VenHub Global, Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America. This discussion should be read in conjunction with the other sections of this Form 10-K, including “Risk Factors,” and the Financial Statements. The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Annual Report on Form 10-K. See “Forward-Looking Statements.” Our actual results may differ materially. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. As used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” except where the context otherwise requires, the term “we,” “us,” “our,” or “the Company,” refers to the business of VenHub Global, Inc. 34 Organizational Overview VenHub, Global Inc. (which may be referred to as the “Company”, “we,” “us,” or “our” doing business as Venhub) was registered in Wyoming on January 31, 2023, as Autonomous Solutions Inc. On August 15, 2024, the Company redomiciled from Wyoming to Delaware and also renamed the Company to VenHub Global, Inc. (“VenHub”). On October 3, 2025, the Company redomiciled from Delaware to Nevada. 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 reducing 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. As described in “Business of VenHub and Certain Information About VenHub,” the Company’s Smart Stores are delivered as fully functional physical autonomous retail units capable of performing core physical and mechanical robotic operations using embedded software installed at deployment. SaaS activation is not required for the Smart Store to perform these core physical functions and is addressed separately pursuant to distinct SaaS agreements as the Company transitions to scaled commercial operations. The Company is in the initial deployment phase of its Smart Store platform. While customer agreements contemplate that purchasers will subscribe to the Company’s cloud-based SaaS platform, the enhanced SaaS functionality has not yet been activated for customer use. For early deployments, the Company has implemented an introductory concession under which SaaS subscription fees may be waived for up to twelve months. Accordingly, no SaaS revenue has been recognized to date. As of the date of this filing, none of the Company’s deployed Smart Stores have software-as-a-service (“SaaS”) functionality activated, and the Company does not currently provide analytics, dashboards, reporting tools, or other operator-facing software to store owners or operators. Any mobile application functionality is limited to consumer product browsing, ordering, and checkout, is provided free of charge to customers, and is not part of the Company’s SaaS platform. The Company expects to introduce customer-accessible and operator-accessible SaaS functionality in future Smart Store versions under separate commercial terms. As of the date of this filing, the Company has deployed five (5) Smart Stores, and none of these stores have SaaS functionality activated. Accordingly, five of five (5 of 5), or 100%, of the Company’s deployed Smart Stores are currently operating without SaaS activation. 35 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 December 31, 2025, the Company has over 1,400 pre-orders from potential customers. The Company started fulfilling its orders in the first quarter of 2025, selling its first two stores in North Hollywood, and Glendale, California respectively. In the second quarter VenHub opened its Company owned flagship store at Los Angeles Airport (LAX) In the third quarter the Company sold a store which opened in Hollywood, CA. VenHub deployed a Company owned store at Union Station Los Angeles during the fourth quarter of 2025. Key Factors Affecting Our Performance Our Company has limited operating history. The Company was formed as a corporation in 2023. We have limited established business operations, and it is currently unclear, if any, of our current and intended plans may come into fruition and, if they do, which ones will be a success. To date, the Company has incurred net losses and has generated limited revenue. 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. Revenue Our revenue to date has been derived primarily from the sale of Smart Stores and product sales in our Company owned stores. Revenue from Smart Store sales is recognized when control of the unit transfers to the customer, generally upon delivery. The revenue from product sales (items sold through the VenHub store) is recognized when control of the product transfers to the end customer, which generally occurs at the point of sale when the customer completes the transaction and the product is dispensed from the Smart Store. For our initial Smart Store deployments, the Company has granted a temporary commercial waiver of SaaS consideration for up to twelve (12) months for initial deployments. During this period, the Company does not provide the enhanced cloud-based functionality contemplated by the agreement. This introductory waiver applies only to SaaS services. For example, during the year ended December 31, 2025, the Company entered into SaaS agreements in connection with the North Hollywood and Glendale Smart Stores. While these agreements were executed, the transaction price allocated to SaaS was zero because the Company elected not to provide such services as part of its early commercialization strategy. As a result, no revenue related to SaaS or maintenance services has been recognized for the periods presented. When implemented, SaaS revenue will be recognized ratably over the subscription term, typically one year, and maintenance revenue will be recognized over the contract period. We believe these services will represent a growing and recurring component of our revenue model in future periods. 