VenHub Global, Inc S-1, filed Oct 3, 2025
VenHub Global, Inc. (VHUB)
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VENHUB GLOBAL, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 3581 | 92-2083580 | ||
| (State or other jurisdiction
of incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
518 S. Fair Oaks Ave
Pasadena, CA 91105
(212)-616-4291
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Smith Eilers, PLLC
149 S. Lexington Ave.
Asheville, NC 28801
561.474.7172
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
| Non-accelerated filer | ☒ | Smaller reporting company | ☐ | ||
| (Do not check if a smaller reporting company) | Emerging growth company | ☒ | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
This registration statement shall hereafter become effective in accordance with the provisions of section 8(a) of the Securities Act of 1933.
COPIES OF COMMUNICATIONS TO:
William R. Eilers, Esq.
Smith Eilers, PLLC.
149 S. Lexington Ave.
Asheville, NC 28801
Subject to completion, dated [MONTH] ___, 2025
PRELIMINARY PROSPECTUS
VENHUB GLOBAL, INC.
5360 Procyon St.
Las Vegas NV 89118
(212)-616-4291
Consisting of 15,547,669 shares common stock
This prospectus relates to the registration of the resale of up to 15,547,669 shares of common stock of VenHub Global, Inc. by 2,958 of our stockholders identified in this prospectus, or their permitted transferees (“Registered Stockholders”) in connection with our direct listing (the “Direct Listing”) on the Nasdaq Capital Market (“Nasdaq”). The shares being registered herein may be freely sold in market transactions following the listing and upon the effectiveness of this registration statement. The shares described above will include all of the Series B Preferred Stock that will be converted to common stock upon effectiveness of this Registration Statement and will represent 20% of the total issued and outstanding shares of common stock of the Company upon effectiveness of this Registration Statement. All such shares abovementioned in this paragraph may be freely sold upon the effective date of this registration statement. Prior to the listing of our common stock on the Nasdaq Capital Market there has been no public market for our common stock. Since inception, on January 31, 2023, we issued shares of common stock to founders and consultants, as well as Series A Preferred to our founders through their jointly held limited liability company, SSO, LLC. In addition, since April of 2023, the Company has engaged in a Regulation CF offering, selling Series B Preferred Stock that converts to common stock of the Company at the discretion of the Board of Directors of the Company. This information, however, may have little or no relation to broader market demand for our shares of common stock. As a result, you should not place undue reliance on these historical sales prices as they may differ materially from the public prices of our shares of common stock on Nasdaq.
Unlike an initial public offering (“IPO”), the resale by the Registered Stockholders is not being underwritten by any investment bank. The Registered Stockholders may, or may not, elect to sell their shares of Common Stock covered by this prospectus, as and to the extent they may determine. Such sales, if any, will be made through brokerage transactions on the Nasdaq Capital Market at prevailing market prices. We will not be involved in the price setting process. Additionally, the price of our shares in prior private transactions may have little or no relation to the opening price and subsequent public price of our stock on Nasdaq. For more information, see the section titled “Plan of Distribution.” If the Registered Stockholders choose to sell their shares of common stock, we will not receive any proceeds from the sale of such shares.
Commencing in April of 2023, the Company initiated a Regulation CF offering of our Series B Preferred Shares for an aggregate of $5,000,000. To date, we have raised $2,735,670.99 with an average price per share of $4.05, selling 675,015 shares of our Series B Preferred Shares. On May 15, 2025, the Company issued 3,462,375 shares of common stock pursuant to a Settlement and Release with Target Global Acquisition I Corp. along with its subsidiaries and sponsor (“TGAA Parties”). Upon a direct listing of the common stock of the Company, TGAA Parties agreed to forfeit exactly 100,000 shares of common stock to treasury, resulting in the TGAA Parties holding 3,362,375 shares of common stock upon the Nasdaq listing. In June of 2025, the Company issued 405,092 units with each unit consisting of 2 shares of common stock and 1 cashless warrant to purchase a share of common stock at a price of $4.32 (the “Unit”). The purchase price of each Unit was $8.64 for aggregate of $3,500,000. As of the date of this filing, there are 100,000 shares of Series A Preferred Stock that convert into common stock at a ratio of 379.35029:1, resulting in 37,935,029 shares of common stock upon Nasdaq listing. In addition, there are currently 671,072 shares of Series B Preferred Stock that will convert to common at a ratio of 1:1 upon the Nasdaq listing. In addition, there are currently 36,279,355shares of common stock currently issued and outstanding. Upon the Nasdaq listing, there will be 74,885,456shares of common stock issued and outstanding.
No public market exists for our common stock. Further, the listing of our common stock on Nasdaq, without a firm-commitment underwritten offering, is a novel method for commencing public trading in shares of our common stock, and consequently, the trading volume and price of shares of our common stock may be more volatile than if shares of our common stock were initially listed in connection with an initial public offering underwritten on a firm-commitment basis.
On the day that our shares of common stock are initially listed on Nasdaq, Nasdaq will begin accepting, but not executing, pre-opening buy and sell orders and will begin to continuously generate the indicative Current Reference Price (as defined below) on the basis of such accepted orders. The Current Reference Price is calculated each second and, during a 10-minute “Display Only” period, is disseminated, along with other indicative imbalance information, to market participants by Nasdaq on its NOII and Book Viewer tools. Following the “Display Only” period, a “Pre-Launch” period begins, during which Revere Securities, LLC (the “Advisor” or “Revere”), in its capacity as our financial advisor, must notify Nasdaq that our shares are “ready to trade.” Once the Advisor has notified Nasdaq that our shares of common stock are ready to trade, Nasdaq will confirm the Current Reference Price for our shares of common stock, in accordance with the Nasdaq rules. If the Advisor then approves proceeding at the Current Reference Price, the applicable orders that have been entered will be executed at such price and the regular trading of our shares of common stock on Nasdaq will commence, subject to Nasdaq conducting validation checks in accordance with the Nasdaq rules. Under the Nasdaq rules, the “Current Reference Price” means: (i) the single price at which the maximum number of orders to buy or sell can be matched; (ii) if there is more than one price at which the maximum number of orders to buy or sell can be matched, then it is the price that minimizes the imbalance between orders to buy or sell (i.e. minimizes the number of shares that would remain unmatched at such price); (iii) if more than one price exists under (ii), then it is the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which our shares of common stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under (iii), a price determined by Nasdaq in consultation with the Advisor in its capacity as our financial advisor. In the event that more than one price exists under (iii), the Advisor will exercise any consultation rights only to the extent that it can do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M, or applicable relief granted thereunder. The Registered Stockholders will not be involved in Nasdaq’s price-setting mechanism, including any decision to delay or proceed with trading, nor will they control or influence the Advisor in carrying out its role as a financial adviser. The Advisor will determine when our shares of common stock are ready to trade and approve proceeding at the Current Reference Price primarily based on considerations of volume, timing and price. In particular, the Advisor will determine, based primarily on pre-opening buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. If the Advisor does not approve the Current Reference Price, trading in our shares will not commence on the Nasdaq Capital Market. Instead, the Direct Listing will remain in the Pre-Launch period and may be extended or restarted in accordance with Nasdaq rules. The financial advisor may withhold approval of the Current Reference Price until such time as it determines that sufficient price discovery has occurred and that an appropriate opening price can be established based on volume, timing, and indicative order flow. The advisor’s approval of the Current Reference Price is a condition precedent to the commencement of trading, of the shares on the Nasdaq Capital Market (assuming listing on the Nasdaq Capital Market is achieved), and the Company will not have any ability to override or influence this determination. The Company may be required to reinitiate the Direct Listing process at a later time if the advisor determines that the market conditions are not conducive to a fair and orderly opening. For more information, see “Plan of Distribution.”
We have applied to list our Common Stock on the Nasdaq Capital Market under the symbol “VNHB”.
If our Nasdaq application is not approved or we otherwise determine that we will not be able to secure the listing of our common stock on Nasdaq, we will not complete this Direct Listing. Nasdaq listing is a condition to this offering. No assurance can be given that our Nasdaq application will be approved and that our common stock will ever be listed on Nasdaq. If our listing application is not approved by Nasdaq, we will not be able to consummate the offering and we will terminate this Direct Listing.
Upon completion of this offering, our founder and Chief Executive Officer, Shahan Ohanessian, along with the Chairwoman of the Board of Directors, his wife, Shoushana Ohanessian, will beneficially own approximately 94% of the voting power of our outstanding voting securities through their ownership of Series C Preferred Stock and common stock, and we will be a “controlled company” within the meaning of the listing rules of The Nasdaq Stock Market LLC. Under Nevada Revised Statutes Section 78.195, the voting rights and powers of this preferred stock have been established in our articles of incorporation. We may rely on the exemptions from the corporate governance requirements that are available to controlled companies.
We are an “emerging growth company” as defined under U.S. federal securities laws and, as such, have elected to comply with reduced public company reporting requirements. We have elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
Investing in our common stock involves risks. See the “Risk Factors” section beginning on page 4 for risks you should consider before investing in our common stock.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is [MONTH] ____, 2025
TABLE OF CONTENTS
You should rely only on the information contained or incorporated by reference to this prospectus in deciding whether to purchase our Common Stock. We have not authorized anyone to provide you with information different from that contained in this prospectus. Under no circumstances should the delivery to you of this prospectus or any sale made pursuant to this prospectus create any implication that the information contained in this prospectus is correct as of any time after the date of this prospectus. To the extent that any facts or events arising after the date of this prospectus, individually or in the aggregate, represent a fundamental change in the information presented in this prospectus, this prospectus will be updated to the extent required by law.
i
The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled “Where You Can Find More Information” in this prospectus and any amendment or supplement hereto.
Company Overview
VenHub Global, Inc. (the “Company”) was incorporated in the state of Wyoming on January 31, 2023, as “Autonomous Solutions, Inc.” and redomiciled in Delaware with the name VenHub Global, Inc. on August 15, 2024. The Company is currently in the processing of redomiciling in Nevada which shall be completed prior to the effectiveness of this Reigstration.
The Company has created “VenHub” as the core brand of its operations. The Company intends VenHub technology to combine the intelligence of a store with the efficiency of robotics. This will be achieved by providing customers with a unique shopping experience expected to be fully autonomous that operates 24/7. The Company believes that with its use of advanced sensors, artificial intelligence (AI), 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. At this stage, our deployed AI systems are primarily focused on operational functions such as product verification, robotic navigation, and predictive maintenance. These capabilities improve order accuracy, fulfillment efficiency, and system uptime. While we are actively developing AI-driven personalization features, such as recommender engines designed to suggest products based on customer history, browsing patterns, and complementary items, these features remain in testing and are not yet deployed in live store environments. Accordingly, our current Smart Stores do not yet provide individualized tailoring of product offerings at this time. The VenHub Owners App provides AI-driven insights and recommendations using purchase data, customer metrics, forecasting, and conversational analytics. These analytics are operational today, though broader personalization features for customers are expected to be added only as development progresses. While the Company believes these applications represent meaningful advancements, it notes that artificial intelligence technology continues to develop rapidly, and the specific ways in which AI may be applied within VenHub Smart Stores may evolve in the future.
Although the Company has no market for its common stock, management believes that the Company will meet all requirements to be quoted on the Nasdaq. Becoming a reporting company will provide us with enhanced visibility and give us a greater possibility to provide liquidity to our shareholders.
We are currently a development stage company and to date we began recording revenue in 2025. Accordingly, our independent registered public accountants have issued a comment regarding our ability to continue as a going concern (please refer to the footnotes to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations, which is sufficient to sustain our operating needs, management intends to rely primarily upon debt and equity financing to supplement cash flows, if any, generated by our services. We will seek out such financing as necessary to allow the Company to continue to grow our business operations, and to cover such cost, excluding professional fees, associated with being a reporting Company with the Securities and Exchange Commission (“SEC”); we estimate such costs to be approximately $1,000,000.00 for 12 months following this Offering. The Company has included such costs to become a publicly reporting company in its targeted expenses for working capital expenses and intends to seek out reasonable loans from friends, family and business acquaintances if it becomes necessary. At this point we have been funded by our founders and initial shareholders and have not received any firm commitments or indications from any family, friends or business acquaintances regarding any potential investment in the Company except those shareholders listed herein.
Upon effectiveness, we may still require additional financing to fund our operations and support expansion of sales and operations. As we are a start-up company, while we have begun generating revenue in 2025, it is still unclear whether we can sustain or grow our revenue generation; however, it is our hopes that our revenues will exceed our costs. Our revenues will be impacted by the success of our marketing campaigns, the general condition of the economy, and the number of clients we attract. For a further discussion of our initial operations, plan of operations, growth strategy and marketing strategy see the below section entitled “Description of Business”.
1
The following tables summarize our financial data for the periods presented and should be read together with the sections of this prospectus entitled “Risk Factors,” “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our financial statements and related notes appearing elsewhere in this prospectus. We derived the summary financial information for the years ended December 31, 2024 and 2023 from our audited financial statements and related notes appearing elsewhere in this prospectus. We have derived our summary financial information for the six months ended June 30, 2025 and 2024. Our historical results are not necessarily indicative of the results we expect in the future.
As shown in the financial statements accompanying this prospectus, VenHub Global, Inc., has had minimal revenues to date and has incurred only losses since its inception. The Company has operations related to the development of the business and building our customer base and network of providers but has been issued a “going concern” opinion from our accountants, based upon the Company’s reliance upon the sale of our common stock as the sole source of funds for our future operations.
| Income Statement Data | Six Months Ended June 30, 2025 (Unaudited) | Six Months Ended June 30, 2024 (Unaudited) | For Year Ended Dec 31, 2024 (Audited) | From Inception (January 31, 2023) to Dec 31, 2023 (Audited) | ||||||||||||
| Revenue | $ | 513,615 | $ | — | $ | — | $ | — | ||||||||
| Cost of Goods sold | 330,217 | — | — | — | ||||||||||||
| Gross Profit | 183,398 | — | — | — | ||||||||||||
| Operating Expenses | 11,480,035 | 5,534,958 | 9,034,016 | 10,376,645 | ||||||||||||
| Loss from Operations | (11,296,637 | ) | (5,34,958 | ) | (9,034,016 | ) | (10,376,645 | ) | ||||||||
| Settlement Expense | 18,288,430 | — | — | |||||||||||||
| Interest expense | 228,033 | — | 165,889 | — | ||||||||||||
| Change in Fair Value of Convertible Debt | 65,414 | — | 192,797 | — | ||||||||||||
| Net Loss | (29,878,514 | ) | (5,534,958 | ) | (9,392,702 | ) | (10,376,645 | ) | ||||||||
| Loss per Share | ||||||||||||||||
| Basic and Diluted | $ | (1.03 | ) | $ | (0.21 | ) | $ | (0.36 | ) | $ | (0.61 | ) | ||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Basic and Diluted | 28,765,414 | 25,650,665 | 26,017,018 | 16,884,296 | ||||||||||||
| Balance Sheet Data | June 30, 2025 (Unaudited) | Dec 31, 2024 (Audited) | ||||||
| Cash and cash equivalents | $ | 3,687,820 | $ | 1,352,892 | ||||
| Working capital (deficit) | 259,591 | (106,637 | ) | |||||
| Total assets | 6,454,654 | 2,690,502 | ||||||
| Deferred revenue | 1,750,000 | 137,895 | ||||||
| Total liabilities | 12,580,477 | 6,360,930 | ||||||
| Total stockholders’ (deficit) | (6,125,823 | ) | (3,670,428 | ) | ||||
2
| The Issuer | VenHub Global, Inc. is a Nevada Corporation | |
| Securities being registered | Up to 15,547,669 of Common Stock. Our Common Stock is described in further detail in the section of this prospectus titled “DESCRIPTION OF SECURITIES — Common Stock.” | |
| Offering Type | The Offering is being made on behalf of those 2,958 “Selling Shareholders” identified herein. | |
| Per Share Price | At market. | |
| No Public Market |
There is no public market for our Common Stock. We cannot give any assurance that the shares being offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares.
We intend to apply to Nasdaq through a market maker that is a licensed broker dealer, to allow the trading of our Common Stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. | |
| Duration of Offering | The shares are offered for a period not to exceed 180 days, unless extended by our Board of Directors for an additional 90 days. | |
| Number of Shares Outstanding Before Effectiveness | There are 36,279,355 shares of Common Stock issued and outstanding as of the date of this prospectus, which are held by 156 holders.
There are 100,000 shares of Series A Preferred issued and outstanding as of the date of this Prospectus, of which 100,000 are held by SSO, LLC, which is controlled by our Chief Executive Officer. Upon the effectiveness of this Registration Statement, all 100,000 shares of Series A Preferred Stock shall be converted into common stock at a rate of 379.35029 shares of common stock per 1 share of Series A Preferred Stock for an aggregate of 37,935,029 shares of common stock.
There are 675,015 shares of Series B Preferred issued and outstanding as of the date of this Prospectus. Upon the effectiveness of this Registration Statement, 671,072 shares of Series B Preferred Stock shall convert into common stock of the Company at a rate of one share of common stock for each one share of Series B Preferred Stock. | |
| Number of Shares Outstanding After Effectiveness | Upon conversion there will be 74,885,456 shares of common stock of which 15,547,669 will be registered and 100,000 shares of Series C Preferred Stock. There will be no Series A or Series B Preferred stock once this Registration Statement is deemed effective. | |
| Registration Costs | We estimate our total costs relating to the registration herein shall be approximately $694,414 | |
| Net Proceeds to the Company | The Company will receive no proceeds of the sale of the Shares. | |
| Risk Factors | An investment in our Common Stock involves a high degree of risk. You should carefully consider the risk factors set forth under the “Risk Factors” section herein and the other information contained in this prospectus before making an investment decision regarding our Common Stock. |
3
An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our Common Stock. If any of the following risks occur, our business, operating results, and financial condition could be seriously harmed. Currently, shares of our Common Stock are not publicly traded. The trading price of our Common Stock could decline due to any of these risks, and you may lose all or part of your investment. In the event our Common Stock fails to become publicly traded you may lose all or part of your investment.
RISKS RELATED TO VENHUB’S BUSINESS AND INDUSTRY
Because we are an early-stage company with minimal revenue and a history of losses and we expect to continue to incur substantial losses for the foreseeable future, we cannot assure you that we can or will be able to operate profitably.
We are an early-stage company. We were formed and commenced operations in 2023. We face all the risks associated with newer companies, including significant competition from existing and emerging competitors in the automated smart store industry, some of which are established and have better access to capital. In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition from an early-stage company to a company capable of supporting larger-scale commercial activities. If we are not successful in such a transition, our business, results, and financial condition will be harmed.
We have not been profitable to date, and there can be no assurance that we will not continue to incur net losses in the future. We may not succeed in expanding our customer base and product offerings and even if we do, may never generate revenue that is significant enough to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Furthermore, we may not be able to control overhead expenses even where our operations successfully expand. Our failure to become and remain profitable would depress our value and could impair our ability to raise capital, expand our business, diversify our product offerings or even continue our operations.
We have a limited operating history, which may make it difficult to evaluate our business and prospects.
We face the risks associated with businesses in their early stages, as we have a limited operating history and our prospects are hard to evaluate. Any evaluation of our business and our prospects must be considered in light of the uncertainties, delays, difficulties and expenses commonly experienced by companies at this stage, which generally include unanticipated problems and additional costs relating to the development and testing of products, product approval or clearance, regulatory compliance, production, product introduction and marketing and competition. For example, we have incurred losses for each of the past few years, driven mainly by our investments in research and development costs. Many of these factors are beyond the control of our management. In addition, our performance will be subject to other factors beyond our control, including general economic conditions and conditions in the robotics industry. Accordingly, our business and success face risks from uncertainties faced by developing companies in a competitive environment. There can be no assurance that our efforts will be successful or that we will ultimately be able to attain profitability.
Our former independent auditors have issued an audit opinion for the year ended December 31, 2024, for VenHub Global, Inc. that includes a statement describing our going concern status. Our financial status creates doubt whether we will continue as a going concern.
As described in Note 3 of our accompanying financial statements, our auditors have issued a going concern opinion regarding the Company. This means there is substantial doubt we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty regarding our ability to continue in business. As such, we may have to cease operations and investors could lose part or all of their investment in the Company.
4
If we fail to effectively manage our growth, we may not be able to design, develop, manufacture, market and launch new generations of our robotic systems, firmware, and software products successfully.
We intend to invest significantly in order to expand our business. Our expansion plans involve significant reliance on AI technologies and data collection, which come with inherent risks including, but not limited to, data breaches, AI malfunctions, and regulatory changes. We also import key components from China, exposing us to risks of supply chain disruptions and potential trade restrictions. Any failure to manage our growth effectively, or to mitigate these risks, could materially and adversely affect our business, prospects, financial condition and operating results. We intend to expand our operations significantly. We expect our expansion to include:
| ● | expanding the management, engineering, and product teams; |
| ● | identifying and recruiting individuals with the appropriate relevant experience; |
| ● | hiring and training new personnel; |
| ● | launching commercialization of new products and services; |
| ● | forecasting production and revenue; |
| ● | entering into relationships with one or more third-party design for manufacturing partners and third-party contract manufacturers and/or expanding our internal manufacturing capabilities; |
| ● | controlling expenses and investments in anticipation of expanded operations; |
| ● | carrying out acquisitions and entering into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships; |
| ● | expanding and enhancing internal information technology, safety and security systems; |
| ● | conducting demonstrations; |
| ● | entering into agreements with suppliers and service providers; and |
| ● | implementing and enhancing administrative infrastructure, systems, and processes. |
Should market penetration warrant, we intend to continue to hire a significant number of additional personnel, including engineers, design, production, operations personnel and service technicians for our robotic systems and services. Because of the innovative nature of our technology, individuals with the necessary experience may not be available to hire, and as a result, we will need to expend significant time and expense, to recruit and retain experienced employees and appropriately train any newly hired employees. Competition for individuals with experience designing, producing, and servicing robots and their software is intense, and we may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business, prospects, financial condition, and operating results.
Our revenues and profits are subject to fluctuations.
We are currently focused on the development and commercialization of our autonomous store products. As of the date of this prospectus, three stores have been developed, including one store deployed directly by the Company. Our pre-orders and current deployments may not be indicative of future revenue or growth. Any future revenues and growth are dependent on our ability to convert our pre-orders into deployed and revenue-generating units, as well as management’s assessment of market opportunities.
It is difficult to accurately forecast our revenues and operating results, and these may fluctuate in the future due to a number of factors, including: changes in customer demand for our autonomous store units and related hardware, firmware, and software offerings; customers’ available capital to invest in our products; general economic and market conditions; our ability to market our Company and technology effectively; and evolving industry and regulatory requirements.
Although we have received pre-orders, we have only limited deployment experience, and therefore have no reliable metric to determine the likelihood that pre-orders will convert into final sales. As a result, our operating results may fluctuate materially from period to period, and at times these fluctuations may be significant and could adversely affect our business, financial condition, and results of operations.
5
We are dependent on general economic conditions.
