $26,165 in sales tax payable. Non-current assets included $879,541 in right of use asset, $701,633 in property and equipment - net and $73,074 in security deposits. Non-current liabilities included $4,537,552 in convertible debt at fair value, $2,500,000 in the form of a promissory note, $877,821 in right of use liability, and $37,778 in interest payable. As of December 31, 2024, we had negative working capital of $106,637 consisting of $1,352,892 in cash, $900,543 in inventory, $88,704 in deferred offering cost $33,707 in prepaid expenses, offset by $491,868 in accounts payable, $137,895 in deferred revenue relating to down payments for pre orders, $174,254 in current operating lease liability and $1,678,466 in accrued payroll and compensation. 6 Non-current assets included $188,918 in right of use asset, $109,664 in property and equipment - net and $16,074 in security deposits. Non-current liabilities included $3,542,797 in convertible debt at fair value, $269,761 in right of use liability and $65,889 in interest payable. For the nine months ended September 30, 2025 We used $4,390,720 of cash in operating activities which represented our net loss from continuing operations of $49,227,634 including $18,288,430 in settlement expense, $25,105,979 in share based compensation, $1,362,105 in deferred revenue, $608,060 of change in operating right of use liability, $17,500 in accrued payroll and compensation, $38,597 in interest payable, $247,874 in accounts payable, $78,313 of unrealized loss on convertible debt, $26,165 in sales tax payable, $64,612 in depreciation expense, $164,145 in customer deposits, $266,442 of paid in kind interest expense offset by $690,623 of change in operating right of use asset, $542,062 in inventory, $141,623 in prepaid expenses and $57,000 in security deposits. We used $656,851 in investing activities for the nine months ended September 30, 2025, relating to the assembly of both our LAX Metro flagship company owned store and our National Automatic Merchandising Association (NAMA) display store along with our capitalized software costs. We generated $5,034,595 of cash from financing activities consisting of $3,500,000 in proceeds from warrant issuance, $650,000 proceeds from convertible debt and $795,891 in proceeds from crowdfunding offset by $88,704 in payment of deferred offering cost. For the nine months ended September 30, 2024 We used $2,390,940 of cash in operating activities which represented our net loss from continuing operations of $7,703,643 including $4,212,809 in share-based compensation, $881,800 in accrued payroll and compensation, $111,717, in accounts payable and accrued expenses, $81,000 in deferred revenue, $54,291 of change in operating right of use asset, $34,725 in depreciation expense, $50,000 in amortization of debt issuance costs, $38,336 of unrealized loss on convertible debt, $10,000 in interest payable, offset by $125,258 of change in operating right of use liability and $36,717 in prepaid expenses. There were no cash flows from investing activities for the period. We generated $2,940,398 of cash from financing activities consisting of $1,482,242 in proceeds from crowdfunding, $535,000 of proceeds from common stock issuance, $950,000 in proceeds from convertible debt, net, offset by $26,844 in repayments from related party notes. Convertible Notes On August 19, 2024, the Company executed two Notes with one investor each for a combined $1,000,000 in note principal. On December 3, 2024, the Company executed one Note with one investor for $200,000 in note principal. On December 4, 2024, the Company executed three Notes with three investors for a combined $1,483,000 in note principal. On December 6, 2024, the Company executed two Notes with two investors for a combined $667,000 in note principal. On February 14, 2025 the Company executed five notes with five investors for a combined $650,000. All amounts in principal total $4,000,000 and $100,000 of debt issuance costs were expensed due to the election of the fair value option. 7 We have historically funded operations and development activities through a combination of debt, equity issuances, and, to a lesser extent, crowdfunding initiatives. During the past year, we began focusing on both debt financing and equity-based capital resources. This transition reflects both our strategic objective of reducing leverage and the increasing availability of equity capital as investor appetite for robotics and artificial intelligence companies continues to expand. We expect this trend to continue in connection with our planned direct listing. The planned equity raise is reasonably likely to materially change the mix of our capital resources by decreasing reliance on debt facilities and enhancing our equity capitalization. We also anticipate that the relative cost of capital will improve, as equity financing is expected to provide greater flexibility and reduce interest expense obligations compared to prior debt arrangements. While we may opportunistically evaluate additional credit facilities in the future, we do not currently anticipate significant off-balance-sheet financing arrangements or other alternative funding mechanisms that would materially alter our capital resource profile. As of September 30, 2025, we had $3,687,820 million in cash and cash equivalents. We expect our operating cash requirements, capital expenditures, and contractual obligations including $182,218 in lease payments and $417,140 in accounts payable and $4,000,000 million in contractor and production payments will total $4,599,358 million over the next 12 months. Based on our current cash position and forecasted operating cash outflows, we do not believe our existing capital resources are sufficient to fund these requirements. Accordingly, we are pursuing additional financing through equity and debt issuances to bridge the deficiency. Longer term, we anticipate ongoing funding needs to support growth and expansion. Our ability to continue as a going concern is dependent upon our ability to secure such additional financing. Critical Accounting Policies and Estimates Accounting Principles The consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). Principles of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiary. All significant intercompany transactions and balances between the Company and its subsidiary are eliminated upon consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, useful lives of property and equipment, valuation of deferred tax assets and liabilities, operating lease right-of-use assets and liabilities and deferred revenue. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected. Property and Equipment Property and equipment primarily include computers and furniture are stated at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over 5 years. Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the leasehold improvements. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred. 8 Income Taxes The Company provides for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax reporting. The deferred tax asset or liability represents the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. A valuation allowance is established for any deferred tax asset for which it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized. The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with the asset and liability method. The first step is to evaluate the tax position for recognition by determining whether evidence indicates that it is more likely than not that a position will be sustained if examined by a taxing authority. The second step is to measure the tax benefit as the largest amount that is 50% likely of being realized upon settlement with a taxing authority. There were no amounts recorded at December 31, 2023 and 2022 related to uncertain tax positions. Fair Value of Financial Instruments The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures. The carrying values of cash, cash equivalents, accounts payable, deferred revenues, interest payable, loan payable, due to related parties, operating lease liabilities and accrued liabilities and other payables are deemed to be reasonable estimates of their fair values because of their short-term nature. Research and Development Costs Research and development expenses are expensed as incurred and include all material and labor costs in developing our alpha unit. Recently Issued Accounting Pronouncements For a detailed discussion on recent accounting pronouncements, see Note 2 to the consolidated financial statements included elsewhere in this prospectus. Contingencies The Company records accruals for contingencies and legal proceedings expected to be incurred in connection with a loss contingency when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss, would be disclosed. Off-Balance Sheet Arrangements VenHub has no off-balance sheet arrangements including arrangements that would affect the Company’s liquidity, capital resources, market risk support and credit risk support or other benefits. 9