36 Introductory SaaS Concession To support early customer adoption and refine the performance of initial deployments, the Company implemented an introductory concession under which customers receive up to twelve months of SaaS access at no charge. During this period, the enhanced cloud-based SaaS functionality has not been activated, and therefore no SaaS revenue has been recognized. The introductory waiver applies only to SaaS services. Because SaaS subscription fees are waived during the introductory period, the transaction price allocated to SaaS is $0 for the periods presented, and all consideration is allocated to the Smart Store hardware in accordance with ASC 606-10-32-28. Maintenance services must be contracted separately and were not contracted for in the periods presented. The Company evaluated its revenue arrangements in accordance with ASC 606-10-25-19 through 25-22 and determined that Smart Store hardware, SaaS services, and maintenance services are separate performance obligations. The Smart Store is fully functional upon delivery without SaaS activation, the SaaS platform does not significantly modify or customize the hardware, and the promises are not highly interdependent or interrelated. As a result, Smart Store revenue is recognized at a point in time, while SaaS and maintenance revenues, once activated or contracted, will be recognized over time. For product sales, revenue is typically recognized at the point in time when control is transferred, which generally occurs upon shipment or delivery, depending on the terms of the contract Going Concern As reflected in the accompanying financial statements, during the year ended December 31, 2025, the Company incurred a working capital deficit of $9,192,737 and negative cash flows from operating activities. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. We have evaluated the conditions or events that raise substantial doubt about the Company’s ability as a going concern within one year of issuance of the financial statements. While the Company is continuing operations and generating revenues, the Company’s cash position is not significant enough to support the Company’s daily operations. During the next twelve months, the Company intends to fund its operations with funds from revenue-producing activities by fulfilling the pre order list along with exploring both additional equity and debt financing. If the Company cannot secure additional short-term capital, it may cease operations. The ability of the Company to continue as a going concern is dependent upon our ability to further implement its business plan and generate revenues and cash flows. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Critical Accounting Policies and Estimates Our significant accounting policies are more fully described in the notes to our consolidated financial statements. Those material accounting estimates that we believe are the most critical to an investor’s understanding of our financial results and condition are discussed immediately below and are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term. Significant estimates used in the preparation of the accompanying financial statements include recording of convertible notes, depreciation and amortization based on estimated useful lives of property and equipment and the fair value of shares issued for compensation. Concentration of Credit Risk The Company maintains its cash with a major financial institution located in the United States of America, which it believes to be credit worthy. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits. As of December 31, 2025, the Company’s cash was less than $250,000 and fully insured. At December 31, 2024 the Company had $1,102,892 more than the federally insured limit. Cash and Cash Equivalents The Company considers short-term, highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of December 31, 2025, the Company had $89,634 cash on hand and no cash equivalents. At December 31, 2024, the Company had $1,352,892 of cash on hand and no cash equivalents. 37 Revenue Recognition The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 – Revenue from Contracts (“ASC 606”) using the 5 step process: 1) Identify the contract with a customer. 2) Identify the performance obligations in the contract. 3) Determine the transaction price. 4) Allocate the transaction price. 5) Recognize revenue when the entity satisfies a performance obligation. The Company’s primary sources of revenue are from the sale of Smart Stores and, once fully commercialized, recurring subscription fees for its SaaS platform and related maintenance and support services. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. Fair value should be based on assumptions market participants would use when pricing an asset. U.S. GAAP provides a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Assets and liabilities that are required to be recorded at fair value on the balance sheet are categorized based on the inputs to valuation techniques as follows: Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 – Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. Level 3 – Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable. Refer to Note 10 to the Financial Statements for liabilities measured at fair value at December 31, 2025, and December 31, 2024. Property and Equipment Property and equipment is recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are expensed as incurred. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the balance sheet accounts and the resultant gain or loss is reflected in income. As of December 31, 2025, the Company had $1,275,078 of property and equipment, net. The Company had $109,664 of property and equipment, net at December 31, 2024. Depreciation is provided using the straight-line method, based on useful lives of the assets, which the Company estimates is 5 years. The Company’s property and equipment is comprised of machinery and equipment and leasehold improvements whose useful life is the lesser of the remaining lease term or estimated useful life. 38 The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized as equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. The Company had no impairment as of December 31, 2025. The Company capitalizes the costs of constructing and preparing company-owned retail stores and display centers for their intended use. Capitalized costs include expenditures directly attributable to the acquisition, construction, and development of store locations, such as leasehold improvements, construction costs, architectural and design fees, furniture, fixtures, and equipment. Internal payroll and related costs that are directly associated with store development activities are also capitalized. Once a store or display is placed into service, the assets are depreciated on a straight-line basis over their estimated useful lives, which generally range from five to seven years for furniture, fixtures, and equipment, and over the shorter of the useful life or lease term for leasehold improvements. Routine maintenance and repair costs are expensed as incurred. If indicators of impairment are present, the Company evaluates company-owned stores or display centers for recoverability by comparing the carrying amount of the store assets to the estimated future undiscounted cash flows expected to be generated. If the carrying value exceeds expected cash flows, an impairment charge is recognized equal to the amount by which the carrying value exceeds fair value. As of December 31, 2025, the net book value of capitalized company-owned store and display assets was $973,052, which is included in “Property and Equipment, net” on the consolidated balance sheets. There was $35,208 depreciation expense related to company-owned store assets/display centers for the year ended December 31, 2025 and no depreciation expense for the year ended December 31, 2024. Depreciation expense for the year ended December 31, 2025 and 2024, was $104,642 and $48,279 respectively. Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. As of December 31, 2025, the Company does not believe any provisions are required in connection with uncertain tax positions as there are none. 39 Stock Based Compensation The Company recognizes as compensation expense all share-based payment awards made to employees, directors, and consultants including grants of stock, stock options and warrants, based on estimated fair values. Fair value is generally determined based on the closing price of the Company’s common stock on the date of grant and is recognized over the service period. Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires annual and interim disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), the disclosure and description of other segment items, the inclusion of all current annual disclosures about a reportable segment in interim periods, allows for disclosure of multiple measures of a reportable segment’s profit or loss, requires disclosure of the CODM’s title and position, and requires a description of how the CODM uses reported measures in assessing the performance of reportable segments and in making decisions pertaining to allocation of resources. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company has adopted this standard. See Note 11 for further information. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires the annual disclosure of specific categories in the rate reconciliation and additional information for the reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. The Company has adopted this standard. See Note 8 for further information. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, that requires disclosures of disaggregated information about certain prescribed expense categories within relevant income statement expense captions. This standard is effective for annual reporting of fiscal years beginning after December 15, 2026, and for interim periods in the following year, with early adoption permitted. This standard should be applied prospectively, with retrospective application permitted. In January 2025 the FASB issued ASU 2025-01, which revised the effective date to December 15, 2027. We are currently evaluating the impact of adopting this standard on our disclosures. In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-04, Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarify the requirements related to accounting for the settlement of a debt as an induced conversion. ASU 2024-04 is intended to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20 for convertible debt instruments with cash conversion features and debt instruments that are not currently convertible. ASU 2024-04 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. We are currently evaluating the impact of this ASU on our financial statements and disclosures. 40 Results of Operations for the Year Ended December 31, 2025 as Compared to the Year Ended December 31, 2024 Revenues and cost of goods sold There was $864,450 of revenue and $583,760 in cost of goods sold for the year ended December 31, 2025. $750,000 of the revenue was related to our store sales and $114,450 relating to our store product revenue from our Company owned stores. VenHub incurred $513,778 in cost of goods sold relating to our smart store revenue and $69,982 relating to product sales. There was no revenue or cost of goods sold for the year ended December 31, 2024, as the Company was still developing its prototype store through research and development. General and administrative expenses For the year ended December 31, 2025 Our total operating expenses for the year ended December 31, 2025 were $39,711,655. This was comprised of $31,891,975 in share based compensation, $1,852,378 in contractor expense, $1,435,000 in accrued payroll and compensation, $1,215,098 in research and development relating to developing and enhancing the smart store, $938,678 in legal and professional expense, $740,731 in advertising, $548,751 in travel, $453,064 in rent, $173,594 in software, $106,221 in dues and subscriptions, $104,728 in utilities, , $104,643 in deprecation, $47,619 in office supplies, $37,095 in insurance, $19,861 in repairs and maintenance, $14,167 in meals and entertainment and $28,052 in miscellaneous expense. We incurred $22,968,198 in other expense for the year ended December 31, 2025 consisting of $22,287,419 in settlement expense, $563,069 in interest expense and $117,710 of change in fair value of convertible debt. As a result of the foregoing, we had a net loss of $62,399,163 for the year ended December 31, 2025. For the year ended December 31, 2024 Our total operating expenses for the year ended December 31, 2024 were $9,034,016. This was comprised of $4,515,182 of non-cash share based compensation, $1,270,000 in accrued payroll and compensation, $875,975 for research and development relating to developing and enhancing the smart store, $771,864 in advertising in relation to our crowdfunding efforts, $718,041 in contractor expense, $262,724 in legal and professional expense, $209,388 in travel, $103,648 in rent, $74,176 in software, $62,967 in dues and subscriptions $48,279 in depreciation, $46,298 in office supplies, $30,614 in utilities, $17,774 in repairs and maintenance, $14,938 in meals and entertainment and $12,148 in miscellaneous expenses. We incurred $358,686 of other expense comprised of $165,889 in interest expense and $192,797 in change of fair value of convertible debt for the period. As a result of the foregoing, we had a net loss of $9,392,702 for the year ended December 31, 2024. 41 Results of Operations for the Year Ended December 31, 2025, Compared to 2024 Expense Category 2025 2024 Change ($) Change (%) Share-based compensation $ 31,891,975 $ 4,515,182 $ 27,376,793 606.3 % Contractor expense $ 1,852,378 $ 718,041 $ 1,134,337 158.0 % Payroll and compensation $ 1,435,000 $ 1,270,000 $ 165,000 13.0 % Research and development $ 1,215,098 $ 875,975 $ 339,123 38.7 % Legal and professional $ 938,678 $ 262,724 $ 675,954 257.3 % Advertising $ 740,731 $ 771,864 $ -31,133 (4.0 )% Travel $ 548,751 $ 209,388 $ 339,363 162.1 % Rent $ 453,064 $ 103,648 $ 349,416 337.1 % Software $ 173,594 $ 74,176 $ 99,418 134.0 % Dues and subscriptions $ 106,221 $ 62,967 $ 43,254 68.7 % Utilities $ 104,728 $ 30,614 $ 74,114 242.1 % Depreciation $ 104,643 $ 48,279 $ 56,364 116.7 % Office supplies $ 47,619 $ 46,298 $ 1,321 2.9 % Insurance $ 37,095 $ 2,827 $ 34,268 1212.2 % Repairs and maintenance $ 19,861 $ 17,774 $ 2,087 11.7 % Miscellaneous $ 28,052 $ 9,321 $ 18,731 201.4 % Meals and entertainment $ 14,167 $ 14,938 $ -(771 ) (5.2 )% Total Operating Expenses $ 39,711,655 $ 9,034,016 $ 30,677,639 339.6 % Total operating expenses increased to $39.7 million in 2025 from $9.0 million in 2024, an