Our business model is dependent on companies purchasing our autonomous store units. Our business model is thus dependent on national and international economic conditions. Uncertain economic conditions have created volatility in the U.S. Such adverse national and international economic conditions may reduce the future availability of dollars companies have to spend on our services, which would negatively impact our revenues and possibly our ability to continue operations. For example, higher interest rates have resulted in a decrease in investment activity and overall capital allocation to hardware startups or for customers to effectively finance the purchase of our products. The worsening of global economic conditions has in the past adversely affected, and could in the future, adversely affect our business, financial condition or results of operations, and the worsening of economic conditions in certain specific regions of the country could impact the expansion and success of our businesses in such areas.
Many of our planned features are still in development or conceptual and may not be commercialized on our anticipated timeline, if at all.
While our Version 1 Smart Stores are commercially available today, many of the features we describe in this prospectus — including ID verification technology for age-restricted products, enhanced AI-driven analytics, solar-powered alternatives, and mobile or retrofit Smart Store formats — are still in development. In addition, we are evaluating a number of longer-term opportunities, such as larger-format Smart Stores, biometric authentication, and expanded personalization capabilities, which remain conceptual at this stage.
The pace and timing of development for these features will depend on a variety of factors, including technological feasibility, available capital resources, customer demand, and regulatory requirements. As a result, there can be no assurance that any of these features will be completed, successfully tested, or commercialized within our expected timeframe, or at all. If we are unable to deliver new features as planned, our growth prospects, competitive position, and financial results could be adversely affected.
We rely on the availability of certain raw materials and a limited number of suppliers for key components, and any disruption in our supply chain could adversely affect our operations.
Our Smart Stores require a range of raw materials and specialized components, including structural steel, refrigeration units, robotics hardware, electronic components, sensors, and display systems. While many of these materials are available from multiple sources, certain specialized components — such as robotics assemblies and semiconductor chips — are currently obtained from a limited number of suppliers. Supplier concentration increases our vulnerability to supply chain disruptions.
Global supply chains for certain materials and components have experienced significant volatility due to factors such as semiconductor shortages, increased demand for electronics, commodity price fluctuations, shipping delays, labor shortages, and geopolitical conditions. If any of our suppliers were unable or unwilling to meet our requirements, or if the cost of raw materials or critical components were to rise significantly, we could face production delays, higher operating costs, or reduced margins.
Although we are pursuing secondary sourcing arrangements and evaluating long-term supply agreements to mitigate these risks, there can be no assurance that such measures will be sufficient. Any material disruption in the supply of raw materials or components could adversely affect our ability to manufacture and deploy Smart Stores on a timely and cost-effective basis, which in turn could have a material adverse effect on our business, financial condition, and results of operations.
The inability of our supply chain to deliver certain key electrical components, such as computer components and accessories, could materially adversely affect our business, financial condition and results of operations.
Autonomous/robotic smart stores rely on specialized hardware components such as sensors, robotics arms, and computer systems, which are often sourced from a limited number of suppliers. Disruptions in the supply of these critical components — due to manufacturing issues, resource scarcity, or geopolitical tensions — can delay the production or maintenance of the robotic systems, impacting store operations and customer service. Dependence on a few key vendors for essential software and hardware increases vulnerability. If a key vendor fails financially, faces production halts, or discontinues a crucial product line, it could significantly disrupt operations. Developing contingency plans, including identifying alternative suppliers and maintaining strategic stockpiles of essential components, is critical. Supply chain disruptions may delay the timing of production and maintenance of our robots, which in turn could negatively impact our business, results of operations and financial condition.
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In addition, most components used in our units are manufactured overseas. The logistics networks that support the delivery and maintenance of robotic components are susceptible to various risks, including transportation delays, regulatory changes, and natural disasters. Disruptions in logistics can lead to inventory shortages, impacting the ability to stock stores and maintain equipment. Shifts in geo-political relationships between the US and component supplier countries could generally limit access to component parts all together. Changes in trade policies, tariffs, and international relations can affect the supply chain’s stability. For example, import restrictions or increased tariffs on goods from a primary supplier country could increase costs or limit access to necessary technology.
As an advanced technologies company, we are also faced with supply chains issues created indirectly from rapidly transforming standards and benchmarks in artificial intelligence and robotics. Rapid advancements in technology can quickly render certain components or software obsolete, complicating maintenance and updates. Managing the lifecycle of technology products, planning for end-of-life components, and staying abreast of new technological developments are essential to minimize this risk.
Our failure to attract and retain highly qualified personnel in the future could harm our business.
We are an innovative technology company. We may not be able to locate or attract qualified individuals for important positions, such as software engineers, robotics engineers, machine vision and machine learning experts and others, which could affect our ability to grow and expand our business. We may also face intense competition for qualified individuals from numerous other companies, including other similarly situated technology companies, many of whom have greater financial and other resources than we do.
In addition, new hires often require significant training and, in many cases, take significant time before they achieve full productivity. We may incur significant costs to attract and retain qualified personnel, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards, and we may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them. Moreover, new employees may not be or become as productive as we expect, as we may face challenges in adequately or appropriately integrating them into our workforce and culture. If we are unable to attract, integrate and retain suitably qualified individuals who can meet our technical, operational, and managerial requirements, on a timely basis or at all, our business, results of operation and financial condition could be adversely affected.
Our units rely on sophisticated software technology that incorporate third-party components and networks to operate, and the inability to maintain licenses for software technology, errors in the software we license, or the terms of open-source licenses could result in increased costs or reduced service levels, which would adversely affect our business.
Our units require certain third-party software and networks to function safely and effectively, and our business relies on certain third-party software obtained under licenses from other companies. Although we continue to develop our own software and firmware products and solutions, we anticipate that we will continue to rely on such third-party software in the future. Although we believe that there are commercially reasonable alternatives to the third-party software, we currently license, this may not always be the case, or it may be difficult or costly to replace. In addition, integration of new third-party software may require significant work and require substantial investment of our time and resources. Our use of additional or alternative third-party software would require us to enter into license agreements with third parties, which may not be available on commercially reasonable terms or at all. Many of the risks associated with the use of third-party software cannot be eliminated, and these risks could negatively affect our business. Furthermore, performance degradation or lack of access to such software and networks can result in poor operational performance or even grounding of our operations of autonomous stores until it is resolved, which can adversely impact our ability to continue our operations.
Additionally, some software powering our technology systems incorporates software covered by open-source licenses. The terms of many open-source licenses have not been interpreted by U.S. courts, and there is a risk that the licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to operate our systems. In the event that portions of our proprietary software are determined to be subject to an open-source license, we could be required to publicly release the affected portions of our source code or re-engineer all or a portion of our technology systems, each of which could reduce or eliminate the value of our technology systems. Such a risk could be difficult or impossible to eliminate and could adversely affect our business, financial condition and results of operations.
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The benefits to customers of our products could be supplanted by other technologies or solutions or competitors’ products that utilize similar technology to ours in a more effective way.
The benefits to customers of our products could be supplanted by other technologies or solutions or competitors’ products that utilize similar technology to ours in a more effective way. We cannot be sure that alternative technologies or improvements to artificial intelligence, industrial automation or other technologies, processes or industries will not match or exceed the benefits of our products or be more cost effective than our products. The development of any alternative technology that can compete with or supplant our products may materially and adversely affect our business, prospects, financial condition and operating results, including in ways we do not currently anticipate. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced products, which could result in the loss of competitiveness of our robotic systems and solutions, decreased revenue and a loss of market share to competitors. Our research and development efforts may not be sufficient to adapt to new or changing technologies. While we plan to upgrade and adapt our units as we or others develop new technology, our robotic systems and solutions may not compete effectively with alternative products if we are not able to source and integrate the latest technology into our systems and solutions.
Our competitor base may change or expand as we continue to develop and commercialize our robotic systems in the future. A number of these companies may have, or may attain, more resources and/or greater market recognition than we do. These or other competitors may develop new technologies or products that provide superior results to customers or are less expensive than our products. Our technologies and products could have reduced competitiveness by such developments.
Our competitors may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, have greater financial, marketing, manufacturing and other resources than we do or may be more successful in attracting potential customers, employees and strategic partners. In addition, potential customers could have long-standing or contractual relationships with competitors. Potential customers may be reluctant to adopt our products, particularly if they compete with or have the potential to compete with or diminish the need/utilization of products or technologies supported through these existing relationships. If we are not able to compete effectively, our business, prospects, financial condition and operating results will be negatively impacted.
In addition, because we operate in a new market, the actions of our competitors could adversely affect our business. Adverse events such as product defects or legal claims with respect to competing or similar products could cause reputational harm to the robotics market on the whole and, accordingly, our business.
Our VenHub Smart Stores rely heavily on artificial intelligence for operations of the units. Interruptions, hallucinations, errors, and malfunctions created from our artificial intelligence could limit the functionality of our VenHub Smart stores and cause damage to our reputation in the market.
Our business relies heavily on artificial intelligence (AI) for the automation of our smart stores. While AI enables us to provide highly efficient services, any technical failures, malfunctions, or inaccuracies in AI algorithms could lead to significant operational disruptions. These disruptions could result in lost revenue, customer dissatisfaction, or even legal claims if the failure leads to inaccurate billing or product handling. AI drives most of our core operations, including inventory management, customer interactions, and security. If we experience issues with the AI software, such as bugs, system crashes, or vulnerability to cyberattacks, it could materially affect our ability to operate efficiently. In particular, cyberattacks on AI systems could expose us to data breaches, theft of proprietary information, or operational sabotage, potentially damaging our reputation and exposing us to legal liabilities.
In addition, continuous improvement and maintenance of our AI systems are required to keep up with technological advancements and changing customer needs. There is a risk that the integration of new AI technologies, or updates to existing systems, could lead to unexpected bugs, incompatibilities, or performance issues. This could result in temporary service interruptions or diminished operational efficiency, which may negatively impact our financial performance.
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Our AI systems make autonomous decisions in the operation of our smart stores, including inventory management, pricing, and customer service interactions. If these AI-driven decisions are flawed or inaccurate, we could be exposed to liability claims. For example, if an AI system causes damage to customer property or provides misleading product information, we could face lawsuits or fines, harming our reputation and financial standing.
The deployment of artificial intelligence and robotics as a replacement to conventional brick and mortar stores may create social and ethical concerns that could indirectly affect use of our VenHub Smart Stores.
The deployment of autonomous systems in retail can lead to significant job displacement, as robots replace human workers in roles such as cashiers, restockers, and customer service representatives. This can result in public backlash and negative media coverage, especially in regions with already high unemployment rates. To mitigate these risks, the Company intends to address these concerns proactively by demonstrating commitment to workforce retraining programs or showing how automation can create new job opportunities in other areas.
Autonomous stores often utilize a variety of sensors and cameras to manage inventory, track purchases, and enhance customer experience. This raises concerns about privacy and the extent of surveillance. Consumers may be wary of being monitored so closely, and any misuse of data can lead to trust issues. Ensuring transparent communication about data use, implementing stringent data protection measures, and adhering to privacy laws are essential steps to mitigate these risks.
Robotic systems must be designed to be accessible to all customers, including those with disabilities. This includes physical accessibility to the store as well as the usability of automated systems. Failure to consider these factors can lead to exclusion and discrimination complaints, potentially resulting in legal consequences and harming the Company’s reputation. Moreover, the introduction of high-tech solutions in retail can widen the socio-economic divide. Those with less access to technology or the internet might find themselves at a disadvantage, unable to benefit from the conveniences offered by autonomous stores. In addition, the use of artificial intelligence in customer interactions and inventory management involves decisions on how AI algorithms are developed and the biases they may contain. There is a risk that AI systems might make decisions that are perceived as unfair or discriminatory. Addressing these concerns involves investing in ethical AI development practices, including transparency in AI decision processes and ongoing monitoring for biased outcomes.
Additionally, the use of AI technologies is subject to evolving laws and regulations that could impose new obligations on our operations. For instance, changes in laws governing data privacy, AI-driven decision-making, or cybersecurity could increase our compliance costs. Additionally, we may face regulatory scrutiny over the fairness, transparency, and accountability of our AI systems, especially if our algorithms are perceived to make biased or unfair decisions affecting customers.
Failure to ultimately engage end users could affect our potential to continue to grow the business.
Generally, our business strategy is to sell units to our customers who may then deploy the units as they see fit, so long as such deployment is within the standards set forth in the purchase agreements. Ultimately, acquiring end users will be driven by our customers’ ability to successfully deploy the units for their own business. Although we will continue to support marketing efforts alongside our customers, we cannot ensure adoption of our units and will not manage the operations of the units. Moreover, regardless of our efforts or the efforts of our customers, end user adoption is limited. We know that automated vending machines and kitchens have expanded market share with mixed success. We also know that despite the initial excitement regarding stores like Amazon Go, recent trends suggest that user adoption isn’t sufficient to continue operations.
We have designed and developed our robotic systems with the goal of reducing operating costs and greenhouse gases. Even if we successfully market our products and services to customers, the purchase, adoption and the use of the products may be materially and negatively impacted if our customers resist or delay the use and adoption of these new technology products and services. End users may resist or delay the adoption of our products and services for several reasons, including lack of confidence in autonomous and semi-autonomous delivery vehicles. If our customers resist or delay adoption of our automated smart store systems, our business, prospects, financial condition and operating results will be materially and adversely affected.
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Defects, glitches, or malfunctions in our products or the software that operates them, failure of our products to perform as expected, connectivity issues or operator errors may result in product recalls, lower than expected return on investment for customers and could cause significant safety concerns, each of which could adversely affect our results of operations, financial condition, and our reputation.
Our products incorporate sophisticated computer software. Complex software frequently contains errors, especially when first introduced. Our software may experience errors or performance problems in the future. If any part of our products’ hardware or software were to fail, the service mission could be compromised. Additionally, users may not use our products in accordance with safety protocols and training, which could increase the risk of failure. Any such occurrence could cause a delay in market acceptance of our products, damage to our reputation, product recalls, increased service and warranty costs, product liability claims and loss of revenue relating to such hardware or software defects.
We anticipate that as part of our ordinary course of business we may be subject to product liability claims alleging defects in the design or manufacture of our products. A product liability claim, regardless of our merit or eventual outcome, could result in significant legal defense costs and high punitive damage payments. Although we maintain product liability insurance, the coverage is subject to deductibles and limitations and may not be adequate to cover future claims. Additionally, we may be unable to maintain our existing product liability insurance in the future at satisfactory rates or adequate amounts.
Even if our products perform properly and are used as intended, if operators sustain any injuries while using our products, we could be exposed to liability and our results of operations, financial condition and our reputation may be adversely affected.
Our products contain complex technology and must be used as designed and intended in order to operate safely and effectively. While we expect to develop a training, customer service and maintenance and servicing infrastructure to ensure users are equipped to operate our products in a safe manner, we cannot be sure that the products will ultimately be used as designed and intended. In addition, we cannot be sure that we will be able to predict all the ways in which use or misuse of the products can lead to injury or damage to property, and our training resources may not be successful at preventing all incidents. If operators were to cause any injuries or damage to property while using our products, in a manner consistent with our training and instructions or otherwise, we could be exposed to liability and our results of operations, financial condition and our reputation may be adversely affected.
If we cannot protect, maintain and, if necessary, enforce our intellectual property rights, our ability to develop and commercialize products may be adversely impacted.
Our success, in large part, depends on our ability to protect and maintain the proprietary nature of our technology. We must prosecute and maintain our existing patents and obtain new patents. Some of our proprietary information may not be patentable, and there can be no assurance that others will not utilize similar or superior solutions to compete with us. We cannot guarantee that we will develop proprietary products that are patentable, and that, if issued, any patent will give us a competitive advantage or that such patent will not be challenged by third parties. The process of obtaining patents can be time consuming with no certainty of success, as a patent may not issue or may not have sufficient scope or strength to protect the intellectual property it was intended to protect. We cannot assure you that our means of protecting our proprietary rights will suffice or that others will not independently develop competitive technology or design around patents or other intellectual property rights issued to us. If any of our products or the technology underlying our products is covered by third-party patents or other intellectual property rights, we could be subject to various legal actions. Even if a patent is issued, it does not guarantee that it is valid or enforceable. Any patents that we or our licensors have obtained or obtain in the future may be challenged, invalidated or unenforceable. Pursuant to NRS 78.138(3), our Board of Directors has determined that initiating actions to protect our intellectual property, when necessary, is in the best interests of the corporation, despite the costs and time involved, as such actions are essential to protecting our business assets and competitive position.
We may be subject to claims of infringement of third-party intellectual property rights.
Our operating results may be adversely affected if third parties claim that our products infringed their patent, copyright, or other intellectual property rights. We cannot assure you that our products do not, or will not in the future, infringe patents held by others. Although there have been no allegations made to this effect, we cannot assure you that we will not receive such correspondence from third parties or competitors in the future. Such assertions could lead to expensive and unpredictable litigation, diverting the attention of management and technical personnel. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity, misappropriation, or other claims. Any such litigation could result in substantial costs and diversion of our resources. Moreover, any settlement of or adverse judgment resulting from such litigation could require us to obtain a license to continue to use the technology that is the subject of the claim, or otherwise restrict or prohibit our use of the technology. Any required licenses may not be available to us on acceptable terms, if at all. An unsuccessful result in such litigation could adversely affect our business, including injunctions, exclusion orders and royalty payments to third parties.
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Security breaches and other disruptions could compromise our proprietary information and expose us to liability, which would cause our business and reputation to suffer.
We rely on trade secrets, technical know-how and other unpatented proprietary information relating to our product development and manufacturing activities to provide us with competitive advantages. We protect this information by entering into confidentiality agreements with our employees, consultants, strategic partners and other third parties. We also design our computer systems and networks and implement various procedures to restrict unauthorized access to the dissemination of our proprietary information.
We face internal and external data security threats. For example, current, departing, or former employees or third parties could attempt to improperly use or access our computer systems and networks to copy, obtain or misappropriate our proprietary information or otherwise interrupt our business. Like others, we are also subject to significant system or network disruptions from numerous causes, including computer viruses and other cyber-attacks, facility access issues, new system implementations and energy blackouts.
Security breaches, computer malware, phishing, spoofing, and other cyber-attacks have become more prevalent and sophisticated in recent years. We do not believe that such attacks have caused us any material damage to date, but because the techniques used by computer hackers and others to access or sabotage networks constantly evolve and generally are not recognized until launched against a target, we may be unable to anticipate, counter or ameliorate all these techniques. As a result, our and our customers’ proprietary information may be misappropriated, and we cannot predict the impact of any future incident. Any loss of such information could harm our competitive position, result in a loss of customer confidence in the adequacy of our threat mitigation and detection processes and procedures, cause us to incur significant costs to remedy the damages caused by the incident and divert management and other resources. We routinely implement improvements to our network security safeguards, and we are devoting increasing resources to the security of our information technology systems. However, we cannot assure you that such system improvements will be sufficient to prevent or limit the damage from any future cyber-attack or network disruptions.
The costs related to cyber-attacks or other security threats or computer systems disruptions typically would not be fully insured or indemnified by others. As a result, the occurrence of any of the events described above could result in the loss of competitive advantages derived from our intellectual property. Moreover, these events may result in the diversion of the attention of management and critical information technology and other resources, or otherwise adversely affect our internal operations and reputation or degrade our financial results and stock price.
We may be subject to theft, loss, or misuse of personal data by or about our employees, customers or other third parties, which could increase our expenses, damage our reputation or result in legal or regulatory proceedings.
In the ordinary course of our business, we have access to sensitive, confidential, or personal data or information regarding our employees and others that are subject to privacy and security laws and regulations. Therefore, the theft, loss, or misuse of personal data collected, used, stored or transferred by us to run our business, or by our third-party service providers, including business process software applications providers and other vendors that have access to sensitive data, could result in damage to our reputation, disruption of our business activities, significantly increased business and security costs or costs related to defending legal claims.
We are also aware of certain media reports relating to the use of our automated systems as elements in law enforcement surveillance efforts. As a general policy, we do not share data with law enforcement, except in certain narrow circumstances where (1) we are required to share data when served with a warrant or subpoena or (2) there are insurance claims, active incident investigations, or acts of armed violence or theft attempts involving the Company’s personnel or property.
Global privacy legislation, enforcement, and policy activity in this area are rapidly expanding and creating a complex regulatory compliance environment. For example, the European Union has adopted the General Data Protection Regulation (“GDPR”), which requires companies to comply with rules regarding the handling of personal data, including its use, protection and the ability of persons whose data is stored to correct or delete such data about themselves. Failure to meet GDPR requirements could result in penalties of up to 4% of worldwide revenue. In addition, the interpretation and application of consumer and data protection laws in the U.S., Europe, and elsewhere are often uncertain and fluid and may be interpreted and applied in a manner that is inconsistent with our data practices. As a result, complying with these changing laws has caused, and could continue to cause, us to incur substantial costs, which could harm our business and the results of operations. Further, failure to comply with existing or new rules may result in significant penalties or orders to stop the alleged non-compliant activity. Finally, even our inadvertent failure to comply with federal, state or international privacy-related or data protection laws and regulations could result in audits, regulatory inquiries or proceedings against us by governmental entities or others.
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Our business plans require a significant amount of capital. Our future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders or contain terms unfavorable to us or our investors.
We expect our capital expenditures to remain significant in the foreseeable future as we continue to develop, improve, and commercialize our autonomous store systems. Although based on our current cash resources and management’s operating plan we believe we will have sufficient liquidity to fund our currently planned operations for the near term, our ability to sustain operations and implement our growth strategy will require raising additional capital.
Our actual capital needs will depend on a variety of factors, many of which are outside of our control. These include: the pace at which we can commercialize and scale our autonomous stores; the cost and timing of research and development activities; manufacturing and deployment expenses; customer demand; general economic conditions; and potential unanticipated costs such as accelerated product improvements, strategic alliances, or acquisitions. Because we have limited experience commercializing our autonomous stores on a large scale, we have little historical data on long-term demand, which makes our capital requirements inherently uncertain.
To meet these needs, we will likely be required to seek additional equity or debt financing. Such financing may not be available in a timely manner, on acceptable terms, or at all. If available, additional equity or equity-linked securities could dilute existing stockholders, while debt financing could increase our leverage and impose restrictive covenants. If we are unable to raise sufficient funds when needed, we may be forced to significantly reduce our spending, delay or cancel planned activities, alter our growth strategy, or even curtail or discontinue operations.
We will be required to raise additional capital in order to develop our technology and scale our commercial delivery operations. However, we may be unable to raise additional capital needed to fund and grow our business.
We will need additional capital to develop our next generation of autonomous smart stores and scale our operations. We will not be able to continue product development and our autonomous smart store operations if we cannot raise additional debt and/or equity financing.
We may not be able to increase our capital resources by engaging in additional debt or equity financings. Even if we complete such financings, they may result in dilution to our existing investors and include additional rights or terms that may be unfavorable to our existing investor base. These circumstances could materially and adversely affect our financial results and impair our ability to achieve our business objectives. Additionally, we may be required to accept terms that restrict our ability to incur additional indebtedness or take other actions (including terms that require us to maintain specified liquidity or other ratios) that would otherwise be in the best interests of our stockholders.
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by domestic and international financial institutions or transactional counterparties, could adversely affect our business, financial condition and results of operations.
Actual events involving reduced or limited liquidity, defaults, non-performance or other adverse developments that affect domestic and international financial institutions or other companies in the financial services industry or the financial services industry generally or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation as receiver. Although we currently do not have any debt obligations, future financings may require that we engage with similar institutions, exposing ourselves to greater risk. Furthermore, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfil our other obligations or result in breaches of our financial and/or contractual obligations. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations, financial condition and results of operations.
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Variations in local permitting and zoning rules may delay or even prevent roll out of VenHub Smartstores in certain locales that could affect our overall footprint.
VenHub and its customers may face challenges in obtaining local permits and complying with zoning ordinances, which could adversely affect the deployment and operation of Smart Stores. Navigating the complex and varied permitting processes and zoning laws across different jurisdictions can lead to delays, additional costs, or the inability to operate in certain areas. These regulatory hurdles could impede our expansion efforts, disrupt our business plans, and negatively impact our financial performance. Moreover, although we have designed and built our first stores with California and Nevada regulations in mind, varied or additional requirements may require additional efforts in design and build of VenHub Smartstores that may slow production and delivery of VenHub Smartstores. Furthermore, any changes in local regulations or enforcement practices could further complicate compliance efforts and introduce additional operational risks.
Our business depends on discretionary spending patterns in the areas where our customers deploy the autonomous smart stores, as well as in the broader economy. Economic downturns or other events (like coronavirus variants or similar widespread health/pandemic outbreaks) impacting the United States and global economy could materially adversely affect our results of operations.
Purchases at autonomous smart stores are discretionary for consumers, and therefore, we are susceptible to changes in discretionary spending patterns or economic slowdowns in the geographic areas where these stores on our partners’ platforms operate, and in the economy at large. Discretionary consumer spending can be impacted by general economic conditions, unemployment, consumer debt, inflation, rising gasoline prices, interest rates, consumer confidence, and other macroeconomic factors. We believe that consumers are generally more willing to make discretionary purchases, including shopping at autonomous smart stores during favorable economic conditions. Disruptions in the overall economy (including disruptions due to coronavirus (“COVID-19”) or similar health/pandemic events), including high unemployment, inflation, rising gasoline prices, financial market volatility and unpredictability, and the related reduction in consumer confidence, could negatively affect sales throughout the autonomous smart store industry, including transactions on our partners’ platforms. Additionally, operators of these autonomous stores may be negatively impacted by general economic conditions, supply chain issues, labor shortages, inflation, or other macroeconomic factors, which could negatively impact their ability to fulfil customer needs. There is also a risk that if uncertain economic conditions persist for an extended period of time or worsen, consumers might make long-lasting changes to their discretionary spending behavior, including shopping less frequently at these autonomous stores. The ability of the U.S. economy to handle this uncertainty is likely to be affected by many national and international factors that are beyond our control. These factors, including national, regional and local politics and economic conditions, continued impact of the COVID-19 pandemic, disposable consumer income and consumer confidence, also affect discretionary consumer spending. If any of these factors cause autonomous stores to cease operations or cease using our partners’ platforms, it could also significantly harm our financial results, for the reasons set forth elsewhere in these risk factors. Continued uncertainty in or a worsening of the economy, generally or in a number of our markets, and consumers’ reactions to these trends could adversely affect our business and cause us to, among other things, reduce the number and frequency of new market openings or cease operations in existing markets.
Moreover, inflation also increases the cost of labor and materials needed to build and operate autonomous systems. For example, we have observed an increase in the cost of labor for managing and maintaining autonomous systems in the field over the past year. However, over the longer time horizon, technological improvements continue to reduce the cost of our key components such as sensors, batteries, and computers. While the unit cost of labor for operating these systems will increase over time with inflation, autonomous technology leverages labor more efficiently than manual retail operations. As such, we believe labor inflation increases the cost of manual retail operations more than it increases the cost of operating autonomous systems. However, we believe improvements in automation will continue to reduce the rate of labor usage.
Our autonomous smart stores are disruptive to the traditional convenience store, retail stores, pharmacies, lockers, and any and all distribution or sales outlets and vending industries, and important assumptions about the market demand, pricing, adoption rates and sales cycle for our current and future stores may be inaccurate.
The market demand for and adoption of our autonomous stores is unproven, and important assumptions about the characteristics of targeted markets, pricing and sales cycles may be inaccurate. Although we have engaged in ongoing dialogue with potential customers, we have no binding commitments to purchase products and services.
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Existing or new regulatory or safety standards, or resistance by customer employees and labor unions, all of which are outside of our control, could cause delays or otherwise impair adoption of these new technologies, which will adversely affect our growth, financial position, and prospects. Given the evolving nature of the markets in which we operate, it is difficult to predict customer demand or adoption rates for our products or the future growth of the markets we expect to target. If one or more of the targeted markets experience a shift in customer or prospective customer demand, our products may not compete as effectively, if at all, and they may not be fully developed into commercial products. As a result, any projections necessarily reflect various estimates and assumptions that may not prove accurate and these projections could differ materially from actual results because of the risks included in this “Risk Factors” section, among others. If demand does not develop as expected or if we cannot accurately forecast pricing, adoption rates and sales cycle for our products, our business, results of operations and financial condition will be adversely affected.
Our systems, products, technologies and services and related equipment may have shorter useful lives than we anticipate.
Our growth strategy depends in part on developing systems, products, technologies and services. These reusable systems, products, technologies and services and systems will have a limited useful life. While we intend to design our products and technologies for a certain lifespan, which corresponds to a number of cycles, there can be no assurance as to the actual operational life of a product or that the operational life of individual components will be consistent with its design life. A number of factors will impact the useful lives of our products and systems, including, among other things, the quality of their design and construction, the durability of their component parts and availability of any replacement components and the occurrence of any anomaly or series of anomalies or other risks affecting the technology during launch and in orbit. In addition, any improvements in technology may make our existing products, designs or any component of our products obsolete prior to the end of their lifecycle. If our systems, products, technologies and services and related equipment have shorter useful lives than we currently anticipate, this may lead to delays in increasing the rate of our follow on work and new business, which would have a material adverse effect on our business, financial condition and results of operations. In addition, we are continually learning, and as our engineering and manufacturing expertise and efficiency increases, we aim to leverage this learning to be able to manufacture our products and equipment using less of our currently installed equipment, which could render our existing inventory obsolete.
Any acquisitions, partnerships or joint ventures that we enter into could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations.
From time to time, we may evaluate potential strategic acquisitions of businesses, including partnerships or joint ventures with third parties. We may not be successful in identifying acquisition, partnership or joint venture candidates. In addition, we may not be able to continue the operational success of such businesses or successfully finance or integrate any businesses that we acquire or with which we form a partnership or joint venture. We may have potential write-offs of acquired assets and/or an impairment of any goodwill recorded as a result of acquisitions. Furthermore, the integration of any acquisition may divert management’s time and resources from our core business and disrupt our operations or may result in conflicts with our business. Any acquisition, partnership or joint venture may not be successful, may reduce our cash reserves, may negatively affect our earnings and financial performance and, to the extent financed with the proceeds of debt, may increase our indebtedness. Further, depending on market conditions, investor perceptions of us and other factors, we might not be able to obtain financing on acceptable terms, or at all, to implement any such transaction. We cannot ensure that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business, financial condition, and results of operations.
Changes to the Company’s business segments and operations could create additional costs and complications that could burden the growth of the Company.
As VenHub considers expanding its business segments by operating VenHub-owned stores and developing relationships with white label or other enterprise operations, there are inherent risks associated with such changes. Transitioning from a sales-focused model to operating VenHub-owned stores could require substantial operational adjustments, including resource allocation, management restructuring, and the development of new strategic competencies. Additionally, aligning with white label or enterprise partners may introduce complexities in integration, quality control, and brand consistency. These shifts in business lines could be disruptive, potentially lead to operational challenges, inefficiencies, and increased expenditures. Any inability to effectively manage these transitions could adversely impact VenHub’s business operations, financial performance, and market positioning.
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As part of growing our business, we may make acquisitions. If we fail to successfully select, execute or integrate our acquisitions, then our business, results of operations and financial condition could be materially adversely affected, and our stock price could decline.
Failure to successfully identify, complete, manage and integrate acquisitions could materially and adversely affect our business, financial condition and results of operations and could cause our stock price to decline.
From time to time, we may undertake acquisitions to add new products and technologies, acquire talent, gain new sales channels or enter into new markets or sales territories. In addition to possible stockholder approval, we may need approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, and a failure to obtain such approvals and licenses could result in delays and increased costs and may disrupt our business strategy. Furthermore, acquisitions and the subsequent integration of new assets, businesses, key personnel, customers, vendors and suppliers require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our operations. Acquired assets or businesses may not generate the financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
The deployment of artificial intelligence and robotics as a replacement to conventional brick and mortar stores may create social and ethical concerns that could indirectly affect use of our VenHub Smart Stores.
The deployment of autonomous systems in retail can lead to significant job displacement, as robots replace human workers in roles such as cashiers, restockers, and customer service representatives. This can result in public backlash and negative media coverage, especially in regions with already high unemployment rates. To mitigate these risks, the Company intends to address these concerns proactively by demonstrating commitment to workforce retraining programs or showing how automation can create new job opportunities in other areas.
Autonomous stores often utilize a variety of sensors and cameras to manage inventory, track purchases, and enhance customer experience. This raises concerns about privacy and the extent of surveillance. Consumers may be wary of being monitored so closely, and any misuse of data can lead to trust issues. Ensuring transparent communication about data use, implementing stringent data protection measures, and adhering to privacy laws are essential steps to mitigate these risks.
Robotic systems must be designed to be accessible to all customers, including those with disabilities. This includes physical accessibility to the store as well as the usability of automated systems. Failure to consider these factors can lead to exclusion and discrimination complaints, potentially resulting in legal consequences and harming the Company’s reputation. Moreover, the introduction of high-tech solutions in retail can widen the socio-economic divide. Those with less access to technology or the internet might find themselves at a disadvantage, unable to benefit from the conveniences offered by autonomous stores. In addition, the use of artificial intelligence in customer interactions and inventory management involves decisions on how AI algorithms are developed and the biases they may contain. There is a risk that AI systems might make decisions that are perceived as unfair or discriminatory. Addressing these concerns involves investing in ethical AI development practices, including transparency in AI decision processes and ongoing monitoring for biased outcomes. In all such cases, our management team will have broad discretion in making strategic decisions to execute their growth plans, and there can be no assurance that our management’s decisions will result in successful achievement of our business objectives or will not have unintended consequences that negatively impact our growth prospects.
Our management team will have broad discretion in making strategic decisions to execute their growth plans, and there can be no assurance that our management’s decisions will result in successful achievement of our business objectives or will not have unintended consequences that negatively impact our growth prospects.
Our management team will have broad discretion in making strategic decisions to execute their growth plans and may devote time and company resources to new or expanded solution offerings, potential acquisitions, prospective customers or other initiatives that do not necessarily improve our operating results or contribute to our growth. Management’s failure to make strategic decisions that are ultimately accretive to our growth may result in unfavorable returns and uncertainty about our prospects, each of which could cause the price of the common stock to decline.
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Our controlling stockholders have significant influence over the Company.
Our Chief Executive Officer, Shahan Ohanessian, along with his wife, Shoushana Ohanessian, who sits as Chairwoman of the Board of Directors, holds, through their limited liability company SSO, LLC, 100,000 shares of Series A Preferred Stock, which, collectively and in their entirety, have voting rights equal to exactly 2,000 votes per each share of Series A Preferred Stock, for a total of 200,000,000 votes. Immediately prior to commencing trading on Nasdaq, all of the Series A Preferred Stock will be converted into 37,935,029 shares of common stock and simultaneously we will issue 100,000 shares of Series C Preferred Stock to SSO, LLC which will have voting rights of 1,000 per each shares. As a result, Mr. and Mrs. Ohanessian will collectively over 94% voting rights on all matters presented to shareholders, limiting shareholders’ ability to affect decision making if the Offering is fully subscribed. In addition, we have 675,015 shares of Series B Preferred Stock that have no voting rights, but that do convert into shares of common stock at a 1:1 ratio. Upon the effectiveness of this Registration Statement, the Series A Preferred Stock and Series B Preferred Stock will convert into shares of common stock at a rate as described in the designations thereof.
Our executive employment agreements include significant cash bonus and equity award provisions, which could increase our expenses or result in substantial dilution to our stockholders.
In August 2025, we entered into new employment agreements with our Chief Executive Officer and our President, effective upon the effectiveness of this registration statement. These agreements provide for base salaries, potential cash bonuses, and equity awards tied to geographic expansion and performance milestones. While the aggregate potential annual cash bonuses under these agreements could total up to $3.2 million, the payment of such bonuses is subject to the availability of surplus cash, approval of our Board of Directors, and achievement of specified conditions. Accordingly, there can be no assurance as to the timing or amount of any such payments; however, if paid, these bonuses could materially increase our operating expenses and impact our liquidity in future periods.
The agreements also provide for equity-based awards that could result in the issuance of a significant number of additional shares if geographic expansion or performance milestones are achieved. For example, the agreements contemplate issuances of up to 1,000,000 shares per U.S. state and 2,000,000 shares per country in which we open or operate Smart Stores, as well as 1,000,000 shares for every 30 Smart Stores launched or sold and 2,000,000 shares upon the listing of our common stock on a national securities exchange. If these milestones are met, the resulting issuances could substantially dilute the ownership interests of our existing stockholders.
Together, these cash and equity obligations could adversely affect our liquidity, results of operations, and the value of our common stock.
Our incorporation in Nevada may have adverse effects on stockholder rights.
Our incorporation in Nevada subjects stockholder rights to the Nevada Revised Statutes, which may materially affect such rights, increase legal uncertainty, and adversely impact market perceptions. Upon reincorporation, the rights of our stockholders and the fiduciary duties of our directors and officers will be governed by the Nevada Revised Statutes (“NRS”), which differ in certain material respects from the Delaware General Corporation Law (“DGCL”). The NRS provides broader statutory protections for directors and officers and lacks the extensive body of judicial precedents available in Delaware, potentially increasing uncertainty in the interpretation and enforcement of corporate law and the resolution of stockholder disputes.
Recent legislative developments may further complicate the corporate-law landscape. In March 2025, Delaware enacted significant amendments to the DGCL relating to controller transactions, definitions of “controlling stockholder” and “disinterested director,” and books-and-records inspection rights. Nevada and Texas have likewise adopted amendments aimed at enhancing their attractiveness as incorporation jurisdictions. Changes in any of these regimes may affect how courts evaluate our governance structures or stockholder claims, including the enforceability of charter and bylaw provisions.
Moreover, proxy advisory firms have increased scrutiny of reincorporations in 2025 and may issue adverse voting recommendations. Negative sentiment among institutional investors or proxy advisors toward Nevada-domiciled companies could negatively affect our corporate governance scores or the trading market for our common stock.
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We may also face additional litigation risks and costs related to our forum-selection provisions in our Amended and Restated Bylaws in connection with the reincorporation. Under Nevada Revised Statutes § 78.747, we may adopt exclusive forum provisions for internal corporate claims. While Nevada law expressly permits such provisions, they may still be subject to legal challenges, potentially resulting in parallel proceedings, increased costs, or unenforceable provisions. (See “Description of Securities—Certain Provisions of Nevada Law and of Our Governing Documents.”)
Finally, the reincorporation is subject to obtaining requisite corporate approvals and effecting necessary filings. Any delay or failure to complete the reincorporation on our anticipated timeline could result in increased expenses and may divert the attention of management.
We and any manufacturing partners and suppliers may rely on complex machinery for production, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.
We, any third-party manufacturing partners and suppliers may rely on complex machinery for the production, assembly, repair and maintenance of our robotic systems, which will involve a significant degree of uncertainty and risk in terms of operational performance and costs. Our operational facilities, and those of any third-party manufacturing partners and suppliers, consist or are expected to consist of large-scale machinery combining many components. These components may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of these components may significantly affect the intended operational efficiency. Operational performance and costs can be difficult to predict and are often influenced by factors outside of our or any third-party manufacturing partners’ and suppliers’ control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, fire including wild fires, seismic activity and natural disasters. Should operational risks materialize, they may result in the personal injury to or death of workers, the loss of production equipment, damage to production facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on our business, prospects, financial condition and operating results.
We may be unable to adequately control the costs associated with our operations.
We will require significant capital to develop and grow our business, including developing and producing our commercial robotic systems and other products, establishing or expanding design, research and development, production, operations and maintenance and service facilities and building our brand and partnerships. We have incurred and expect to continue incurring significant expenses which will impact our profitability, including research and development expenses, procurement costs, business development, operation and integration expenses as we build and deploy our autonomous store systems, and general and administrative expenses as we scale our operations, identify and commit resources to investigate new areas of demand and incur costs as a public company. In addition, we may incur significant costs servicing, maintaining and refurbishing our robots, and we expect that the cost to repair and service our robots will increase over time as they age. Our ability to become profitable in the future will not only depend on our ability to complete the design and development of our autonomous store systems to meet projected performance metrics, identify and investigate new areas of demand and successfully market our autonomous store services, but also to sell, whether outright or through subscriptions, our systems at prices needed to achieve our expected margins and control our costs, including the risks and costs associated with operating, maintaining and financing our autonomous store systems. If we are unable to efficiently design, develop, manufacture, market, deploy, distribute and service our robots in a cost-effective manner, our margins, profitability and prospects would be materially and adversely affected.
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Our ability to manufacture products of sufficient quality on schedule in the future is uncertain, and delays in the design, production and launch of our products could harm our business, prospects, financial condition and operating results.
Our future business depends in large part on our ability to execute our plans to design, develop, manufacture, market, deploy and service our products. We have designed our units to be assembled on site with minimal additional manufacturing requirements. However, we have yet to engage in full scale delivery of units. We may underestimate the costs and labor associated with both pre-assembly production and the delivery of our systems on a large scale.
We also plan to retain third-party vendors and service providers to engineer, design and test some of the critical systems and components of our units. While this allows us to draw from such third parties’ industry knowledge and expertise, there can be no assurance such systems and components will be successfully developed to our specifications or delivered in a timely manner to meet our program timing requirements.
Laws, regulations and other legislative efforts related to climate change, environmental concerns and health and safety could result in increased operating costs, reduced demand for our products and services or the loss of future business.
Concerns over environmental pollution and climate change have produced significant legislative and regulatory efforts on a global basis, and we believe this will continue both in scope and in the number of countries participating. These changes could directly increase the cost of energy, which may have an effect on the way we manufacture or utilize energy in our autonomous smart stores. In addition, any new regulations or laws in the environmental area might increase the cost of raw materials or key components we use in our autonomous smart stores. Environmental regulations may require us to reduce product energy usage and to participate in compulsory recovery and recycling of our products or components. We are unable to predict how any future changes will impact us and if such impacts will be material to our business.
Further, climate change laws, environmental regulations, and other similar measures may have an effect on the operating activities of our customers, which may, in turn, reduce the demand for our products and services. To the extent increasing concentrations of greenhouse gases in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climatic events, such events could have a material adverse effect on the Company and potentially subject the Company to further regulation.
We may become subject to new or changing governmental regulations relating to the design, manufacturing, marketing, distribution, servicing or use of our products, including as a result of climate change, and a failure to comply with such regulations could lead to withdrawal or recall of our products from the market, delay our projected revenues, increase cost or make our business unviable if we are unable to modify our products to comply.
Autonomous and robotic smart stores operate at the intersection of multiple regulatory environments, including retail, consumer safety, data protection, and advanced technologies involving robotics and artificial intelligence. Each jurisdiction may have distinct and possibly conflicting requirements, making compliance complex and burdensome. For example, specific licenses might be required to operate robotic equipment in public spaces, or there might be stringent regulations governing the sale of goods through automated systems or the collection of personal customer data. These conflicting regulatory schemes may limit our ability to provide the most sophisticated products and slow development for future offerings. Our initial model for deployment is to sell units and SaaS to our customers.
We do not, currently, intend to operate the autonomous smart stores, with the exception of several flagship locations, along with any other stores that we may use to seed market locations, for R&D purposes, or as otherwise requested by local jurisdictions or others. The burden of regulatory compliance will be eased by shifting liabilities to customers. However, this could result in fewer sales if we are unable to provide products that are not ultimately compliant across multiple jurisdictions and multiple layers of regulations.
We may become subject to new or changing international, federal, state and local regulations, including laws relating to the design, manufacturing, marketing, distribution, servicing or use of our products. Such laws and regulations may require us to pause sales and modify our products, which could result in a material adverse effect on our revenues and financial condition. Such laws and regulations can also give rise to liability such as fines and penalties, property damage, bodily injury and cleanup costs. Capital and operating expenses needed to comply with laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production or a cessation of our operations. Any failure to comply with such laws or regulations could lead to the withdrawal or recall of our products from the market.
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Climate change laws and environmental regulations could result in increased operating costs and reduced demand for our services.
Concerns over environmental pollution and climate change have produced significant legislative and regulatory efforts on a global basis, and we believe this will continue both in scope and in the number of countries participating. These changes could directly increase the cost of energy, which may have an effect on the way we operate our autonomous smart stores or utilize energy to deliver our services. In addition, any new regulations or laws in the environmental area might increase the cost of raw materials or key components we use in our autonomous smart stores. Environmental regulations may require us to reduce product energy usage and to participate in compulsory recovery and recycling of components from our autonomous smart stores. We are unable to predict how any future changes will impact us and if such impacts will be material to our business.
Further, climate change laws, environmental regulations and other similar measures may have an effect on the operating activities of our customers, which may, in turn, reduce the demand for our products and services. To the extent increasing concentrations of greenhouse gasses in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climatic events, such events could have a material adverse effect on the Company and potentially subject the Company to further regulation.
We are subject to cybersecurity risks to our operational systems, security systems, infrastructure, integrated software in our products and data processed by us or third-party vendors.
Our business and operations involve the collection, storage, processing and transmission of personal data and certain other sensitive and proprietary data of collaborators, customers, and others. Additionally, we maintain sensitive and proprietary information relating to our business, such as our own proprietary information and personal data relating to our employees. An increasing number of organizations have disclosed breaches of their information security systems and other information security incidents, some of which have involved sophisticated and highly targeted attacks. We may be a target for attacks by state-sponsored actors and others designed to disrupt our operations or to attempt to gain access to our systems or data that is processed or maintained in our business. The ongoing effects of the COVID-19 pandemic have increased security risks due to personnel working remotely.
We are at risk for interruptions, outages and breaches of our: (a) operational systems, including business, financial, accounting, product development, data processing or production processes, owned by us or our third-party vendors or suppliers; (b) facility security systems, owned by us or our third-party vendors or suppliers; (c) transmission control modules or other in-product technology, owned by us or our third-party vendors or suppliers; (d) the integrated software in our autonomous smart stores; or (e) customer data that we processes or that our third-party vendors or suppliers process on our behalf. Because techniques used to obtain unauthorized access to or to sabotage information systems change frequently and may not be known until launched against a target, we may be unable to anticipate or prevent these attacks, react in a timely manner, or implement adequate preventive measures, and may face delays in our detection or remediation of, or other responses to, security breaches and other privacy-and security-related incidents. Such incidents could: materially disrupt our operational systems; result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information; compromise certain information of customers, employees, suppliers or others; jeopardize the security of our facilities or affect the performance of in-product technology and the integrated software in our autonomous smart stores. Certain efforts may be state-sponsored or supported by significant financial and technological resources, making them even more difficult to detect, remediate, and otherwise respond to.