increase of $30.7 million, or 339.6%. The increase was primarily driven by a $27.4 million rise in share-based compensation, which represented the largest component of operating expenses in 2025 and was associated with equity issued for services, settlements, and financing-related activities. Contractor expense increased by $1.1 million, or 158%, as the Company relied more heavily on third-party engineers and deployment personnel to support commercialization. Legal and professional fees increased by $676,000, or 257%, primarily due to audit, legal, and regulatory costs associated with financing transactions and public-company readiness. Legal and professional fees increased by $676,000, or 257%, primarily due to increased audit, legal, accounting, and regulatory costs associated with financing transactions, corporate governance initiatives, and public-company readiness activities. Research and development expense increased by $339,000, or 38.7%, reflecting continued investment in hardware, robotics, and software enhancements. Travel, rent, utilities, software, and depreciation expenses also increased as the Company expanded facilities and deployment activities in support of early commercial operations. Payroll and compensation increased modestly by 13% year over year as headcount expanded to support engineering, manufacturing, and administrative functions. Advertising expense remained relatively consistent with the prior year. Net Loss As a result of the above, Net Loss increased by $52,931,030 from $9,468,133 for the year ended December 31, 2024 to $62,399,163 in 2025. Liquidity and Capital Resources December 31, 2025 As of December 31, 2025, we had negative working capital of $9,192,737 consisting of $89,634 in cash, $1,021,947 in inventory, and $248,032 in prepaid expenses $2,000 in security deposit - current, offset by $4,576,949 in convertible debt at fair value, $2,114,487 in accrued payroll and compensation, $1,500,000 in deferred revenue relating to down payments for pre orders, $1,000,000 in loan payable – related party, $716,329 in accounts payable and accrued expenses, $346,953 in current operating lease liability, $203,645 in customer deposits and $89,148 in interest payable and $6,839 in sales tax payable. Non-current assets included $1,275,078 in property and equipment — net, $907,705 in right of use asset, and $79,566 in security deposits. 42 Non-current liabilities consisted of $2,550,930 in promissory note, $706,441 in right of use liability and $131,549 in interest payable. We used $5,939,092 of cash in operating activities which represented our net loss from continuing operations of $62,399,163 including $31,891,974 in share-based compensation, $22,062,419 in settlement expense share based compensation, $1,500,000 in deferred revenue, $609,379 of change in operating right of use liability, $436,021 of accrued payroll and compensation, $224,461 in accounts payable and accrued expenses, $266,442 of paid in kind interest capitalized, $154,808 in interest payable, $117,710 of unrealized loss on convertible debt, $104,642 in depreciation expense, $88,704 in deferred offering cost, $65,750 in customer deposits, $50,930 in promissory note interest, $6,839 in sales tax payable offset by $720,787 of change in operating right of use asset, $214,325 in prepaid expenses, $121,404 in inventory, and $63,492 in security deposits. We used $1,270,057 of cash for property and equipment, net in investing activities. We generated $5,945,891of cash from financing activities consisting of $3,500,000 in proceeds from warrant issuance, $1,000,000 in proceeds from related party notes, $795,891 in proceeds from crowdfunding and $650,000 in proceeds from convertible notes. On February 14, 2025 the Company executed five notes with five investors for a combined $650,000. On June 30, 2025, the Company entered into subscription agreement with two investors, providing for the issuance and sale of 405,162 Units, consisting of 810,324 shares of the Company’s Common Stock and 405,162 warrants to purchase up to 405,162 shares of Common Stock for a total subscription amount of $3,500,000. December 31, 2024 As of December 31, 2024, we had negative working capital of $3,715,323 consisting of $1,352,892 in cash, $900,543 in inventory, $88,704 in deferred offering cost, $33,707 in prepaid expenses, offset by $3,542,797 in convertible debt at fair value, $1,678,466 in accrued payroll and compensation, $491,868 in accounts payable, $137,895 in customer deposits relating to down payments for pre orders, $174,254 in current operating lease liability and $65,889 in interest payable 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 consisted of $269,761 in right of use liability. We used $3,981,894 of cash in operating activities which represented our net loss from continuing operations of $9,392,702 including $4,515,182 in share-based compensation, $1,064,300 in accrued payroll and compensation, $471,689 in accounts payable and accrued expenses, $192,797 of unrealized loss on convertible debt, $100,000 in amortization of debt issuance costs, $71,750 in customer deposits, $65,889 in