We plan to include product services and functionality that utilize data connectivity to monitor performance and timely capture opportunities to enhance performance and for safety and cost-saving preventative maintenance. The availability and effectiveness of our services depend on the continued operation of information technology and communications systems. Our systems will be vulnerable to damage or interruption from, among others, physical theft, fire, terrorist attacks, natural disasters, power loss, war, telecommunications failures, viruses, denial or degradation of service attacks, ransomware, social engineering schemes, insider theft or misuse or other attempts to harm our systems.
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We intend to use our product services and functionality to log information about each unit’s use in order to aid us in diagnostics and servicing. Our customers may object to the use of this data, which may require us to implement new or modified data handling policies and mechanisms, increase our unit maintenance costs and costs associated with data processing and handling, and harm our business prospects.
Although we are in the process of implementing certain systems and processes that are designed to protect our data and systems within our control, prevent data loss and prevent other security breaches and security incidents, these security measures cannot guarantee security. The IT and infrastructure used in our business may be vulnerable to cyberattacks or security breaches, and third parties may be able to access data, including personal data and other sensitive and proprietary data of us and our customers, collaborators and partners, our employees’ personal data or other sensitive and proprietary data, accessible through those systems. Employee error, malfeasance or other errors in the storage, use or transmission of any of these types of data could result in an actual or perceived privacy or security breach or other security incident.
Moreover, there are inherent risks associated with developing, improving, expanding and updating our current systems, such as the disruption of our data management, procurement, production execution, finance, supply chain and sales and service processes. These risks may affect our ability to manage our data and inventory, procure parts or supplies or manufacture, deploy, and service our autonomous smart stores, adequately protect our intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. We cannot be sure that these systems upon which we rely, including those of our third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If we do not successfully implement, maintain or expand these systems as planned, our operations may be disrupted, our ability to accurately and timely report our financial results could be impaired, and deficiencies may arise in our internal control over financial reporting, which may impact our ability to certify our financial results. Moreover, our proprietary information or intellectual property could be compromised or misappropriated, and our reputation may be adversely affected. If these systems do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.
Any actual or perceived security breach or security incident, or any systems outages or other disruption to systems used in our business, could interrupt our operations, result in loss or improper access to, or acquisition or disclosure of, data or a loss of intellectual property protection, harm our reputation and competitive position, reduce demand for our products, damage our relationships with customers, partners, collaborators, or others or result in claims, regulatory investigations, and proceedings and significant legal, regulatory and financial exposure, and any such incidents or any perception that our security measures are inadequate could lead to loss of confidence in us and harm to our reputation, any of which could adversely affect our business, financial condition and results of operations. Any actual or perceived breach of privacy or security or other security incident impacting any entities with which we share or disclose data (including, for example, our third-party technology providers) could have similar effects. We expect to incur significant costs in an effort to detect and prevent privacy and security breaches and other privacy-and security-related incidents and may face increased costs and requirements to expend substantial resources in the event of an actual or perceived privacy or security breach or other incident.
We are subject to evolving laws, regulations, standards, policies and contractual obligations related to data privacy and security laws and regulations, and our actual or perceived failure to comply with such obligations could harm our reputation, subject us to significant fines and liability or otherwise adversely affect our business, prospects, financial condition and operating results.
We are subject to or affected by a number of federal, state and local laws and regulations, as well as contractual obligations and industry standards, that impose certain obligations and restrictions with respect to data privacy and security, and govern our collection, storage, retention, protection, use, processing, transmission, sharing and disclosure of personal information, including that of our employees, customers and others. Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and others of security breaches involving certain types of data. Such laws may be inconsistent or may change, or additional laws may be adopted. In addition, our agreements with certain customers may require us to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity, result in penalties or fines, result in litigation, may cause our customers to lose confidence in the effectiveness of our security measures and require us to expend significant capital and other resources to respond to and/or alleviate problems caused by the actual or perceived security breach.
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The global data protection landscape is rapidly evolving, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. We may not be able to monitor and react to all developments in a timely manner. For example, California adopted the California Consumer Privacy Act (“CCPA”), which became effective in January 2020. The CCPA establishes a privacy framework for covered businesses, including an expansive definition of personal information and data privacy rights for California residents. The CCPA includes a framework with potentially severe statutory damages and private rights of action. The CCPA requires covered businesses to provide new disclosures to California residents, provide them with new ways to opt-out of certain disclosures of personal information, and allow for a new cause of action for data breaches. Additionally, a new privacy law, the California Privacy Rights Act (“CPRA”), was approved by California voters in the November 3, 2020 election. The CPRA creates obligations relating to consumer data beginning on January 1, 2022, with implementing regulations expected on or before July 1, 2022, and enforcement beginning July 1, 2023. The CPRA significantly modifies the CCPA, potentially resulting in further uncertainty. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States. Other states have begun to propose and enact similar laws. For example, Virginia has enacted the Virginia Consumer Data Protection Act, which provides for obligations similar to the CCPA, and which will go into effect January 1, 2023. As we expand our operations, the CCPA, CPRA and other laws and regulations relating to privacy and data security may increase our compliance costs and potential liability. Compliance with any applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms to comply with such laws and regulations.
Additionally, as our international presence expands, we may become subject to or face increasing obligations under laws and regulations in countries outside the United States, many of which, such as the European Union’s General Data Protection Regulation (“GDPR”) and national laws supplementing the GDPR, as well as legislation substantially implementing the GDPR in the United Kingdom, are significantly more stringent than those currently enforced in the United States. The GDPR requires companies to meet stringent requirements regarding the handling of personal data of individuals located in the European Economic Area (“EEA”). The GDPR also includes significant penalties for noncompliance, which may result in monetary penalties up to the higher of €20 million or 4% of a group’s worldwide turnover for the preceding financial year for the most serious violations. The United Kingdom’s version of the GDPR, the UK GDPR, which it maintains along with its Data Protection Act (collectively, the “UK GDPR”), also provides for substantial penalties that, for the most serious violations, can go up to the greater of £17.5 million or 4% of a group’s worldwide turnover for the preceding financial year. Many other jurisdictions globally are considering or have enacted legislation providing for local storage of data or otherwise imposing privacy, data protection and data security obligations in connection with the collection, use and other processing of personal data.
We publish privacy policies and other documentation regarding our collection, processing, use and disclosure of personal information and/or other confidential information. Although we endeavor to comply with our published policies and other documentation, we may at times fail to do so or may be perceived to have failed to do so. Moreover, despite our efforts, we may not be successful in achieving compliance, including if our employees, contractors, service providers or vendors fail to comply with our published policies and documentation.
Such failures can subject us to potential action by governmental or regulatory authorities if they are found to be deceptive, unfair or misrepresentative of our actual practices. We are also aware of certain media reports relating to the use of our robots as elements in law enforcement surveillance efforts. As a general policy, we do not share data with law enforcement, except in certain narrow circumstances where (1) we are required to share data when served with a warrant or subpoena or (2) there are insurance claims, active incident investigations or acts of armed violence or theft attempts involving our personnel or property. Public perception of our involvement in such surveillance activities could harm our reputation, and consequently, our business prospects and financial condition. Any actual or perceived inability of us to adequately address privacy and security concerns or comply with applicable laws, rules and regulations relating to privacy, data protection or data security or applicable privacy notices, could lead to investigations, claims and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties and other liabilities. Any such claims or other proceedings could be expensive and time-consuming to defend and could result in adverse publicity. Any of the foregoing may have an adverse effect on our business, prospects, results of operations and financial condition.
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We are subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations. We can face criminal liability and other serious consequences for violations, which can harm our business, prospects, financial condition and operating results.
We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, and other anti-corruption, anti-bribery and anti-money laundering laws in countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, business partners, third-party intermediaries, representatives and agents from authorizing, promising, offering or providing, directly or indirectly, improper payments or anything else of value to government officials, political candidates, political parties or commercial partners for the purpose of obtaining or retaining business or securing an improper business advantage.
We sometimes leverage third parties to conduct our business abroad, and our third-party business partners, representatives and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of our employees or these third parties, even if we do not explicitly authorize or have actual knowledge of such activities. The FCPA and other applicable laws and regulations also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. While we have policies and procedures to address compliance with such laws, there can be no assurance that all of our employees, business partners, third-party intermediaries, representatives and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. Our exposure to violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions.
Any violations of the laws and regulations described above may result in whistleblower complaints, adverse media coverage, investigations, substantial civil and criminal fines and penalties, damages, settlements, prosecution, enforcement actions, imprisonment, the loss of export or import privileges, suspension or debarment from government contracts, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences, any of which could adversely affect our business, prospects, financial condition and operating results. In addition, responding to any investigation or action will likely result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.
Being a public company can be administratively burdensome and will significantly increase our legal and financial compliance costs.
In the event that we are successful in our “going public” strategy, as a public reporting company, we will be subject to the information and reporting requirements of the Securities Act, the Exchange Act and other federal securities laws, rules and regulations related thereto, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). In addition, the listing requirements of any national securities exchange or other exchange and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will significantly increase our legal and financial compliance costs and will make some activities more time-consuming and costly. Among other things, we are required to:
| ● | maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board; |
| ● | maintain policies relating to disclosure controls and procedures; |
| ● | prepare and distribute periodic reports in compliance with our obligations under federal securities laws; |
| ● | institute a more comprehensive compliance function, including with respect to corporate governance; and |
| ● | involve, to a greater degree, our outside legal counsel and accountants in the above activities. |
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The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders is expensive and much greater than that of a privately-held company, and compliance with these rules and regulations will require us to hire additional financial reporting, internal controls and other finance personnel, and will involve a material increase in regulatory, legal and accounting expenses and the attention of our board of directors and management. In addition, being a public company makes it more expensive for us to obtain director and officer liability insurance. In the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage. These factors could also make it more difficult for us to attract and retain qualified executives and members of our board of directors.
Although the JOBS Act may for a limited period of time somewhat lessen the cost of complying with these additional regulatory and other requirements, we nonetheless expect a substantial increase in legal, accounting, insurance and certain other expenses in the future, which will negatively impact our business, results of operations and financial condition.
Our management as a group has limited experience in operating a publicly traded company.
Our management team may not successfully or effectively manage operating as a public company subject to significant regulatory oversight and reporting obligations under U.S. securities laws. Our executive officers as a group have limited experience in the management of a publicly traded company. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of our company. We may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies. Any failure by us to effectively and efficiently meet our obligations as a publicly traded company could have a material adverse effect on our business, prospects, financial condition and operating results and/or result in legal liability or other negative consequences.
Our Significant Executive Cash Compensation Obligations May Adversely Affect Our Liquidity and Operational Flexibility
Under our executive employment agreements, we are obligated to pay high base salaries, guaranteed cash bonuses, expense allowances, and severance benefits. These commitments include guaranteed annual cash bonuses totaling over $3.2 million and significant severance entitlements. These substantial cash obligations may adversely affect our ability to allocate capital for operating activities, research and development, or growth initiatives. If our revenues fail to meet projections or we are unable to secure additional financing, our cash obligations to executives could strain our financial condition and limit our operational flexibility.
General Risk Factors
We may face risks related to securities litigation that could result in significant legal expenses and settlement or damage awards.
We may in the future become subject to claims and litigation alleging violations of the securities laws or other related claims, which could harm our business and require us to incur significant costs. Significant litigation costs could impact our ability to comply with certain financial covenants under our credit agreement. Under Nevada law (NRS 78.7502), we are permitted to, and our bylaws require us, to indemnify our current and former directors and officers who are named as defendants in these types of lawsuits to the fullest extent permitted by Nevada law, subject to certain limitations. Regardless of the outcome, litigation may require significant attention from management and could result in significant legal expenses, settlement costs or damage awards that could have a material impact on our business, results of operation and financial condition.
We may be significantly impacted by pandemics, outbreaks of other contagious diseases and other catastrophic events.
The extent to which any catastrophic event affects our business and financial results will depend on future developments, including the duration of such event and the global response to it, its impact on capital and financial markets, its impact on global supply chains, and whether the impacts may result in temporary or permanent changes in consumer behavior among others, which are highly uncertain and cannot be predicted.
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In addition, we cannot predict the impact any future pandemic, outbreak of other contagious diseases or other catastrophic events will have on our business partners and third-party merchants and suppliers, and we may be adversely impacted as a result of the adverse impact our business partners and third-party merchants and suppliers suffer. For example, if we are unable to maintain our automated systems due to technical issues, we may not be able to operate our automated smart stores as planned and scale our business. This impact would mean we’d need to raise additional capital in order to cover our operating expenses and meet our revenue targets. To the extent a pandemic or other catastrophic event adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section. Any of the foregoing factors, or other cascading effects of the pandemic that are not currently foreseeable, could adversely impact our business, financial performance and condition and results of operations.
RISKS RELATED TO THIS OFFERING
If our registration statement is declared effective, we will be subject to reporting requirements, and we currently do not have sufficient capital to maintain this reporting status with the SEC.
If our registration statement is declared effective, we will have a reporting obligation to the SEC. As of the date of this Prospectus, the funds currently available to us will not be sufficient to meet our reporting obligations. If we fail to meet our reporting obligations, we will lose our reporting status with the SEC. Our management believes that if we cannot maintain our reporting status with the SEC, we will have to cease all efforts directed towards developing our company. In that event, any investment in the company could be lost in its entirety.
Our status as an “emerging growth company” under the JOBS Act Of 2012 may make it more difficult to raise capital when we need to do it.
Because of the exemptions from various reporting requirements provided to us as an “emerging growth company,” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors, and it may be difficult for us to raise additional capital as and when we need it. We will remain an emerging growth company until the earliest of the events described under “Prospectus Summary — Emerging Growth Company,” and if we cease to qualify, we would then be required to comply with new or revised accounting standards as of the dates applicable to other public companies and would lose other EGC-related exemptions, which could increase our costs. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
We will not be required to comply with certain provisions of the Sarbanes-Oxley Act for as long as we remain an “emerging growth company.”
We are not currently required to comply with the SEC rules that implement Sections 302 and 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal controls over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with certain of these rules, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. Though we will be required to disclose changes made in our internal control procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an “emerging growth company” as defined in the JOBS Act.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an “emerging growth company.” At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
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Reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.
As an “emerging growth company”, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
We will incur ongoing costs and expenses for SEC reporting and compliance, with minimal revenues and operations at a net loss we may not be able to remain in compliance, making it difficult for investors to sell their shares, if at all.
Our business plan allows for the estimated $694,414 cost of this Registration Statement to be paid from our cash on hand. Going forward, the Company will have ongoing SEC compliance and reporting obligations, estimated as approximately $1,000,000 annually. Such ongoing obligations will require the Company to expend additional amounts on compliance, legal and auditing costs. In order for us to remain in compliance, we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. If we are unable to generate sufficient revenues to remain in compliance, it may be difficult for you to resell any shares you may purchase, if at all.
The structure of this offering as a direct listing, rather than a traditional underwritten initial public offering, involves significant risks and uncertainties that may adversely affect the trading price and liquidity of our common stock.
Because we are pursuing a direct listing, rather than a traditional underwritten initial public offering, investors in our common stock will be subject to risks that could result in increased volatility, uncertainty, and potential losses. In particular, the price of our common stock may fluctuate widely and unpredictably because there will be no underwriter to stabilize the price or to engage in book-building or related activities. The opening trading price will be determined by buy and sell orders collected by the exchange from broker-dealers and may not bear any relationship to the prices at which our shares have historically been sold in private transactions or to the fundamental value of our business (see “Plan of Distribution — Direct Listing”). Investors who purchase shares at or shortly after the opening price could incur substantial losses if the trading price declines.
Further, this offering lacks the safeguards typically associated with a traditional underwritten offering, such as underwriter price stabilization activities, lock-up agreements restricting early insider sales, or an underwriters’ over-allotment option (“greenshoe”). The absence of these mechanisms could result in greater volatility and downward pressure on our stock price (see “Market Information”).
In addition, there is limited precedent for direct listings, and the performance of other companies that have completed direct listings may not be indicative of the performance of our common stock. This lack of precedent increases the uncertainty of the outcome of this offering. Finally, demand for our shares may be influenced by the strength of our brand and consumer recognition. To the extent investors perceive our brand as weak or our consumer base as limited, demand for our common stock may be reduced, adversely affecting the trading price and liquidity of our shares (see “Business” and “Risk Factors — Risks Related to Our Brand and Market Recognition”).
Securities law claims under Sections 11 and 12 of the Securities Act may be more difficult for investors to pursue in connection with this direct listing than in a traditional underwritten offering, which could limit remedies available to investors and affect the outcome of securities litigation.
Because this offering is being conducted through a direct listing, rather than a traditional underwritten initial public offering, investors may face additional challenges in bringing securities liability claims under Sections 11 and 12 of the Securities Act. In a traditional underwritten offering, plaintiffs generally can trace their purchases to the shares registered under the applicable registration statement. In a direct listing, however, both registered and unregistered shares may be available for trading immediately upon listing, which can make tracing significantly more difficult.
25
Courts, including the U.S. Supreme Court in Slack Technologies, LLC v. Pirani, 598 U.S. 579 (2023), and the Ninth Circuit in Pirani v. Slack Technologies, Inc., 127 F.4th 1183 (9th Cir. 2025), have addressed whether plaintiffs must trace their purchases to shares registered under the registration statement to establish standing under Section 11 or Section 12. These decisions highlight uncertainty and potential limitations on investors’ ability to pursue claims under the Securities Act in the context of a direct listing.
As a result, investors in our common stock may have more limited remedies available in securities litigation compared to investors in companies that complete a traditional underwritten initial public offering. This uncertainty could affect the willingness of investors to purchase our shares and could increase the costs, risks, and outcomes of potential securities litigation (see “Plan of Distribution — Direct Listing” and “Legal Proceedings”).
Our Chief Executive Officer will control and make corporate decisions that may differ from those that might be made by the other shareholders.
Due to the controlling amount of their share ownership in our Company, our chief executive officer will have a significant influence in determining the outcome of all corporate transactions, including the power to prevent or cause a change in control. His interests may differ from the interests of other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
Our future results may vary significantly in the future which may adversely affect the price of our common stock.
It is possible that our quarterly revenues and operating results may vary significantly in the future and period-to-period comparisons of our revenues and operating results are not necessarily meaningful indicators of the future. You should not rely on the results of one quarter as an indication of our future performance. It is also possible that in some future quarters, our revenues and operating results will fall below our expectations or the expectations of market analysts and investors. If we do not meet these expectations, the price of our common stock may decline significantly.
We Are Unlikely To Pay Dividends
To date, we have not paid, nor do we intend to pay in the foreseeable future dividends on our common stock, even if we become profitable. Earnings, if any, are expected to be used to advance our activities and for general corporate purposes, rather than to make distributions to stockholders. Prospective investors will likely need to rely on an increase in the price of Company stock to profit from an investment. There are no guarantees that any market for our common stock will ever develop or that the price of our stock will ever increase. If prospective investors purchase Shares pursuant to this Offering, they must be prepared to be unable to liquidate their investment and/or lose their entire investment.
Since we are not in a financial position to pay dividends on our common stock, and future dividends are not presently being contemplated, investors are advised that return on investment in our common stock is restricted to an appreciation in the share price. The potential or likelihood of an increase in share price is questionable at best.
United States state securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this Prospectus.
There is no public market for our securities, and there can be no assurance that any public market will develop in the foreseeable future. Secondary trading in securities sold in this Offering will not be possible in any state in the U.S. unless and until the common shares are qualified for sale under the applicable securities laws of the state, or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in such state. There can be no assurance that we will be successful in registering or qualifying our securities for secondary trading, or identifying an available exemption for secondary trading in our securities in every state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the securities in any particular state, the securities could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our securities, the market for our securities could be adversely affected.
26
RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK
Any future market price for the shares may be volatile.
In the event the Company has its common stock listed on the Nasdaq, the market price for the resulting shares is likely to be highly volatile, and subject to wide fluctuations in response to various factors including the following:
| 1. | Actual or anticipated fluctuations in the Company’s quarterly operating results and revisions to expected results; |
| 2. | Changes in financial estimates by securities research analysts; |
| 3. | Conditions in the U.S. financial markets; |
| 4. | Changes to international, federal, state or local regulations related to artificial intelligence, automated retail technology, digital payment systems, personal data protection, and robotics; |
| 5. | Changes in the economic performance or market valuations of companies specializing in comparable companies having securities traded on a national exchange; |
| 6. | Announcements by the Company or its competitors of new services, strategic relationships, joint ventures or capital commitments; |
| 7. | Addition or departure of key personnel; |
| 8. | Litigation related to any assets or intellectual property; and |
| 9. | Sales or perceived potential sales of the shares. |
In addition, securities markets have from time to time, and to a greater degree since 2007, experienced significant price and volume fluctuations that bear no relation to the operating performance of particular companies. These market fluctuations may also have a materially adverse effect on the market price of the Company’s common shares. Furthermore, in the past, following periods of volatility in the market price of a public company’s securities, investors have frequently instituted securities class action litigation against that company. Litigation of this kind could result in substantial costs and a diversion of management’s attention and resources.
If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business, as well as the way analysts and investors interpret our financial information and other disclosures. Securities and industry analysts do not currently, and may never, publish research on our business. If few, or no, securities or industry analysts commence coverage of us, our stock price could be negatively affected. If securities or industry analysts downgrade our common stock, or publish negative reports about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our common stock.
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our common stock.
The Financial Industry Regulatory Authority, or FINRA, has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative or low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA has indicated its belief that there is a high probability that speculative or low-priced securities will not be suitable for at least some customers. If these FINRA requirements are applicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock.
27
Our Amended and Restate Bylaws designate the state courts of Nevada as the exclusive forum for certain litigation that may be initiated by our stockholders and the federal district courts of the United States as the exclusive forum for litigation arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or agents.
Pursuant to our Amended and Restated Bylaws unless we consent in writing to the selection of an alternative forum, the state courts of the State Nevada will be the sole and exclusive forum for any claims in state court for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, other employees, or stockholders to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of Chapter 78 of Nevada Revised Statutes, our articles of incorporation or our bylaws, or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine; provided that for the avoidance of doubt, the forum selection provision that identifies the state courts of the State Nevada as the exclusive forum for certain litigation, including any “derivative action”, will not apply to suits to enforce a duty or liability created by Securities Act, the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.
Moreover, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder and our certificate of incorporation will also provide that, unless we consent in writing to the selection of an alternative forum and to the fullest extent permitted by law, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, While there can be no assurance that federal or state courts will follow the holding of the Nevada Supreme Court or determine that our federal forum provision should be enforced in a particular case, application of our federal forum provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and our certificate of incorporation will provide that neither the exclusive forum provision nor our federal forum provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.
Our articles of incorporation will further provide that any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock is deemed to have notice of and consented to the provisions of our articles of incorporation described above. The forum selection provision in our articles of incorporation may have the effect of discouraging lawsuits against us or our directors and officers and may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us. If the enforceability of our forum selection provisions were to be challenged, we may incur additional costs associated with resolving such challenge. While we currently have no basis to expect any such challenge would be successful, if a court were to find our forum selection provisions to be inapplicable or unenforceable with respect to one or more of these specified types of actions or proceedings, we may incur additional costs associated with having to litigate in other jurisdictions, which could have an adverse effect on our business, financial condition, results of operations, cash flows, and prospects and result in a diversion of the time and resources of our employees, management, and board of directors.
Issuances of Equity-Based Compensation to Executives Will Result in Substantial Dilution to Existing Stockholders
Our executive employment agreements include significant equity-based compensation, including fully vested annual equity grants and milestone-based share issuances tied to geographic expansion and operational milestones. These issuances could result in the issuance of tens of millions of additional shares of our common stock over the course of the agreements. As a result, existing stockholders will experience substantial dilution in their ownership and voting interests, which may depress the market price of our common stock. The potential for dilution is further compounded by the fact that such equity grants are not contingent on continued employment or achievement of future performance metrics in certain instances.
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We will not receive any proceeds from the sale of the selling shareholders’ shares of common stock registered herein.
29
This prospectus relates to the offer and resale of up to 15,547,669 shares of our common stock, par value $0.001 per share, held by 2,958 shareholders. We are registering the shares in accordance with the terms of the Purchase Agreements, in order to permit the Selling Shareholders to offer the shares for resale from time to time.
The table below lists the Selling Shareholders and other information regarding the “beneficial ownership” of the shares of common stock by the Selling Shareholders. In accordance with Rule 13d-3 of the Exchange Act, “beneficial ownership” includes any shares of our common stock as to which the Selling Shareholders have sole or shared voting power or investment power and any shares of our common stock the Selling Shareholders have the right to acquire within 60 days.
Each Selling Shareholder may be deemed to be an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.
| Common Stock | Shares of Common Stock Being Registered Pursuant to this | |||||||||||
| Name and Address of Beneficial Owner | Shares | %(1) | Prospectus | |||||||||
| George Kellzi | 4,000 | 0.01 | % | 4,000 | ||||||||
| Royan Herman | 2,500 | 0.00 | % | 2,500 | ||||||||
| Jeffrey Rubin | 45,000 | 0.06 | % | 45,000 | ||||||||
| Marc Ross | 50,000 | 0.07 | % | 50,000 | ||||||||
| Andres Munoz | 440,000 | 0.59 | % | 440,000 | ||||||||
| David M. La Salle | 1,500 | 0.00 | % | 1,500 | ||||||||
| Gurkaran Thiara | 42,049 | 0.06 | % | 42,049 | ||||||||
| Bagrad A. Boursalian | 2,500 | 0.00 | % | 2,500 | ||||||||
| Damon and Sheri Grose Family Trust(6) | 20,000 | 0.03 | % | 20,000 | ||||||||
| Target Global Acquisition I Corp.(7)(34) | 564,402 | 0.75 | % | 564,402 | ||||||||
| Pine Global Advisors Ltd.(8)(34) | 8,806 | 0.01 | % | 8,806 | ||||||||
| Diametric True Alpha Market Neutral Master Fund, LP | 3,238 | <0.001 | % | 3,238 | ||||||||
| Diametric True Alpha Enhanced Market Neutral Master Fund, LP | 17,052 | 0.02 | % | 17,052 | ||||||||
| Eric Lembcke | 95,000 | 0.13 | % | 95,000 | ||||||||
| TQ Master Fund LP(9)(34) | 4,058 | 0.01 | % | 4,058 | ||||||||
| Jatin Mahey | 1,000 | 0.00 | % | 1,000 | ||||||||
| Ann Neidenbach | 10,000 | 0.01 | % | 10,000 | ||||||||
| Ian Gardner And Heather Briand | 43,403 | 0.06 | % | 43,403 | ||||||||
| Anne Pomije | 1,000 | 0.00 | % | 1,000 | ||||||||
| Lone Star C&L Investments LLC(10) | 80,000 | 0.11 | % | 80,000 | ||||||||
| JAMA Quest LLC(11) | 114,070 | 0.15 | % | 114,070 | ||||||||
| Tatevik Pogosian | 17,668 | 0.02 | % | 17,668 | ||||||||
| Anahit Beglaryan | 37,668 | 0.05 | % | 37,668 | ||||||||
| Karen Vardanyan | 17,668 | 0.02 | % | 17,668 | ||||||||
| Artak Khachikyan | 17,668 | 0.02 | % | 17,668 | ||||||||
| Vardan Isayan | 17,668 | 0.02 | % | 17,668 | ||||||||
| Vahe Mailyan | 10,601 | 0.01 | % | 10,601 | ||||||||
| Alyosha Hovsepyan | 7,067 | 0.01 | % | 7,067 | ||||||||
| Artur Felix | 7,067 | 0.01 | % | 7,067 | ||||||||
| Emmanuel Vardanyan | 7,067 | 0.01 | % | 7,067 | ||||||||
| Grigor Musheghyan | 3,534 | 0.00 | % | 3,534 | ||||||||
| Nerses Nahapetyan | 3,534 | 0.00 | % | 3,534 | ||||||||
| Emma Pogosian | 1,767 | 0.00 | % | 1,767 | ||||||||
| Kristine Kzelian | 7,067 | 0.01 | % | 7,067 | ||||||||
| Jacob Akopian | 35,000 | 0.05 | % | 35,000 | ||||||||
| Nikolaos Ioannou | 102,491 | 0.14 | % | 102,491 | ||||||||
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| Common Stock | Shares of Common Stock Being Registered Pursuant to this | |||||||||||
| Name and Address of Beneficial Owner | Shares | %(1) | Prospectus | |||||||||
| Ben Rosenthal | 1,250 | 0.00 | % | 1,250 | ||||||||
| Callum Hutton | 1,250 | 0.00 | % | 1,250 | ||||||||
| Nazareth Ohanessian | 100,000 | 0.13 | % | 100,000 | ||||||||
| Christina Djeredjian Behesnilian | 7,500 | 0.01 | % | 7,500 | ||||||||
| Luke Joseph | 7,065 | 0.01 | % | 7,065 | ||||||||
| Angela Siliezar | 1,250 | 0.00 | % | 1,250 | ||||||||
| Randi S. and Irwin A. Brees | 14,285 | 0.02 | % | 14,285 | ||||||||
| Miguel Molina | 2,250 | 0.00 | % | 2,250 | ||||||||
| Jordan Mack | 9,967 | 0.01 | % | 9,967 | ||||||||
| Gayane Sevoyan | 3,534 | 0.00 | % | 3,534 | ||||||||
| Cynthia Smalley | 1,250 | 0.00 | % | 1,250 | ||||||||
| Emma Rosenthal | 1,250 | 0.00 | % | 1,250 | ||||||||
| Anthony Santillo | 4,500 | 0.01 | % | 4,500 | ||||||||
| Romela Kurdoglanyan | 4,500 | 0.01 | % | 4,500 | ||||||||
| Greg Kurdoglanyan | 4,500 | 0.01 | % | 4,500 | ||||||||
| Shelly Morita | 1,250 | 0.00 | % | 1,250 | ||||||||
| Samuel Henry Folco | 3,300 | 0.00 | % | 3,300 | ||||||||
| David Smith | 50,000 | 0.07 | % | 50,000 | ||||||||
| James Mccubbin | 50,000 | 0.07 | % | 50,000 | ||||||||
| The William And Cindy Clune Family Trust(12) | 1,295,923 | 1.50 | % | 1,295,923 | ||||||||
| Stepan Cholakhyan | 2,750 | 0.00 | % | 2,750 | ||||||||
| Mark Ghaly | 5,000 | 0.01 | % | 5,000 | ||||||||
| Konstantina Karali | 5,000 | 0.01 | % | 5,000 | ||||||||
| Natalia Kontogiorgou | 25,000 | 0.03 | % | 25,000 | ||||||||
| Pablo Bererra | 7,500 | 0.01 | % | 7,500 | ||||||||
| Ron Eagle | 11,000 | 0.01 | % | 11,000 | ||||||||
| Andrew | 8,116 | 0.01 | % | 8,116 | ||||||||
| Cameron Rolfe Kessinger and Sandra L.B. Kessinger, Trustees of the Kessinger Family Trust Dated 8-SEP-16(13) | 40,000 | 0.05 | % | 40,000 | ||||||||
| Marine Vardanyan | 7,067 | 0.01 | % | 7,067 | ||||||||
| Sargis Kopushyan | 7,067 | 0.01 | % | 7,067 | ||||||||
| Albert Kzelian | 53,004 | 0.07 | % | 53,004 | ||||||||
| Movses Balabanyan | 7,067 | 0.01 | % | 7,067 | ||||||||
| Arin Safarians | 10,000 | 0.01 | % | 10,000 | ||||||||
| Bruce Sussman | 8,833 | 0.01 | % | 8,833 | ||||||||
| Evangelos Kollias | 8,723 | 0.01 | % | 8,723 | ||||||||
| Christos Mistriotis | 6,544 | 0.01 | % | 6,544 | ||||||||
| Restoma Investments(14) | 101,000 | 0.13 | % | 101,000 | ||||||||
| Arvin Mehrabian | 17,500 | 0.02 | % | 17,500 | ||||||||
| Michael A. Gardner and Katie J. Gardner Trustees of the Gardner Nevada Trust(15) | 1,136,230 | 1.21 | % | 1,136,230 | ||||||||
| Richard Rueda | 5,000 | 0.01 | % | 5,000 | ||||||||
| Mark Attwood | 12,588 | 0.02 | % | 12,588 | ||||||||
| Md Ismail | 2,000 | 0.00 | % | 2,000 | ||||||||
| RLH Series Fund LP – Special Opportunities I Series(16)(34) | 20,290 | 0.03 | % | 20,290 | ||||||||
| Georgios Lalechos | 500 | 0.00 | % | 500 | ||||||||
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| Common Stock | Shares of Common Stock Being Registered Pursuant to this | |||||||||||
| Name and Address of Beneficial Owner | Shares | %(1) | Prospectus | |||||||||
| Lance Brinker | 210,000 | 0.28 | % | 210,000 | ||||||||
| Target Global Sponsor Ltd.(17)(34) | 818,652 | 1.09 | % | 818,652 | ||||||||
| Gerhard Cromme(34) | 15,000 | 0.02 | % | 15,000 | ||||||||
| Michael Abbott(34) | 15,000 | 0.02 | % | 15,000 | ||||||||
| Vitallii Khomutynnik(34) | 8,786 | 0.01 | % | 8,786 | ||||||||
| Target Global Advisors Cayman Ltd.(18)(34) | 8,786 | 0.01 | % | 8,786 | ||||||||
| Young Cai | 5,000 | 0.01 | % | 5,000 | ||||||||
| Chantal Wessels(2) | 10,000 | 0.01 | % | 10,000 | ||||||||
| Brian Wygle | 1,500 | 0.00 | % | 1,500 | ||||||||
| Zvi Lipman | 5,500 | 0.01 | % | 5,500 | ||||||||
| MHL Financial, Inc. (19) | 7,006 | 0.01 | % | 7,006 | ||||||||
| Clune CO (Richard Clune) (20) | 16,666 | 0.02 | % | 16,666 | ||||||||
| J&A B&C Clue Legacy Holdings, LLC(21) | 100,000 | 0.13 | % | 100,000 | ||||||||
| Judith Stevens | 1,500 | 0.00 | % | 1,500 | ||||||||
| Andrew B. Greenstein | 600 | 0.00 | % | 600 | ||||||||
| Stacey Wing | 600 | 0.00 | % | 600 | ||||||||
| Marc E. Greenstein | 600 | 0.00 | % | 600 | ||||||||
| Seth D. Greenstein | 600 | 0.00 | % | 600 | ||||||||
| Omar Vargas | 500 | 0.00 | % | 500 | ||||||||
| Eileen Zograbyan | 3,500 | 0.00 | % | 3,500 | ||||||||
| CIIG Management III LLC(22)(34) | 1,925,189 | 2.57 | % | 1,925,189 | ||||||||
| Seung Whan Cha | 5,000 | 0.01 | % | 5,000 | ||||||||
| Andreas Bisalas | 3,300 | 0.00 | % | 3,300 | ||||||||
| Seth Farbman | 100,000 | 0.13 | % | 100,000 | ||||||||
| Peter Rosenthal, Trustee of the Survivor’s Trust under the Rosenthal Family Trust dated March 25, 1988(23) | 265,000 | 0.35 | % | 265,000 | ||||||||
| David Ojeda | 135,000 | 0.18 | % | 135,000 | ||||||||
| Sotirios Leontaritis | 95,000 | 0.13 | % | 95,000 | ||||||||
| Dimitrios Kontogiorgos | 866,700 | 1.16 | % | 866,700 | ||||||||
| Fotios Kontogiorgos | 90,000 | 0.12 | % | 90,000 | ||||||||
| Ivan Christopher Castro | 20,000 | 0.03 | % | 20,000 | ||||||||
| David Leandro | 75,000 | 0.09 | % | 75,000 | ||||||||
| Dustin J Ross | 100,000 | 0.13 | % | 100,000 | ||||||||
| Dean A Ross | 100,000 | 0.13 | % | 100,000 | ||||||||
| Ryan Hannigan | 68,062 | 0.09 | % | 68,062 | ||||||||
| Shuyue Wei | 24,288 | 0.03 | % | 24,288 | ||||||||
| William Eilers | 325,000 | 0.43 | % | 325,000 | ||||||||
| Albert Kazelian | 50,000 | 0.07 | % | 50,000 | ||||||||
| B2M Ventures LLC(24) | 75,000 | 0.10 | % | 75,000 | ||||||||
| Karen Thornton | 1,000 | 0.00 | % | 1,000 | ||||||||
| Edgar Lee | 26,074 | 0.03 | % | 26,074 | ||||||||
| Mane Panyan | 500,000 | 0.67 | % | 500,000 | ||||||||
| Serbuhi Kzelian | 620,000 | 0.83 | % | 620,000 | ||||||||
| Kandiss Denise Peay | 1,000 | 0.00 | % | 1,000 | ||||||||
| Elizabeth Stevens Renshaw | 13,000 | 0.02 | % | 13,000 | ||||||||
| Rosemarie Tkocz | 22,000 | 0.03 | % | 22,000 | ||||||||
| Cheryl l. Mckeown | 1,000 | 0.00 | % | 1,000 | ||||||||
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| Common Stock | Shares of Common Stock Being Registered Pursuant to this |
|||||||||||
| Name and Address of Beneficial Owner | Shares | %(1) | Prospectus | |||||||||
| Pavel Vechersky | 5,000 | 0.01 | % | 5,000 | ||||||||
| Nader Kabbani(3) | 375,211 | 0.50 | % | 375,211 | ||||||||
| Anna Mkrtchyan | 2,000 | 0.00 | % | 2,000 | ||||||||
| Andreas Korpetis | 70,000 | 0.09 | % | 70,000 | ||||||||
| Kathleen E Fashaw | 1,000 | 0.00 | % | 1,000 | ||||||||
| David Goodlaw | 2,500 | 0.00 | % | 2,500 | ||||||||
| Matthew Hidalgo(4) | 276,000 | 0.27 | % | 276,000 | ||||||||
| Nile River Capital, LLC(25) | 673,000 | 0.90 | % | 673,000 | ||||||||
| Broad Technology, LLC(26) | 486,000 | 0.65 | % | 486,000 | ||||||||
| Worldwide Acquisition, LLC(27) | 591,000 | 0.79 | % | 591,000 | ||||||||
| Bridgepoint Holdings, LLC(28) | 708,000 | 0.95 | % | 708,000 | ||||||||
| Neon Rainbow Holdings, Ltd.(29) | 100,000 | 0.13 | % | 100,000 | ||||||||
| Ian Gardner | 150,000 | 0.20 | % | 150,000 | ||||||||
| Donna Batilova | 2,500 | 0.00 | % | 2,500 | ||||||||
| David Aslanyan | 20,000 | 0.03 | % | 20,000 | ||||||||
| Aida Attigue | 3,333 | 0.00 | % | 3,333 | ||||||||
| Kardaras Nikoloas | 8,500 | 0.01 | % | 8,500 | ||||||||
| Coralpiraeus Ship Repairs, PC(30) | 21,500 | 0.03 | % | 21,500 | ||||||||
| Anthony J. Preus Separate Property Trust(31) | 25,000 | 0.03 | % | 25,000 | ||||||||
| Jason Michael Clune | 15,000 | 0.02 | % | 15,000 | ||||||||
| Simon John Kendrick and Bridget Lynn Carty (Jointly) | 4,000 | 0.01 | % | 4,000 | ||||||||
| Martin and Sharon Howe Gonzalez (Jointly) | 4,000 | 0.01 | % | 4,000 | ||||||||
| Julian Michael Gonzalez | 2,000 | 0.00 | % | 2,000 | ||||||||
| Krista Marie Gonzalez | 4,000 | 0.01 | % | 4,000 | ||||||||
| Valentina Arakelyan | 20,000 | 0.03 | % | 20,000 | ||||||||
| Regina McGhee | 15,000 | 0.02 | % | 15,000 | ||||||||
| George Dimitrouleas | 35,000 | 0.05 | % | 35,000 | ||||||||
| Ian Rasmussen | 10,000 | 0.01 | % | 10,000 | ||||||||
| Martin Gonzalez | 50,000 | 0.07 | % | 50,000 | ||||||||
| Diametric True Alpha Market Neutral Master Fund, LP(32)(34) | 3,238 | <0.001 | % | 3,238 | ||||||||
| Diametric True Alpha Enhanced Market Neutral Master Fund, LP(33)(34) | 17,052 | 0.02 | % | 17,052 | ||||||||
| Jeffrey Clarke(34) | 15,000 | 0.02 | % | 15,000 | ||||||||
| Sigal Regev Roseberg(34) | 15,000 | 0.02 | % | 15,000 | ||||||||
| Heiko Dimmerling(34) | 15,000 | 0.02 | % | 15,000 | ||||||||
| Series B Preferred Stockholders(5) | 671,072 | 0.900 | % | 671,072 | ||||||||
| TOTAL | 15,547,669 | 20.76 | % | 15,547,669 | ||||||||
Officers, Directors, and Classe
| (1) | Percent-of-class methodology. The percentages shown are based on 74,885,456 shares of our common stock outstanding as of the effectiveness of this Registration Statement. (and, for each holder, include the shares the holder has the right to acquire within 60 days of such date). |
| (2) | Chantal Wessels. Ms. Wessels will be appointed to the Board of Directors effective upon the effectiveness of this Registration Statement. |
| (3) | Nader Kabbani. Mr. Kabbani will be appointed to the Board of Directors effective upon the effectiveness of this Registration Statement. |
| (4) | Matthew (Matt) Hidalgo. Mr. Hidalgo currently serves as the Company’s Chief Financial Officer. |
| (5) | Series B Preferred group. “Series B Preferred Stockholders” reflects investors that purchased and paid for Series B Preferred in the Company’s Regulation CF offering that closed on August 26, 2025; each such holder will receive 1 share of common stock for each 1 share of Series B Preferred effective September 30, 2025. The Company issued 675,015 shares of Series B Preferred, however 3,943 of those shares were issued prior to receiving money from the Investor and as such will not be converted into shares of the common stock. |
| Entities |
| (6) | Damon and Sheri Grose Family Trust. The trustee(s) of the trust is Damon Grose, who may be deemed to have voting and/or investment control over the shares held by the trust. |
| (7) | Target Global Acquisition I Corp. Target Global Acquisition I Corp. is a public company with no majority shareholder. The Chief Executive Officer is Michael L. Minnick. |
| (8) | Pine Global Advisors Ltd. The natural person with voting and/or investment control over the shares held by Pine Global Advisors Ltd. is Kirill Yurkevich. |
33
| (9) | TQ Master Fund LP. The natural persons with ultimate voting and/or investment control over the shares owned by TQ Master Fund LP is Peter Bremberg, Chief Investment Officer of The Quarry LP which is the investment manager of TQ Master Fund LP. |
| (10) | Lone Star C&L Investments LLC. The natural person with voting and/or investment control is Eric Lembcke. |
| (11) | JAMA Quest LLC. The natural person with voting and/or investment control is John Aloe. |
| (12) | The William and Cindy Clune Family Trust. The trustee of the William and Cindy Clune Family Trust is William Clune, who may be deemed to have voting and/or investment control over the shares held by the trust. The total number of shares represent 1,122,282 shares of common stock currently held and 173,641 shares of common stock underlying the cashless exercise warrants with a exercise price of $4.32 per share. |
| (13) | Kessinger Family Trust. The trustees of the Kessinger Family Trust dated 8-SEP-16 are Cameron Rolfe Kessinger and Sandra L.B. Kessinger, who may be deemed to have voting and/or investment control over the shares held by the trust. |
| (14) | Restoma Investments. The natural person with voting and/or investment control over the shares held by Restoma Investments is Dimitrios Kontogiorgos. |
| (15) | Gardner Nevada Trust. The trustees of the Gardner Nevada Trust are Michael A Gardner and Katie J. Gardner, who may be deemed to have voting and/or investment control over the shares held by the trust. The total number of shares represent 904,709 shares of common stock currently held and 231,521shares of common stock underlying the cashless exercise warrants with a exercise price of $4.32 per share. |
| (16) | RLH Series Fund LP — Special Opportunities I Series. The natural person(s) with ultimate voting and/or investment control over the shares owned by RLH Series Fund LP is Louis Camhi, Chief Investment Officer of RLH Capital LLC which is the manager of RLH Series Fund LP. |
| (17) | Target Global Sponsor Ltd. The natural persons with voting and/or investment control over the shares held by Target Global Sponsor Ltd. are Shmuel Chafets, Yaron Valler, Kirill Yurkevich, Mikhail Lobanov, and Vladimir Mukanaev. |
| (18) | Target Global Advisors Cayman Ltd. The natural person with voting and/or investment control over the shares held by Target Global Advisors Cayman Ltd. is Mikhail Lobanov. |
| (19) | MHL Financial, Inc. The natural person with voting and/or investment control over the shares held by MHL Financial, Inc. is Joseph Giampaolo. |
| (20) | Clune Co (Richard Clune). Richard Clune may be deemed to have voting and/or investment control over the shares held by Clune Co. |
| (21) | J&A B&C Clune Legacy Holdings, LLC. The natural person with voting and/or investment control is Richard Clune. |
| (22) | CIIG Management III LLC. The natural person with voting and/or investment control over the shares owned by CIIG Management III LLC is Michael Minnick. |
| (23) | Rosenthal Family Trust. Mr. Peter Rosenthal, as trustee of the Survivor’s Trust under the Rosenthal Family Trust dated March 25, 1988, may be deemed to have voting and/or investment control over the shares held by the trust. |
| (24) | B2M Ventures LLC. The natural person with voting and/or investment control over the shares held by B2M Ventures LLC is Jay Brian Heller. |
| (25) | Nile River Capital, LLC. The natural person with voting and/or investment control over the shares held by Nile River Capital, LLC. is Christina Makarem. |
| (26) | Broad Technology, LLC. The natural person with voting and/or investment control over the shares held by Broad Technology, LLC is Christina Makarem. |
| (27) | Worldwide Acquisition, LLC. The natural person with voting and/or investment control over the shares held by Worldwide Acquisition, LLC. is Christina Makarem. |
| (28) | Bridgepoint Holdings, LLC. The natural person with voting and/or investment control over the shares held by Bridgepoint Holdings, LLC is Christina Makarem.. |
| (29) | Neon Rainbow Holdings, Ltd. The natural person with voting and/or investment control over the shares held by Neon Rainbow Holdings, Ltd. is Allan William. |
| (30) | Coralpiraeus Ship Repairs, P.C. The natural person(s) with voting and/or investment control over the shares held by Coralpiraeus Ship Repairs, P.C. is Vasileios Kanakakis. |
| (31) | Anthony J. Preus Separate Property Trust. The trustee of the Anthony J. Preus Separate Property Trust is Anthony Preus, who may be deemed to have voting and/or investment control over the shares held by the trust. | |
| (32) | Nick Thakore serves as Founder & CIO of the general partner of Diametric Capital LP, and in such capacity may be deemed to be the beneficial owner having shared voting power and shared investment power over the securities described in this footnote. The business address of these entities and Mr. Thakore is 131 Dartmouth Street, Boston, MA 02116. | |
| (33) | Nick Thakore serves as Founder & CIO of the general partner of Diametric Capital LP, and in such capacity may be deemed to be the beneficial owner having shared voting power and shared investment power over the securities described in this footnote. The business address of these entities and Mr. Thakore is 131 Dartmouth Street, Boston, MA 02116. | |
| (34) | Target Global Acquisition I Corp., CIIG Management III, LLC, Target Global Sponsor, Ltd., Diametric True Alpha Enhanced Market Neutral Master Fund, LP, Diametric True Alpha Market Neutral Master Fund, LP, Pine Global Advisors Ltd., TQ Master Fund, LP, Andrew Bail, RLH Series Fund, LP - Special Opportunities I Series, Pine Global Advisors Ltd., Target Global Advisors Cayman Ltd., Vitallii Khomutynnik, Gerhard Crommes, Lars Hinrichs, Rigal Segev, Heiko Dimmerling, Michael Abbott, and Jeffrey Clarke are collectively, limited to leak out restriction in the aggregate such that the entirety of the group is limited to sell 20% of the total volume on any trading day. |
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DETERMINATION OF OFFERING PRICE
In a direct listing, there is no underwritten offering and therefore no “offering price” arbitrarily determined by the Company. Instead, the opening trading price of our common stock on the Nasdaq Capital Market will be determined by buy and sell orders collected by Nasdaq from broker-dealers, reflecting market demand and supply.