interest payable, $56,432 of change in operating right of use asset $48,279 in depreciation expense, offset by $900,543 in inventory, $152,556 of change of operating right of use liability, $88,704 in deferred offering cost and $33,707 in prepaid expenses. There were no cash flows from investing activities for the period. We generated $5,288,026 of cash from financing activities consisting of $3,250,000 in proceeds from convertible notes, net, $1,529,803 in proceeds from crowdfunding, $535,067 in proceeds from common stock issuances, offset by $26,844 in proceeds from related party 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. All amounts in principal total $3,350,000 and $100,000 of debt issuance costs were expensed due to the election of the fair value option. 43 Future Outlook 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. In July 2025, we entered into new employment agreements with our Chief Executive Officer and our President, which became effective in October 2025. These agreements include annual base salaries, potential cash bonuses, and equity-based awards tied to geographic expansion and performance milestones. While the agreements contemplate potential annual cash bonuses of up to $3.2 million in the aggregate, such bonuses are contingent on the availability of legally distributable funds as defined under NRS 78.288, Board approval, and may be deferred or accrued until sufficient resources are available in compliance with Nevada law. Accordingly, we have not accrued any amounts for such bonuses to date. If payable in full, these cash bonuses could increase our annual compensation expense and impact our liquidity. However, because payment is conditional and may be deferred, the timing and extent of this impact cannot be predicted with certainty. We expect operating expenses to increase in future periods as we expand deployments of our autonomous Smart Stores, invest in further product development, and build out the organizational infrastructure required to support a scaled commercial business. In particular, we anticipate growth in payroll and compensation, research and development, and marketing expenses, partially offset by reduced reliance on share-based compensation compared to prior years. We may also incur increased legal and professional expenses in connection with our financing activities and as a result of our obligations as a public company. In addition, the equity award provisions in these agreements could result in the issuance of significant additional shares in the event that geographic expansion or performance milestones are achieved, which could result in dilution to existing stockholders. As of December 31, 2025, we had $89,634 in cash. We expect our operating cash requirements, capital expenditures, and contractual obligations including $716,329 in accounts payable and accrued expenses, $281,753 in lease payments, $89,148 in interest payable and $2,500,000 estimated in contractor and production payments will total $3,587,050 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. 44 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) and comply with applicable requirements of Nevada Revised Statutes Chapter 78 governing Nevada corporations. 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. 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, 2025 and 2024 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. 45 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. Emerging Growth Company Status; Accounting Standards Election We are an “emerging growth company” (“EGC”) as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the “Securities Act”). We have elected to use the extended transition period under Section 7(a)(2)(B) of the Securities Act for complying with any new or revised financial accounting standards. As a result, we will adopt new or revised accounting standards on the dates such standards become applicable to private companies (or EGCs that avail themselves of the extended transition period), which may result in our financial statements not being comparable to those of public companies that adopt such standards as of earlier public-company effective dates. We may decide at any time to irrevocably opt out of the extended transition period, after which we would be required to adopt new or revised standards as of the dates applicable to public companies that are not EGCs. We will remain an EGC until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act; (ii) the date on which we become a “large accelerated filer” under Rule 12b-2 of the Exchange Act; (iii) the date on which we have issued more than $1 billion in non-convertible debt during the previous three years; and (iv) the last day of the fiscal year in which our total annual gross revenues meet or exceed the then-applicable SEC revenue threshold for EGCs. 46 Item 8. Financial Statements and Supplementary Data Our consolidated financial statements and notes thereto and the report of our independent registered public accounting firm, are set forth on pages F-1 through F-25 of this report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.