For context, the Company’s securities have been sold in a limited number of private transactions, including crowdfunding sales. Commencing in April of 2024, the Company initiated a Regulation CF offering of our Series B Preferred Shares for an aggregate of $5,000,000. To date, we have raised $2,735,670.99 with an average price per share of $4.05, selling 675,015 shares of our Series B Preferred Shares. On May 15, 2025, the Company issued 3,462,375 shares of common stock pursuant to a Settlement and Release with Target Global Acquisition I Corp. along with its subsidiaries and sponsor (“TGAA Parties”) Upon a direct listing of the common stock of the Company, TGAA Parties agreed to forfeit exactly 100,000 shares of common stock to treasury, resulting in the TGAA Parties (through Target Global Sponsor Ltd. Target Global Advisors Cayman Ltd., and other affiliates) holding 3,362,375 shares of common stock upon the Nasdaq listing. In June of 2025, the Company issued 405,092 units with each unit consisting of 2 shares of common stock and 1 cashless warrant to purchase a share of common stock at a price of $4.32 (the “Unit”). The purchase price of each Unit was $8.64 for aggregate of $3,500,000. These private transaction prices were established based on negotiations with investors in offerings exempt from registration under the Securities Act, and they reflected factors such as stage of development, investor risk tolerance, and lack of liquidity.
While we believe this history of private sales provides useful context, investors should not view these transaction prices as indicative of the price at which our common stock will open on the Nasdaq Capital Market. The target Current Reference Price will be determined as described herein, which reflects a reference point established in consultation with our financial advisor and Nasdaq in connection with the direct listing process, and has little bearing on recent private or crowdfunding sales. The Current Reference Price is not an offering price and should not be viewed as a prediction of the opening trading price of our shares or the actual trading price at any time. The opening trading price may differ significantly from both the Current Reference Price and from historical private transaction prices.
35
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
All of the shares covered in this registration statement represent 20.12% of the Company’s currently issued and outstanding common stock. All such shares being registered under this prospectus may be freely sold upon effectiveness of this registration statement. The shares of common stock beneficially owned by the Registered Stockholders covered by this prospectus may be offered and sold from time to time by the Registered Stockholders. The term “Registered Stockholders” includes donees, pledgees, transferees or other successors in interest selling securities received after the date of this prospectus from a Registered Stockholder as a gift, pledge, partnership distribution or other transfer. We will not receive any of the proceeds from the sale of the securities by the Registered Stockholders. The Registered Stockholders will not be involved in Nasdaq’s price-setting mechanism, including any decision to delay or proceed with trading, nor will they control or influence the Advisor in carrying out its role as a financial adviser. We will not be involved in the price setting process. Additionally, the price of our shares in prior private transactions may have little or no relation to the opening price and subsequent public price of our stock on Nasdaq. The Registered Stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. The Registered Stockholders may offer, sell or distribute all or a portion of the securities hereby registered publicly at prevailing market prices. We are not party to any arrangement with any Registered Stockholder or any broker-dealer with respect to sales of shares of common stock by the Registered Stockholders. As such, we do not anticipate receiving notice as to if and when any Registered Stockholder may, or may not, elect to sell their shares of common stock or the prices at which any such sales may occur, and there can be no assurance that any Registered Stockholders will sell any or all of the shares of common stock covered by this prospectus. Pursuant to Nasdaq Rule 4120(c)(9), we have engaged Revere Securities, LLC (the “Advisor” or “Revere”) as our licensed broker-dealer to serve as our financial advisor. In consideration of its services, the Company paid the Advisor a fixed fee of $5,000 upon execution of the engagement letter between the Company and the Advisor dated June 23, 2025, which engagement letter provided for the Advisor’s engagement as the Company’s financial advisor in connection with the Direct Listing. The Advisor will be paid a fixed fee of $1,000,000 worth of the equivalent number of shares of common stock, based on the Direct Listing price per share, which shares are subject to a 6-month lock-up. The Company will also remit reimbursable out-of-pocket expenses to the Advisor, which expenses will be limited to $125,000. On the day that our shares of common stock are initially listed on Nasdaq, Nasdaq will begin accepting, but not executing, pre-opening buy and sell orders and will begin to continuously generate the indicative Current Reference Price (as defined below) on the basis of such accepted orders. The Current Reference Price is calculated each second and, during a 10-minute “Display Only” period, is disseminated, along with other indicative imbalance information, to market participants by Nasdaq on its NOII and BookViewer tools. Following the “Display Only” period, a “Pre-Launch” period begins, during which the Advisor in its capacity as our financial advisor, must notify Nasdaq that our shares are “ready to trade.” Once the Advisor has notified Nasdaq that our shares of common stock are ready to trade, Nasdaq will confirm the Current Reference Price for our shares of common stock, in accordance with the Nasdaq rules. If the Advisor then approves proceeding at the Current Reference Price, the applicable orders that have been entered will then be executed at such price and regular trading of our shares of common stock on Nasdaq will commence, subject to Nasdaq conducting validation checks in accordance with the Nasdaq rules. If the Advisor does not approve the Current Reference Price, trading in our common stock will not commence on the Nasdaq Capital Market. Instead, the process will remain in the Pre-Launch period and may be extended or restarted in accordance with Nasdaq rules. The Advisor may withhold approval until such time as it determines that sufficient price discovery has occurred and that an appropriate opening price can be established based on volume, timing, and indicative order flow. The Advisor’s approval is a condition precedent to the commencement of trading, and the Company will not have any ability to override or influence this determination. The Company may be required to reinitiate the Direct Listing process at a later time if the Advisor determines that the market conditions are not conducive to a fair and orderly opening.
Under the Nasdaq rules, the Current Reference Price means: (i) the single price at which the maximum number of orders to buy or sell can be matched; (ii) if there is more than one price at which the maximum number of orders to buy or sell can be matched, then it is the price that minimizes the imbalance between orders to buy or sell (i.e. minimizes the number of shares that would remain unmatched at such price); (iii) if more than one price exists under (ii), then it is the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which our shares of common stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under (iii), a price determined by Nasdaq in consultation with the Advisor in its capacity as our financial advisor. In the event that more than one price exists under (iii), the Advisor will exercise any consultation rights only to the extent that it can do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M, or applicable relief granted thereunder.
36
In determining the Current Reference Price, Nasdaq’s cross algorithms will match orders that have been entered into and accepted by Nasdaq’s system. This occurs with respect to a potential Current Reference Price when orders to buy shares of common stock at an entered bid price that is greater than or equal to such potential Current Reference Price are matched with orders to sell a like number of shares of common stock at an entered asking price that is less than or equal to such potential Current Reference Price. To illustrate, as a hypothetical example of the calculation of the Current Reference Price, if Nasdaq’s cross algorithms matched all accepted orders as described above, and two limit orders remained — a limit order to buy 500 shares of common stock at an entered bid price of $10.01 per share and a limit order to sell 200 shares of common stock at an entered asking price of $10.00 per share — the Current Reference Price would be selected as follows:
| ● | Under clause (i), if the Current Reference Price is $10.00, then the maximum number of additional shares that can be matched is 200. If the Current Reference Price is $10.01, then the maximum number of additional shares that can be matched is also 200, which means that the same maximum number of additional shares would be matched at the price of either $10.00 or $10.01. |
| ● | Because more than one price under clause (i) exists, under clause (ii), the Current Reference Price would be the price that minimizes the imbalance between orders to buy or sell (i.e. minimizes the number of shares that would remain unmatched at such price). Selecting either $10.00 or $10.01 as the Current Reference Price would create the same imbalance in the limit orders that cannot be matched, because at either price 300 shares would not be matched. |
| ● | Because more than one price under clause (ii) exists, under clause (iii), the Current Reference Price would be the entered price at which orders for shares of common stock at such entered price will remain unmatched. In such case, choosing $10.01 would cause 300 shares of the 500 share limit order with the entered price of $10.01 to remain unmatched, compared to choosing $10.00, where all 200 shares of the limit order with the entered price of $10.00 would be matched, and no shares at such entered price remain unmatched. Thus, Nasdaq would select $10.01 as the Current Reference Price, because orders for shares at such entered price will remain unmatched. The above example (including the prices) is provided solely by way of illustration. |
The Advisor will determine when our shares of common stock are ready to trade and approve proceeding at the Current Reference Price primarily based on considerations of volume, timing and price. In particular, the Advisor will determine, based primarily on pre-opening buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. If the Advisor does not approve proceeding at the Current Reference Price (for example, due to the absence of adequate pre-opening buy and sell interest), the Advisor will request that Nasdaq delay the opening until such a time that sufficient price discovery has been made to ensure that a reasonable amount of volume crosses on the opening trade. Further, in the highly unlikely event that Nasdaq consults with the Advisor as described in clause (iv) of the definition of Current Reference Price, the Advisor would request that Nasdaq delay the opening to ensure a single opening price within clauses (i), (ii) or (iii) of the definition of the Current Reference Price. The Registered Stockholders will not be involved in Nasdaq’s price-setting mechanism, and will not coordinate or be in communication with the Advisor including with respect to any decision by the Advisor to delay or proceed with trading.
Similar to a Nasdaq-listed firm-commitment underwritten initial public offering, in connection with the listing of our shares of common stock, buyers and sellers who have subscribed will have access to Nasdaq’s Order Imbalance Indicator (the “Net Order Imbalance Indicator”), a widely available, subscription-based data feed, prior to submitting buy or sell orders. Nasdaq’s electronic trading platform simulates auctions every second to calculate a Current Reference Price, the number of shares of common stock that can be paired off the Current Reference Price, the number of shares of common stock that would remain unexecuted at the Current Reference Price and whether a buy-side or sell-side imbalance exists, or whether there is no imbalance, to disseminate that information continuously to buyers and sellers via the Net Order Imbalance Indicator data feed.
However, because this is not an initial public offering being conducted on a firm-commitment underwritten basis, there will be no traditional book building process. Moreover, prior to the opening trade, there will not be a price at which underwriters initially sold shares of common stock to the public, as there would be in a firm-commitment underwritten initial public offering. The lack of an initial public offering price could impact the range of buy and sell orders collected by Nasdaq from various broker-dealers. Consequently, the public price of our shares of common stock may be more volatile than in an initial public offering underwritten on a firm-commitment basis and could, upon being listed on Nasdaq, decline significantly and rapidly. See “Risk Factors — Risks Related to Ownership of Our Common Stock — Our shares of common stock currently have no public market. An active trading market may not develop or continue to be liquid and the market price of our shares of common stock may be volatile.”
37
In addition, to list on Nasdaq, we are also required to have at least three registered and active market makers. We expect that the Advisor will act as a registered and active market maker and will engage other market makers.
In addition to sales made pursuant to this prospectus, the shares of common stock covered by this prospectus may be sold by the Registered Stockholders in private transactions exempt from the registration requirements of the Securities Act.
Under the securities laws of some states, shares of common stock may be sold in such states only through registered or licensed brokers or dealers.
If any of the Registered Stockholders utilize a broker-dealer in the sale of the shares of common stock being offered by this prospectus, such broker-dealer may receive commissions in the form of discounts, concessions or commissions from such Registered Stockholder or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal.
We have engaged Revere as our financial advisor to advise and assist us with respect to certain matters relating to our listing. The services expected to be performed by the Advisor will include providing advice and assistance with respect to defining objectives, analyzing, structuring and planning the listing and developing and assisting with our investor communication strategy in relation to this listing.
However, the Advisor will not be engaged to otherwise facilitate or coordinate price discovery activities or sales of shares of our common stock in consultation with us, and will not be permitted to, and will not be instructed by us to, plan or actively participate in any investor education activities, except as described herein.
Prior to the financial advisory services provided by the Advisor to the Company in connection with the listing of our securities, neither the Advisor nor any affiliates of the Advisor have provided services of any kind to the Company. However, the Advisor is a full service financial institution engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The Advisor and their affiliates may, from time to time, perform financial advisory and investment banking services for us, for which they would receive customary fees, discounts and customary payments including but not limited to certain expense reimbursements.
38
Common Stock
Our authorized Common Stock consists of 100,000,000 shares of Common Stock. As of the date of this Prospectus, there were 36,279,355 shares of Common Stock issued and outstanding. Immediately prior to commencing trading there will be 74,885,456 shares of common stock issued and outstanding.
Holders of our Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, and have cumulative voting rights in the election of directors as provided under Nevada Revised Statutes Section 78.360. All outstanding shares of Common Stock are fully paid and nonassessable as provided under Nevada Revised Statutes Section 78.211, and the shares of Common Stock to be issued upon completion of this offering will be fully paid and nonassessable. The holders of Common Stock have no preferences or rights of cumulative voting, conversion, pre-emptive or other subscription rights. There is no redemption or sinking fund provisions applicable to the Common Stock. In the event of any liquidation, dissolution or winding-up of our affairs pursuant to Nevada Revised Statutes Chapter 78, holders of Common Stock will be entitled to share ratably in any of our assets remaining after payment or provision for payment of all of our debts and obligations and after liquidation payments to holders of outstanding shares of preferred stock, if any, in accordance with their respective rights and preferences.
Series A Preferred Stock
The Company established a Series A Preferred Stock (the “Series A Preferred”) and authorized an aggregate of 100,000 shares with a par value of $0.001 per share of Series A Preferred Stock to be issued. As of September 30, 2025, 100,000 shares of Series A Preferred Stock are issued and outstanding. The Series A Preferred Stock having voting rights equal to 2,000 votes per share. Upon effectiveness of this Registration Statement, all the Series A Preferred Stock will be converted into 37,935,029 shares of common stock.
Series B Preferred Stock
In August 2024, the Company established a Series B Preferred Stock (the “Series B Preferred”) and authorized an aggregate of 20,000,000 shares with a par value of $$0.001 per share. As of September 30, 2025, 675,015 shares of Series B Preferred Stock are issued and outstanding. Shares of Series B Preferred Stock have no voting rights and convert into 1 share of Common Stock of the Company for each share of Series B Stock at the sole discretion of the Board of Directors. Upon effectiveness of this Registration Statement, 671,072 shares of the Series B Preferred Stock shall be converted into 671,072 shares of common stock.
Series C Preferred Stock
Upon effectiveness of this Registration Statement, the Company shall designate a Series C Super Voting Preferred Stock (the “Series C Preferred”) and will have 100,000 shares with a par value of $0.001 per share, which shall be immediately issued to SSO, LLC upon filing with the state of Nevada. The Series C Preferred Stock shall have no conversion rights and shall have voting rights equal to 1,000 votes per 1 share of Series C Preferred Stock.
Dividends
It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Anti-Takeover Effects of Certain Provisions of Our Certificate of Incorporation and Bylaws to Be in Effect Upon the Completion of This Offering Undesignated Preferred Stock
As discussed above, our board of directors will have the ability to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management.
Board Classification
Our articles of incorporation, which will be in effect upon the completion of this offering, will provide for a board of directors comprised of three classes of directors, with each class serving a three-year term beginning and ending in different years than those of the other two classes. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms.
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Differences in Corporate Law Resulting from Our Reincorporation in Nevada
Following our reincorporation in Nevada, the rights of our stockholders will be governed by the NRS and our Nevada Articles of Incorporation and Bylaws. Nevada law provides a strong statutory business-judgment presumption and broader liability protections for directors and officers than Delaware in several respects, which may make it more difficult for stockholders to prevail in litigation against our directors and officers. Nevada’s decisional law is also less developed than Delaware’s, which could increase uncertainty in the application of corporate law to our affairs. See “Risk Factors—Our reincorporation in Nevada will change the rights of our stockholders and may increase legal uncertainty.”
Our Nevada Articles of Incorporation and Bylaws will provide for the exculpation of and indemnification to directors and officers to the fullest extent permitted under the Nevada Revised Statutes (NRS), thereby affording robust protection mechanisms consistent with Nevada law. Cross-references to these provisions may be found in Part II, “Indemnification of Directors and Officers,” and Article VI of the Bylaws. With respect to stockholder rights and corporate records, material differences exist between Nevada and Delaware law, particularly concerning inspection rights and internal affairs doctrine; notably, recent 2025 amendments to the Delaware General Corporation Law (DGCL) have narrowed stockholder books-and-records rights and introduced retroactive limitations, while Nevada maintains a distinct statutory and case law framework. On matters of corporate governance, unless explicitly stated otherwise in the Nevada Articles, cumulative voting shall not apply, and our governing documents will expressly disallow cumulative voting—requiring conforming amendments to the Bylaws. Additionally, we intend to designate Nevada courts as the exclusive forum for all internal corporate claims, and federal courts for claims arising under the Securities Act of 1933, subject to applicable enforceability limitations. The existing model charter language references Delaware-centric forum provisions, which must be revised to reflect the governing Nevada jurisdiction.
Action by Written Consent; Special Meetings of Stockholders
Our articles of incorporation will provide that, from and after the date our current Chief Executive Officer ceases to beneficially own at least 40% of the voting power of our outstanding common stock (the “Trigger Date”), our stockholders may not act by written consent, which may lengthen the amount of time required to take stockholder actions. As a result, following the Trigger Date, a holder controlling a majority of our common stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our bylaws. In addition, our articles of incorporation will provide that, from and after the Trigger Date, special meetings of the stockholders may be called by the chairperson of our board of directors, our Chief Executive Officer, our board of directors, or by stockholders representing at least 10% of the voting power as permitted under NRS 78.310. Following the Trigger Date, stockholders may not call a special meeting of stockholders, which may delay the ability of our stockholders to force consideration of a proposal or for holders controlling a majority of our common stock to take any action, including the removal of directors.
Advance Notice Procedures
Our bylaws will establish advance notice procedures with respect to stockholder proposals and stockholder nomination of candidates for election as directors. These provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Removal of Directors; Vacancies
Our articles of incorporation will provide that directors may be removed from office, with or without cause, by the affirmative vote of stockholders holding at least two-thirds of the voting power of our outstanding common stock, consistent with NRS 78.335. Prior to the Trigger Date, directors may be removed with or without cause by the affirmative vote of at least a majority of the voting power of our outstanding common stock.
No Cumulative Voting
Because our stockholders will not have cumulative voting rights, stockholders holding a majority of the voting power of the common stock outstanding will be able to elect all of our directors. The absence of cumulative voting makes it more difficult for a minority stockholder to nominate and elect a director to our board of directors in order to influence our board of directors’ decision regarding a takeover or otherwise.
Amendment of Charter and Bylaw Provisions
Our articles of incorporation will provide that, following the Trigger Date, the amendment of certain of the provisions of our certificate of incorporation described in this prospectus will require approval by holders of at least two-thirds of the voting power of our outstanding common stock. Our articles of incorporation will provide that our board of directors may from time to time adopt, amend, alter, or repeal our bylaws without stockholder approval. The stockholders may adopt, amend, alter, or repeal our bylaws by the affirmative vote of a majority of the voting power of our outstanding common stock (other than certain specified bylaws which, following the Trigger Date, will require the affirmative vote of two-thirds of our outstanding common stock).
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The combination of these provisions will make it more difficult for another party to obtain control of us by replacing our board of directors. Because our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for another party to effect a change in management.
These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to reduce our vulnerability to hostile takeovers and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and may have the effect of delaying changes in our control or management.
Choice of Forum
Our Amended and Restated Bylaws provide that the state courts of Nevada will be the exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of fiduciary duty; (iii) any action asserting a claim against us arising under the Nevada Revised Statutes; (iv) any action regarding our articles of incorporation or our bylaws; or (v) any action asserting a claim against us that is governed by the internal affairs doctrine. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction. These provisions will provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Nevada of the enforceability of such exclusive-forum provision. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the forum provisions in our Amended and Restated Bylaws. However, it is possible that a court could find our forum selection provisions to be inapplicable or unenforceable.
Limitations on Liability and Indemnification of Officers and Directors
The Nevada Revised Statutes authorize corporations to limit or eliminate the personal liability of directors or officers to corporations and their stockholders for monetary damages for breaches of directors’ or officers’ fiduciary duties, subject to certain exceptions. Our articles of incorporation will include a provision that eliminates the personal liability of directors and officers for monetary damages for any breach of fiduciary duty as a director or officer, respectively, except to the extent such exemption from liability or limitation thereof is not permitted under the Nevada Revised Statutes. The effect of these provisions will be to eliminate the rights of us and our stockholders, through stockholders’ derivative suits on our behalf, to recover monetary damages from a director or officer for breach of fiduciary duty as a director or officer, respectively, including breaches resulting from grossly negligent behavior. However, exculpation will not apply to any director or officer if the director or officer has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions, or derived an improper benefit from his or her actions as a director or officer.
Our bylaws will provide that we must indemnify and advance expenses to our directors and officers to the fullest extent authorized by the Nevada Revised Statutes. We also will be expressly authorized to carry directors’ and officers’ liability insurance providing indemnification for our directors, officers, and certain employees for some liabilities. We believe that these indemnification and advancement provisions and insurance will be useful to attract and retain qualified directors and officers.
The limitation of liability, indemnification, and advancement provisions that will be included in our articles of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breaches of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
There is currently no pending material litigation or proceeding involving any of our directors, officers, or employees for which indemnification is sought.
Warrants and Options
The Company currently has 405,092 warrants to purchase common stock at a price of $4.32.
Transfer Agent and Registrar
Our transfer agent is VStock Transfer, LLC with an address of 18 Lafayette Place, Woodmere, NY 11598, and a phone number of (212) 828-8436.
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INFORMATION WITH RESPECT TO REGISTRANT
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ TOGETHER WITH THE FINANCIAL STATEMENTS OF VENHUB GLOBAL, Inc. AND THE NOTES TO FINANCIAL STATEMENTS INCLUDED IN THIS REGISTRATION STATEMENT. THIS DISCUSSION SUMMARIZES THE SIGNIFICANT FACTORS AFFECTING OUR OPERATING RESULTS, FINANCIAL CONDITIONS AND LIQUIDITY AND CASH-FLOW SINCE INCEPTION.
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No public market currently exists for shares of our common stock. Upon approval by Nasdaq we will commence this Offering.
As of September 30, 2025, there are 36,279,355 shares of common stock outstanding, 100,000 shares of Series A Preferred Stock issued and outstanding, and 675,015 shares of Series B Preferred Stock issued and outstanding. All shares of the Series A Preferred Stock and 671,072 shares of the Series B Preferred Stock will convert into common stock upon effectiveness of this Registration Statement. As of the date of effectiveness of this Registration Statement, there shall be 100,000 shares of Series C Preferred Stock issued and outstanding.
Holders of Our Common Stock
As of the date of this Prospectus statement, we have 36,279,355 shares of common stock.
Rule 144 Shares
After the date this Prospectus is declared effective, 59,146,877 shares of our outstanding shares of common stock, equal to a total of 78.98% of the total issued and outstanding upon commencing of trading, will be “restricted securities” as defined under Rule 144 promulgated under the Securities Act will all be held by our CEO, Shahan Ohanessian, our President, Shoushana Ohanessian, and SSO, LLC an entity controlled and owned by Shahan Ohanessian and Shoushana Ohanessian. Mr. and Mrs. Ohanessian are husband and wife, or Mr. and Mrs. Ohanessian, individually.
Reports
Following the effective date of this Registration Statement we will be subject to certain reporting requirements and will furnish annual financial reports to our stockholders, certified by our independent accountants, and will furnish un-audited quarterly financial reports in our quarterly reports filed electronically with the SEC. All reports and information filed by us can be found at the SEC website, www.sec.gov.
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The Company does not anticipate paying dividends on the Common Stock at any time in the foreseeable future. Under NRS 78.288, the Company may only make distributions to stockholders, including dividends, if after giving effect to the distribution, (1) the Company would be able to pay its debts as they become due in the usual course of business; and (2) the Company's total assets would not be less than the sum of its total liabilities plus any amount needed to satisfy preferential rights of shareholders superior to those receiving the distribution. The Company’s Board of Directors currently plans to retain earnings for the development and expansion of the Company’s business. Any future determination as to the payment of dividends will be at the discretion of the Board of Directors of the Company, subject to applicable Nevada law, and will depend on a number of factors including future earnings, capital requirements, financial conditions and such other factors as the Board of Directors may deem relevant.
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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 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.
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 June 30, 2025, the Company has over 1,400 preorders from potential customers. The Company started fulfilling its orders in the first quarter of 2025, opening its first two stores in North Hollywood, and Glendale, California respectively.
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, he 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.
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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. Revenue from Smart Store sales is recognized when control of the unit transfers to the customer, generally upon delivery.
Although each Smart Store requires a subscription to our SaaS platform, we have not charged our initial customers for SaaS services during our early commercialization phase. For example, during the three and six months ended June 30, 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 to provide such services free of charge as part of its early commercialization strategy. Instead, we have provided SaaS and maintenance services to initial store owners at no cost while we continue to refine our technology and operating model. As a result, no revenue related to SaaS or maintenance services has been recognized for the periods presented. We expect to begin charging customers for SaaS subscriptions and, where applicable, maintenance and support services as we expand beyond the early stage of deployment. 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.
The Company has evaluated its revenue arrangements under ASC 606 and has determined that Smart Stores and SaaS represent separate performance obligations. Accordingly, once SaaS fees are introduced, we will allocate transaction price between Smart Stores and SaaS based on relative standalone selling prices.
Key Components of Results of Operations
For the year ended December 31, 2024 and for the period January 31, 2023 (inception) to December 31, 2023
Revenues
Since December 31, 2024, the Company has sold two stores for $500,000 of revenue.
General and administrative expenses
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.
For the period from January 31, 2023 (inception) to December 31, 2023
Our total operating expenses from January 31, 2023 (inception) to December 31, 2023 were $10,376,645. This was comprised of $8,766,437 of non-cash share based compensation, $614,166 in accrued payroll and compensation, $318,154 in advertising in relation to our crowdfunding efforts, $125,045 in contractor expense, $117,624 in legal expense, $114,649 in research and development, $76,998 in repairs and maintenance for our leased flex space, $54,861 in crowdfunding processing fees, $50,975 in office supplies, $46,673 in rent, $23,898 for our alpha event launch, $23,283 in travel, and $43,882 in miscellaneous expenses.
We incurred no other income or expense for the period.
As a result of the foregoing, we had a net loss of $10,376,645 for the period January 31, 2023 (inception) to December 31, 2023.
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Results of Operations for the Year Ended December 31, 2024 Compared to January 31, 2023 (inception) to December 31, 2023
Total operating expenses for the year ended December 31, 2024 decreased to $9.0 million in 2024 from $10.4 million in 2023, a decline of approximately $1.4 million, primarily driven by a reduction in share-based compensation, partially offset by higher personnel, development, marketing, and professional costs as we continued to scale our operations.
Share-based compensation expense for the year ended December 31, 2024 decreased significantly to $4.52 million in 2024 from $8.77 million in 2023. This decline of approximately $4.25 million reflects the fact that the majority of equity awards were granted in 2023 as part of the Company’s initial ramp-up, with fewer issuances in 2024.
In contrast, accrued payroll and compensation for the year ended December 31, 2024 increased to $1.27 million in 2024 from $0.61 million in 2023, reflecting an increase in headcount and the ramp-up of salaried personnel as we expanded staffing to support commercialization activities.
Research and development for the year ended December 31, 2024 expenses rose to $0.88 million in 2024 from $0.11 million in 2023, an increase of approximately $0.76 million, as we increased investment in the development of our Smart Store product platform.
Advertising expense, primarily related to crowdfunding campaigns for the year ended December 31, 2024 increased to $0.77 million in 2024 from $0.32 million in 2023. This increase of approximately $0.45 million reflects expanded marketing efforts to support ongoing capital-raising initiatives and brand awareness.
Contractor expense for the year ended December 31, 2024 increased to $0.72 million in 2024 from $0.13 million in 2023, reflecting our increased reliance on external contractors to support product development, operations, and deployment activities.
Legal and professional expenses for the year ended December 31, 2024 increased to $0.26 million in 2024 from $0.12 million in 2023, due to expanded financing and regulatory activity associated with our growth and preparations for becoming a public company.
Rent, repairs, and utilities expenses for the year ended December 31, 2024 increased slightly to $0.15 million in 2024 from $0.12 million in 2023, primarily due to a full year of use of our flex office and warehouse space.
Travel expenses for the year ended December 31, 2024 increased to $0.21 million in 2024 from $0.02 million in 2023, reflecting greater operational and investor-related activity, including site visits, deployment preparation, and fundraising roadshows.
Finally, office supplies, meals, and miscellaneous expenses for the year ended December 31, 2024 declined to approximately $0.07 million in 2024 from $0.15 million in 2023, reflecting reduced discretionary spend and improved cost controls implemented during the year.
Overall, the shift in operating expenses reflects the transition from an initial equity award-heavy compensation structure in 2023 to a more balanced operating cost structure in 2024, with increased investment in personnel, product development, marketing, and professional services to support the Company’s growth trajectory.
Future Outlook: In August 2025, we entered into new employment agreements with our Chief Executive Officer and our President, effective upon the effectiveness of this registration statement. 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.
Liquidity and Capital Resources
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.
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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.
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 deferred revenue, $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 of 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.
As of December 31, 2023, we had negative working capital of $806,376 consisting of $46,670 in cash, offset by $20,179 in accounts payable and accrued expenses, $66,145 in deferred revenue relating to down payments for pre orders, $152,556 in current operating lease liability and $614,166 in accrued payroll and compensation.
Non-current assets included $245,350 in right of use asset, $155,963 in property and equipment — net and $16,074 in security deposits.
Non-current liabilities included $444,015 in right of use liability and $26,844 in loan payable — related party.
We used $566,791 of cash in operating activities which represented our net loss from continuing operations of $10,376,645 including $8,766,437 in share-based compensation, $596,571 of change in operating right of use liability, $614,166 of accrued compensation, $66,145 in deferred revenue, $20,179 in accounts payable, $7,780 in depreciation offset by $245,350 of change in operating right of use asset, and $16,074 in security deposits.
We used $163,743 in investing activities from the purchase of property and equipment.
We generated $777,294 of cash from financing activities consisting of $750,450 in proceeds from crowdfunding and $26,844 in proceeds from related party notes.
For the three months ended June 30, 2025 and June 30, 2024
Revenues
There was $13,615 and $6,829 of revenue and cost of goods sold for the three months ended June 30, 2025, respectively, relating to product sales for our Company owned flagship store at LAX/Metro. There were no Smart Store Sales, SaaS sales, or Maintenance sales for the three months ended June 30, 2025, or related cost of goods sold. During the first quarter ended June 30, 2025, the Company also opened Smart Stores in North Hollywood and Glendale. While each of these stores required SaaS agreements in order to operate, the Company elected to provide SaaS and maintenance services at no charge as part of its early commercialization strategy. As such, no revenue related to SaaS or maintenance services was recognized for these locations in the period presented.
General and administrative expenses
For the three months June 30, 2025
Our total operating expenses for the three months ended June 30, 2025 were $2,124,146. This was comprised of $409,050 in legal and professional expenses, $312,571 in contractors, $317,500 in accrued compensation, $304,541 non-cash share based compensation, $263,375 in advertising related to our crowdfunding offering, $152,106 in travel, $131,016 in research and development, $112,908 facilities leases and rent, $29,259 in software, $22,901 in utilities, $20,409 in office supplies, $12,723 in depreciation and $35,517 in miscellaneous expense.
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For the three months ended June 30, 2025, we incurred $18,288,430 in settlement expenses, $120,000 in interest expenses, and $3,849 of change in fair value of convertible notes.
As a result of the foregoing, we had a net loss of $ $20,529,639 for the three months ended June 30, 2025.
For the three months ended June 30, 2024
Our total operating expenses for the three months ended June 30, 2024 were $1,730,945. This was comprised of $491,174 in non-cash share-based compensation, $317,500 in accrued compensation, $251,693 in research and development, $239,841 in advertising, $137,899 in contractor expenses, $81,201 in legal and professional expenses, $80,399 in travel, $45,497 in software, 24,995 in facilities leases and rent, $13,716 in office supplies, $12,169 in depreciation expenses, and $34,861 in miscellaneous expenses.
We had no other expense for the three months ended June 30, 2024.
As a result of the foregoing, we had a net loss of $1,730,945 for the three months ended June 30, 2024.
Results of Operations for the Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024
Total operating expenses for the three months ended June 30, 2025 were $2.1 million for the three months ended June 30, 2025, compared to $1.7 million for the same period in 2024, an increase of approximately $0.4 million, or 23%. The increase was primarily driven by higher professional services, contractor costs, travel, and facilities expenses, partially offset by lower non-cash share-based compensation and reduced research and development spending.
Legal and professional expenses for the three months ended June 30, 2025 rose to $0.4 million in 2025 from $0.1 million in 2024, reflecting increased compliance requirements and financing activities as we advanced our preparations to operate as a public company. Contractor expense also increased significantly, to $0.3 million from $0.1 million, as we relied more heavily on external project and technical support to advance development and deployment of our Smart Stores. Accrued compensation remained consistent year-over-year at $0.3 million, reflecting stable headcount during the period.
Non-cash share-based compensation for the three months ended June 30, 2025 declined to $0.3 million in 2025 from $0.5 million in 2024, due to fewer equity grants being made in 2025 following the larger issuances in the prior year. Advertising expense increased modestly to $0.3 million from $0.2 million, reflecting additional marketing spend associated with our Regulation Crowdfunding campaign. Travel expense nearly doubled to $0.2 million from $0.1 million, as we expanded operational and investor-related activity in connection with deployment and financing efforts.
Research and development expenses for the three months ended June 30, 2025 decreased to $0.1 million in 2025 from $0.3 million in 2024, as resources shifted from research and product development toward commercialization and deployment. Facilities lease and rent increased sharply to $0.1 million in 2025 from $25,000 in 2024, reflecting lease costs for our flagship store and additional facilities. Software expense declined to $29,000 from $45,000, reflecting optimization and cost-control initiatives in IT. Utilities, which were not incurred in the comparable 2024 period, were $23,000 in 2025 due to the commencement of new facility operations. Office supplies, depreciation, and miscellaneous expenses remained relatively consistent year-over-year, reflecting modest scaling of operations.
In addition to operating expenses, several material items impacted results for the quarter. We recognized a one-time settlement expense of $18.3 million in 2025, which did not occur in the prior year. This settlement related to the termination of a business combination agreement with a SPAC, formerly listed on Nasdaq, and we do not expect similar charges to recur in future periods. We also incurred $0.1 million in interest expense, reflecting debt financing costs, and recorded a non-cash charge of $3,849 related to the change in fair value of a convertible note.
As a result of these factors, our net loss for the three months ended June 30, 2025 was $20.5 million, compared to a net loss of $1.7 million for the same period in 2024. The increase of approximately $18.8 million was driven primarily by the one-time settlement expense, together with higher professional, contractor, and facilities costs incurred as we expanded operations and prepared for commercialization.
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Looking forward, we expect operating expenses to increase in future periods as we expand store deployments, increase headcount, and incur additional costs associated with being a public company. We also anticipate continued investment in marketing, research and development, and facilities. While the settlement expense recognized in the second quarter of 2025 was non-recurring, interest expense and financing-related costs are expected to increase as we continue to utilize debt and equity financing to support our growth strategy.
For the six months ended June 30, 2025 and 2024
Revenues
There was $513,615 in revenue and $330,217 in cost of goods sold for the six months ended June 30, 2025. Of the revenue, $500,000 was related to the sale of our smart stores and $13,615 relating to product sales from our Company owned flagship store at LAX/Metro. For cost of goods sold, $323,388 related to our smart stores and $6,829 to our product sales at LAX/Metro. For the six months ended June 30, 2024, we had no revenue or cost of goods sold.
General and administrative expenses
For the six months ended June 30, 2025
Our total operating expenses for the six months ended June 30, 2025 were $11,480,035. This was comprised of $7,913,640 of non-cash share based compensation, $778,377 in contractor expense, $744,571 of legal and professional expense, $635,000 in accrued compensation, $432,371 in research and development, $404,363 in advertising related to our crowdfunding, $183,449 in travel and transportation, $180,258 in rent and lease expense, $60,266 in software costs, $37,106 in utilities, $27,834 in office supplies $27,952 in depreciation and $54,668 in miscellaneous expenses.
We incurred $18,288,430 in settlement expense, $228,033 in interest expense and $65,414 of change in fair value of convertible note for the six months ended June 30, 2025.
As a result of the foregoing, we had a net loss of $ $29,878,514.
For the six months ended June 30, 2024
Our total operating expenses for the six months ended June 30, 2024 were $5,534,958. This was comprised of $3,390,772 of non-cash share based compensation, $635,000 for accrued compensation, $481,600 in advertising, $329,773 in research and development, $237,400 of contractors, $108,985 in legal and professional expense, $110,462 in travel, $76,235 in office supplies, $49,989 rent, $34,986 in software, $23,150 in depreciation and $56,606 in miscellaneous expense.
We had no other expense for the six months ended June 30, 2024.
As a result of the foregoing, we had a net loss of $5,534,958 for the six months ended June 30, 2024.
Results of Operations for the Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024
Total operating expenses for the six months ended June 30, 2025 were $11.5 million, compared to $5.5 million for the same period in 2024, an increase of approximately $5.9 million, or 107%. The increase was primarily driven by higher share-based compensation, professional fees, contractor costs, and facility-related expenses, partially offset by reduced advertising and office supply spending.
Non-cash share-based compensation rose to $7.9 million in 2025 from $3.4 million in 2024, an increase of approximately $4.5 million, reflecting expanded equity awards issued in 2025 as part of employee and contractor incentive programs. Contractor expense also increased significantly, to $0.8 million in 2025 from $0.2 million in 2024, as the Company relied more heavily on outside technical and operational support to advance product development and store deployment. Legal and professional expenses rose to $0.7 million in 2025 from $0.1 million in 2024, reflecting greater compliance, financing, and regulatory activity in anticipation of a potential public listing. Accrued compensation remained flat at $0.6 million for both periods.
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Research and development expense increased modestly, to $0.4 million in 2025 from $0.3 million in 2024, as we continued investment in robotics and artificial intelligence initiatives to enhance our Smart Store platform. Advertising expense decreased to $0.4 million in 2025 from $0.5 million in 2024, reflecting the tapering of crowdfunding-related marketing campaigns. Travel and transportation expenses increased to $0.2 million in 2025 from $0.1 million in 2024, reflecting expanded operational and investor-related activity. Rent and lease expense rose to $0.2 million in 2025 from $50,000 in 2024, reflecting new facilities and additional leased space, while utilities of $37,000 were incurred in 2025 as a result of facility operations, compared to none in the prior year.
Software expense increased to $60,000 in 2025 from $35,000 in 2024, reflecting greater use of IT tools to support scaling operations. Office supply expenses decreased to $28,000 in 2025 from $76,000 in 2024, due to lower provisioning requirements, while depreciation remained relatively consistent year-over-year at approximately $28,000 in 2025 compared to $23,000 in 2024. Miscellaneous expenses were relatively flat at $55,000 in 2025 compared to $57,000 in 2024.
In addition to operating expenses, several material items impacted our results during the period. We recorded a one-time settlement expense of $18.3 million in 2025, which did not occur in the prior year. This expense related to the termination of a business combination agreement with a SPAC, formerly listed on Nasdaq, and we do not expect similar charges to recur in future periods. We also incurred $0.2 million of interest expense in 2025, reflecting the use of debt financing, and recorded a non-cash charge of $65,414 related to the change in fair value of a convertible note.
As a result of these factors, our net loss for the six months ended June 30, 2025 was $29.9 million, compared to a net loss of $5.5 million for the same period in 2024. The increase of approximately $24.3 million was primarily attributable to the one-time settlement expense, as well as higher share-based compensation, professional services, contractor costs, and facilities expenses.
Looking ahead, we expect operating expenses to continue to rise as we expand headcount, increase research and development, scale operations, and incur costs associated with operating as a public company. We also anticipate higher legal, professional, and financing-related expenses in connection with our capital-raising and commercialization efforts. While the settlement expense recorded in 2025 was non-recurring, interest expense and other financing-related costs are expected to remain part of our cost structure as we rely on a combination of debt and equity financing to support our growth strategy.
Liquidity and Capital Resources
As of June 30, 2025, we had working capital of $259,591 consisting of $3,687,820 in cash, $1,079,638 in inventory, $92,988 of prepaid expenses offset by $417,140 in accounts payable and accrued expenses, $2,082,466 in accrued payroll and compensation, $1,750,000 in deferred revenue, $136,895 in customer deposits, $174,254 in current operating lease liability, and $40,100 in sales tax payable.
Non-current assets included $930,316 in right of use asset, $592,818 in property and equipment — net and $71,074 in security deposits.
Non-current liabilities included $4,258,211 in convertible debt at fair value, $2,500,000 in the form of a promissory note, $954,833 in right of use liability, and $266,578 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 preorders, $174,254 in current operating lease liability and $1,678,466 in accrued payroll and compensation.
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 right of use liability and $65,889 in interest payable.
For the six months ended June 30, 2025
We used $1,552,968 of cash in operating activities which represented our net loss from continuing operations of $29,878,514 including $18,288,430 in settlement expense, $7,913,639 in share based compensation, $1,750,000 in deferred revenue, $685,072 of change in operating right of use liability, $404,000 in accrued payroll and compensation, $200,689 in interest payable, $74,728 in accounts payable and accrued expenses, $65,414 of unrealized loss on convertible debt, $40,100 in sales tax payable, $27,952 in depreciation expense, offset by $741,398 of change in operating right of use asset, $179,095 in inventory, $88,704 in deferred offering cost, $59,281 in prepaid expenses, $1,000 in customer deposits and $55,000 in security deposits.
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We used $483,154 in investing activities for the six months ended June 30, 2025 relating to the assembly of both our LAX Metro flagship company owned store and our National Automatic Merchandising Association (NAMA) display store.
We generated $4,371,050 of cash from financing activities consisting of $3,500,000 in proceeds from warrant issuance, crowdfunding, $650,000 proceeds from convertible debt and $221,050 in proceeds from crowdfunding.
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.
For the six months ended June 30, 2024
We used $1,404,426 of cash in operating activities which represented our net loss from continuing operations of $5,534,958 including $3,390,772 in share-based compensation, $609,300 in accrued payroll and compensation, $88,513, in accounts payable and accrued expenses, $70,250 in deferred revenue, $35,626 of change in operating right of use asset, $23,150 in depreciation expense offset by $82,709 of change in operating right of use liability and $5,000 in prepaid expenses.
There were no cash flows from investing activities for the period.
We generated $1,382,760 of cash from financing activities consisting of $1,134,604 in proceeds from crowdfunding, $235,000 of proceeds from common stock issuance, and $13,156 of proceeds from related party notes.
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 initial public offering. 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 June 30, 2025, we had $3,687,820 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 in contractor and production payments will total $4,599,358 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.
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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, 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.
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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.
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DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name and age of our current executive officers, as well as the principal offices and positions held. Our Board of Directors appoints our executive officers in accordance with NRS 78.130. Our directors serve until the earlier occurrence of the election of his or her successor at the next meeting of stockholders, death, resignation, or removal by stockholders in accordance with NRS 78.335. The Company has no promoters as that term is defined by Rule 405 of Regulation S-K.
Unless the context otherwise requires, any reference in this section of this proxy statement/prospectus to “VenHub,” “the Company”, “we,” “us” or “our” refers to VenHub Global, Inc., a Nevada corporation (formerly a Delaware corporation) and its consolidated subsidiaries. VenHub will qualify, as an “emerging growth company” within the meaning of the Securities Act for purposes of the SEC’s executive compensation disclosure rules. In accordance with those rules, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in the rules promulgated under the Securities Act, which require compensation disclosure for its principal executive officer, its two most highly compensated executive officers (other than the principal executive officer) and up to two additional persons who served as executive officers during the fiscal year but were no longer serving in such capacity as of the end of the fiscal year if their total compensation is higher than any of the two most highly compensated executive officers.
The current Board of Directors consist of two members, Shahan and Shoushana Ohanessian. Upon effectiveness of this Registration Statement, the Board of Directors of the Company will be comprised of five (5) directors, of whom the following have been identified: Shahan Ohanessian, Shoushana Ohanessian, Nader Kabbani, Jeffrey Rubin, and Chantal Wessels in the classes set forth below.
Each director will hold office until his or her term expires at the next annual meeting of stockholders for such director’s class or until his or her death, resignation, removal by stockholders in accordance with NRS 78.335, or the earlier termination of his or her term of office.
The following table sets forth certain information, as of the date of this proxy statement/prospectus, concerning the persons who are expected to serve as directors, officers and significant employees following the effectiveness of this Registration Statement.
| Name | Age | Position | ||
| Shahan Ohanessian | 62 | Chief Executive Officer and Class I Director | ||
| Matthew Hidalgo | 42 | Chief Financial Officer | ||
| Shoushana Ohanessian | 53 | President and Class II Director | ||
| Nader Kabbani | 60 | Class II Director | ||
| Jeffrey Rubin | 60 | Class III Director | ||
| Chantal Wessels | 45 | Class III Director |
The Company believes that the above-mentioned attributes, along with the leadership skills and other experiences of the officers and board members described below, will provide The Company with a diverse range of perspectives and judgment necessary to facilitate the goals of The Company and be good stewards of capital.
Officers
Shahan Ohanessian, 62, from 2012 to 2019, served as Chief Executive Officer of ABT Holdings, Inc., a company engaged in strategic partnerships with major logistics and food delivery platforms, including Amazon Logistics, Uber Eats, Eat24, and GrubHub. During his tenure, Shahan oversaw substantial growth in the company’s operations, which included managing a workforce of approximately 4,000 employees and generating annual revenues exceeding $200 million. His responsibilities included the implementation of advanced technological solutions aimed at enhancing operational efficiency.
Prior to his role at ABT Holdings, Shahan was the Chief Executive Officer and co-founder of Insurance Services Network, Inc., a global provider of online property claims management systems. Under his leadership, the company achieved significant market expansion, with annual revenues surpassing $80 million within four years of its establishment.
From 2017 to 2022, Shahan also served as Chief Executive Officer of Serve Limited, a pioneering blockchain technology company focused on developing blockchain-based solutions for delivery management and logistics. During his tenure, Shahan played a key role in expanding Serve Limited’s presence within the blockchain sector. The company wound down its operations in 2022, and its issued token is no longer actively traded.
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Shoushana Ohanessian, 53, has over 10 years of experience in logistics and operations. From 2012 to 2019, Ms. Ohanessian served as President of Operations for a major logistics delivery company, where she oversaw the delivery of over 100 million shipments and managed a team of 2,000 drivers. During her tenure, she was responsible for improving operational efficiency and streamlining processes. The company ceased operations in 2019 and subsequently filed for Chapter 11 bankruptcy protection.
Ms. Ohanessian also held the position of President at Serve Limited, a blockchain company focused on delivery management and logistics. Under her leadership, Serve Limited pursued innovations in the use of blockchain technology for logistics. The company wound down operations in 2022, and the associated token is no longer traded on the market.
Matthew Hidalgo, 42, Matthew Hidalgo brings over 20 years of experience in accounting, operations, corporate finance, restructuring, SEC compliance, and acquisition integration. He has held various senior financial roles for both public and private companies, including serving as Chief Financial Officer for several portfolio companies. In these roles, Mr. Hidalgo has been responsible for overseeing financial operations, managing audits, ensuring regulatory compliance, and leading efforts to optimize financial performance and operational efficiency.
Before joining VenHub, Mr. Hidalgo held key positions at WPCS International Incorporated, where he served as Controller and Operations Manager for its largest subsidiary. In this capacity, he managed all financial reporting and operational functions, playing a critical role in driving subsidiary performance. Prior to this role, he oversaw accounting functions for several Australian subsidiaries, providing strategic financial oversight and ensuring compliance with international accounting standards.
Mr. Hidalgo began his career at PricewaterhouseCoopers LLP, where he worked as an accountant focusing on financial statement preparation and partnership allocations for hedge funds and private equity firms. His expertise in financial analysis and accounting was honed through years of experience managing complex financial reporting and SEC compliance for public companies.
Mr. Hidalgo holds a Bachelor of Science degree in Accounting from Pennsylvania State University.
Board of Directors
Shahan Ohanessian, 62, is a member of our Board of Directors. From 2012 to 2019, Mr. Ohanessian served as Chief Executive Officer of ABT Holdings, Inc., a company engaged in strategic partnerships with major logistics and food delivery platforms, including Amazon Logistics, Uber Eats, Eat24, and GrubHub. During his tenure, Shahan oversaw substantial growth in the company’s operations, which included managing a workforce of approximately 4,000 employees and generating annual revenues exceeding $200 million. His responsibilities included the implementation of advanced technological solutions aimed at enhancing operational efficiency.
Prior to his role at ABT Holdings, Shahan was the Chief Executive Officer and co-founder of Insurance Services Network, Inc., a global provider of online property claims management systems. Under his leadership, the company achieved significant market expansion, with annual revenues surpassing $80 million within four years of its establishment.
From 2017 to 2022, Shahan also served as Chief Executive Officer of Serve Limited, a pioneering blockchain technology company focused on developing blockchain-based solutions for delivery management and logistics. During his tenure, Shahan played a key role in expanding Serve Limited’s presence within the blockchain sector. The company wound down its operations in 2022, and its issued token is no longer actively traded.
Shoushana Ohanessian, 53, is a member of our Board of Directors and sits as our Chairwoman. Mrs. Ohanessian has over 10 years of experience in logistics and operations. From 2012 to 2019, Mrs. Ohanessian served as President of Operations for a major logistics delivery company, where she oversaw the delivery of over 100 million shipments and managed a team of 2,000 drivers. During her tenure, she was responsible for improving operational efficiency and streamlining processes. The company ceased operations in 2019 and subsequently filed for Chapter 11 bankruptcy protection.
Mrs. Ohanessian also held the position of President at Serve Limited, a blockchain company focused on delivery management and logistics. Under her leadership, Serve Limited pursued innovations in the use of blockchain technology for logistics. The company wound down operations in 2022, and the associated token is no longer traded on the market.
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Jeffrey Adam Rubin, 59, upon effectiveness of this Registration Statement will be a member of the Board of Directors. Mr. Rubin brings extensive leadership experience in the oil and gas retail industry, with over 36 years in the field. He is a seasoned executive with a proven track record in brand management, strategic planning, and marketing innovation. Throughout his career, Mr. Rubin has consistently demonstrated the ability to grow established businesses and launch new initiatives, all while driving operational excellence.
From 2014 to 2024, Mr. Rubin held several senior positions at Motiva Enterprises, including Director of Marketing & Business Operations, Vice President of Management for Fuel Sales and Marketing, and Director of Special Projects. In these roles, he spearheaded strategic initiatives, fostered cross-functional team collaboration, and negotiated high-stakes partnerships. Known for his adaptability and strong business acumen, Mr. Rubin has consistently implemented industry best practices to improve performance metrics and drive growth.
Mr. Rubin earned an Executive MBA with a focus on general management from the University of California, Irvine, in 1991, and a Bachelor of Science degree in Marketing and Management from Northeastern University in 1987. His areas of expertise include brand and retail marketing strategy, consumer insights, business analytics, product innovation, concept development, leadership in cross-functional team settings, and strategic negotiations, including joint ventures.
Jeffrey Rubin is recognized for his ability to deliver innovative solutions and foster significant business advancements. He has consented to serve on the Board of Directors if elected and is committed to supporting the company’s strategic objectives to enhance stakeholder value.
Nader Kabbani, 60, upon effectiveness of this Registration Statement will be a member the Board of Directors. Mr. Kabbani brings a wealth of experience in industrial engineering, management consulting, and leading transformative initiatives in both startup and corporate settings. Over his distinguished career, he has demonstrated exceptional expertise in scaling businesses, launching new ventures, and navigating complex operational challenges.
Mr. Kabbani served at Amazon.com for 18 years, where he played a pivotal role in incubating, launching, and leading multi-billion-dollar businesses. His leadership extended across logistics, pharmacy services, self-publishing, Kindle devices, inventory planning, and supply chain management. Prior to his tenure at Amazon, he held senior roles in the airline and travel industry with companies such as American Airlines, Sabre Technologies, and McKinsey & Company. Additionally, he has contributed as a Chief Operating Officer and Senior Vice President at innovative startups, including CALEB Technologies and Flexport, showcasing his ability to drive growth and operational excellence across various sectors.
Mr. Kabbani holds a Bachelor of Science degree in Electrical Engineering and a Master of Science degree in Industrial Engineering & Operations Research, both from Texas A&M University, awarded in 1986 and 1988, respectively. His technical background, coupled with his vast professional experience, positions him as an insightful leader capable of addressing complex challenges in a dynamic business environment.
He has consented to serve on the Board of Directors if elected and is committed to advancing the company’s objectives while creating value for its stakeholders.
Chantal Wessels, 45, upon effectiveness of this Registration Statement will be a member of our Board of Directors. Ms. Wessels is a seasoned financial executive with over 20 years of global leadership experience, including CFO roles at Parameta Solutions and Apex Fintech Solutions, and senior finance leadership positions at NASDAQ. She brings deep financial expertise in IPO readiness, SEC reporting, strategic planning, capital allocation, and operational transformation. Chantal has led the development of investor-grade financial infrastructures, SOX-compliant controls, and scalable reporting systems to support high growth, regulated businesses. She is recognized for her ability to strengthen financial governance, enhance transparency, and align finance strategy with long-term business objective.
Corporate Governance
Composition of the Company Board
Our business and affairs will be managed under the direction of the Company Board. The Company Board will be chaired by Shoushana Ohanessian and will include the individuals named above as members. The Company Board is expected to determine that Jeffrey Rubin, Nader Kabbani, and Chantal Wessels qualify as independent in accordance with applicable Nasdaq rules, The Company Certificate of Incorporation and the Company Bylaws, the number of directors will be fixed by the Company Board.
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When considering whether directors and director nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Company Board to satisfy its oversight responsibilities effectively in light of its business and structure, the Company Board expects to focus primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above in order to provide an appropriate mix of experience and skills relevant to the size and nature of its business.
Director Independence
Under the Company’s Corporate Governance Guidelines and the Nasdaq rules, a director will not be independent unless the Board of Directors affirmatively determines that the director does not have a direct or indirect material relationship with the Company or any of its subsidiaries. In addition, the director must not be precluded from qualifying as independent under the per se bars set forth by the Nasdaq rules.
The Board will undertake a review of its composition, the composition of its committees and the independence of directors and consider whether any director has a material relationship with The Company that could compromise their ability to exercise independent judgment in carrying out their responsibilities. Based upon information requested from and provided by each director concerning their background, employment and affiliations, including family relationships, the Company Board has determined that Jeffrey Rubin, Nader Kabbani, and Chantal Wessels, who comprise all of The Company’s non-employee directors, do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors qualifies as “independent” as that term is defined under the Nasdaq rules. In making these determinations, the Company Board will consider the relationships that each non-employee director has with The Company and all other facts and circumstances the Company Board deemed relevant in determining their independence, including the director’s beneficial ownership of The Company Common Stock.
Classified Board of Directors
Pursuant to the Proposed Articles of Incorporation under Nevada law, The Company directors shall be divided into three (3) classes designated as Class I Directors, Class II Directors and Class III Directors, respectively, with each class serving for staggered three (3)-year terms commencing as follows:
| (a) | at the first annual general meeting of The Company following Closing, the term of office of the Class III Directors shall expire and the Class III Directors elected to succeed those directors shall be elected for a term of one (1) years; |
| (b) | at the second annual general meeting of The Company following Closing, the term of office of the Class II Directors shall expire and the Class II Directors elected to succeed those directors shall be elected for a term of two (2) years; and |
| (c) | at the third annual general meeting of The Company following Closing, the term of office of the Class I Directors shall expire and the Class I Directors elected to succeed those directors shall be appointed for a term of three (3) years. |
Committees of the Company Board
The Company Board will direct the management of its business and affairs, as provided by Chapter 78 of the Nevada Revised Statutes law, and conduct its business through meetings of the Company Board and standing committees. The Company Board will have a standing audit committee, compensation committee and nominating and corporate governance committee, each of which will operate under a written charter and composed solely of independent directors.
In addition, from time to time, special committees may be established under the direction of the Company Board when the Company Board deems it necessary or advisable to address specific issues. Copies of The Company’s committee charters will be posted on The Company’s website, (https://www.venhub.com/investors), as required by applicable SEC and Nasdaq rules. The information contained on, or that may be accessed through, VenHub’s and The Company’s website is not part of, and is not incorporated into, this proxy statement/prospectus or the registration statement of which it forms a part.
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Audit Committee
The Company’s audit committee will be responsible for, among other things:
| ● | overseeing our accounting and financial reporting process; |
| ● | appointing, compensating, retaining and overseeing the work of our independent registered public accounting firm and any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or related work or performing other audit, review or attest services for us; |
| ● | discussing with our independent registered public accounting firm any audit problems or difficulties and management’s response; |
| ● | pre-approving all audit and non-audit services provided to us by our independent registered public accounting firm (other than those provided pursuant to appropriate preapproval policies established by the audit committee or exempt from such requirement under the rules of the SEC); |
| ● | reviewing and discussing our annual and quarterly financial statements with management and our independent registered public accounting firm; |
| ● | discussing our risk management policies; |
| ● | reviewing and approving or ratifying any related person transactions; |
| ● | establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, and for the confidential and anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and |
| ● | preparing the audit committee report required by SEC rules. |
Our audit committee is expected to consist of Jeffrey Rubin, Nader Kabbani and Chantal Wessels, who shall serve as chair. All members of our audit committee will meet the requirements for financial literacy under the applicable Nasdaq rules and regulations. The Company Board expects to affirmatively determine that each member of the audit committee qualifies as “independent” under Nasdaq’s additional standards applicable to audit committee members and Rule 10A-3 of the Exchange Act applicable audit committee members. In addition, the Company Board expects to determine that Chantal Wessels qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.
Compensation Committee
The Company’s compensation committee will be responsible for, among other things:
| ● | reviewing and approving corporate goals and objectives with respect to the compensation of our Chief Executive Officer, evaluating our Chief Executive Officer’s performance in light of these goals and objectives and setting our Chief Executive Officer’s compensation; |
| ● | reviewing and setting or making recommendations to the Company Board regarding the compensation of our other executive officers; |
| ● | reviewing and making recommendations to the Company Board regarding director compensation; |
| ● | reviewing and approving or making recommendations to the Company Board regarding our incentive compensation and equity-based plans and arrangements; |
| ● | appointing and overseeing any compensation consultants; |
| ● | reviewing and discussing annually with management our “Compensation Discussion and Analysis,” to the extent required; and |
| ● | preparing the annual compensation committee report required by SEC rules, to the extent required. |
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Our compensation committee is expected to consist of Jeffrey Rubin, Chantal Wessels, and Nadar Kabbani, who shall serve as chair. The Company Board has determined that each of these directors qualify as “independent” under Nasdaq’s additional standards applicable to compensation committee members and each member of the compensation committee is a “non-employee director” as defined in Section 16b-3 of the Exchange Act.
Nominating and Corporate Governance Committee
The Company’s nominating and corporate governance committee will be responsible for, among other things:
| ● | identifying individuals qualified to become members of the Company Board and ensure the Company Board has the requisite expertise and consists of persons with sufficiently diverse and independent backgrounds; |
| ● | recommending to the Company Board the persons to be nominated for election as directors and to each committee of the Company Board; |
| ● | developing and recommending to the Company Board corporate governance guidelines, and reviewing and recommending to the Company Board proposed changes to our corporate governance guidelines from time to time; and |
| ● | overseeing the annual evaluations of the Company Board, its committees and management. |
Our nominating and corporate governance committee is expected to consist of Chantal Wessels, Nader Kabbani and Jeffrey Rubin, who shall serve as chair. The Company Board has determined that the members of our nominating and corporate governance committee qualify as “independent” under Nasdaq rules applicable to nominating and corporate governance committee members.
The nominating and corporate governance committee will review nominations for election or re-election to the Company Board consistent with the requirements of Nevada Revised Statutes Section 78.115, considering a candidate's qualifications, merits, and The Company’s needs after taking into account the current composition of the Company Board. At minimum, all candidates must meet the statutory requirements that directors be at least 18 years of age and have not been convicted of a felony involving fraud or similar misconduct. When evaluating candidates annually for nomination for election, the nominating and corporate governance committee will consider an individual’s skills, diversity, independence, experience in areas that address the needs of the Company Board and ability to devote adequate time to The Company Board duties. The nominating and corporate governance committee does not specifically define diversity, but values diversity of experience, perspective, education, race, gender and national origin as part of its overall annual evaluation of director nominees for election or re-election. Whenever a new seat or a vacated seat on the Company Board is being filled, candidates that appear to best fit the needs of the Company Board and The Company will be identified, interviewed and evaluated by the nominating and corporate governance committee. Candidates selected by the nominating and corporate governance committee will then be recommended to the full The Company Board.
The Company Board may from time to time establish other committees.
Code of Ethics
In connection with Closing, The Company will adopt a code of ethics that applies to all of our executive officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The code of ethics will be available on our website, (https://www.venhub.com/investors).
The Company intends to make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website rather than by filing a Current Report on Form 8-K.
Compensation Committee Interlocks and Insider Participation
No anticipated member of the compensation committee was at any time during fiscal year 2024 or since, or at any other time, one of our officers or employees. None of our executive officers has served as a director or member of a compensation committee (or other committee serving an equivalent function) of any entity, one of whose executive officers served as a director of our board of directors or member of our compensation committee.
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Executive Compensation
Below is a summary of our executive compensation:
| Name and Principal Position | Year Ended | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation Earnings | Non- Qualified Deferred Compensation Earnings | All Other Compensation | Total ($) | |||||||||||||||||||||||||
| Shahan Ohanessian | 2023 | $ | 307,083 | $ | 6,733,637 | $ | 7,040,720 | |||||||||||||||||||||||||||
| 2024 | $ | 575,000 | $ | 2,508,000 | $ | 3,083,000 | ||||||||||||||||||||||||||||
| Shoushana Ohanessian | 2023 | $ | 307,083 | $ | 1,210,000 | $ | 1,517,083 | |||||||||||||||||||||||||||
| 2024 | $ | 575,000 | $ | 2,508,000 | $ | 3,083,000 | ||||||||||||||||||||||||||||
| Matt Hidalgo | 2023 | - | $ | 8,800 | $ | 8,800 | ||||||||||||||||||||||||||||
| 2024 | $ | 120,000 | $ | 396,720 | $ | 516,720 | ||||||||||||||||||||||||||||
Currently all executives perform their duties pursuant to consulting agreements.
Upon effectiveness of this Registration Statement, we entered into new employment agreements with our Chief Executive Officer, Shahan Ohanessian, and our President, Shoushana Ohanessian. The agreements provide for base salaries of $1,000,000 and $750,000, respectively, subject to annual increases. Each executive is entitled to guaranteed annual cash bonuses ($1,850,000 for Mr. Ohanessian and $1,387,500 for Ms. Ohanessian), annual equity grants of fully vested common stock (1,000,000 and 750,000 shares, respectively), as well as significant additional equity compensation tied to performance milestones, such as store openings and listing on a national securities exchange. These agreements also provide for generous severance and change-in-control protections, including lump sum payments of up to the remaining term of the agreement, accelerated equity vesting, COBRA payments, and post-termination advisory roles.
Matt Hidalgo has entered into an executive employment agreement to be effective upon effectiveness of this registration statement with a base salary of $180,000 as Chief Financial Officer base salary with a bonus package to be determined by the Compensation Committee.
The executive employment agreements with Shahan Ohanessian and Shoushana Ohanessian, provide for annual equity grants of 1,000,000 and 750,000 fully vested shares, respectively, as well as milestone-based equity awards for store openings, geographic expansion, and public listing events.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information on the security ownership of the management of the company that are owned by executive officers and directors, and other persons holding more than 10% of any class of the company’s voting securities or having the right to acquire those securities. The table summarizes shares as “beneficial ownership”, and vested options as “beneficial ownership acquirable”
| Name of Beneficial Owner(1) | Common Stock
(Before)(2) | % of Common (Before) | %
of Voting Power (Before)(2) | Common Stock
(After)(3)(4)(5) | % of Common (After) | % of Voting Power (After) | ||||||||||||||||||
| Shahan Ohanessian(6) | 311,848 | 0.86 | % | 0.13 | % | 311,848 | 0.42 | % | 0.00 | % | ||||||||||||||
| Shoushana Ohanessian(6) | 900,000 | 2.48 | % | 0.38 | % | 1,400,000 | 1.87 | % | 0.00 | % | ||||||||||||||
| Matt Hidalgo | 276,000 | 0.76 | % | 0.00 | % | 0 | 0.00 | % | 0.00 | % | ||||||||||||||
| Jeffrey Rubin | 10,000 | 0.03 | % | 0.00 | % | 0 | 0.00 | % | 0.00 | % | ||||||||||||||
| Nader Kabbani | 375,211 | 1.04 | % | 0.16 | % | 0 | 00.00 | % | 0.00 | % | ||||||||||||||
| Chantel Wessels | 10,000 | 0.03 | % | 0.00 | % | 0 | 0.00 | % | 0.00 | % | ||||||||||||||
| SSO, LLC(7) | 20,000,000 Common + 100,000 Series A | 55.22 | % | 93.13 | % | 57,935,029 Common + 100,000 Series C | 77.42 | % | 90.34 | % | ||||||||||||||
| Aggregate of SSO, LLC, Shahan Ohanessian and Shoushana Ohanessian | 21,211,848 Common + 100,000 Series A | 58.56 | % | 93.65 | % | 59,537,345 Common + 100,000 Series C | 77.42 | % | 90.34 | % | ||||||||||||||
| Holders of >5% | ||||||||||||||||||||||||
| CIIG Management III LLC | 1,970,189 | 5.3 | % | 0.83 | % | 0 | 0.00 | % | 0.00 | % | ||||||||||||||
| All Holders of >5% | 1,970,189 | 5.3 | % | 0.81 | % | 0 | 0.00 | % | 0.00 | % | ||||||||||||||
| All directors and executive officers as a group (6 persons) | 21,918,059 | 60.51 | % | 93.95 | % | 59,537,
345 Common + 100,000 Series C | 77.42 | % | 90.34 | % | ||||||||||||||
| (1) | Under Rule 13d-3 promulgated under the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. |
| (2) | The Series A Preferred Stock currently grants 2,000 votes per share, equating to 200,000,000 votes for the 100,000 shares. |
| (3) | The Series B Preferred Stock converts on a one-for-one basis into 675,015 shares of common stock. |
| (4) | Our financial advisor, Revere Securities, LLC, is entitled to receive an additional 1,000,000 shares of common stock post-effectiveness. |
| (5) | The total common stock outstanding after the effectiveness of the registration statement is 74,885,456 shares. Upon the effectiveness of the registration statement, the Series A Preferred Stock is convertible into 37,935,029 shares of common stock. The total voting power after the effectiveness of the registration statement comprises 74,885,456 votes from common shares, and 100,000,000 votes from Series C, totaling votes. |
| (6) | Includes shares of common stock issuable pursuant to executive employment agreements with Shahan Ohanessian and Shoushana Ohanessian, which provide for annual equity grants of 1,000,000 and 750,000 fully vested shares, respectively, as well as milestone-based equity awards for store openings, geographic expansion, and public listing events. The number of shares beneficially owned also includes any shares held by SSO, LLC, a company controlled by Mr. Ohanessian. |
| (7) | SSO, LLC’s voting power after effectiveness includes 57,935,029 votes from common shares, and 100,000,000 votes from Series C, amounting to 159,537,345 votes, representing approximately 95.5 – 96.0% of the total voting power (rounded as ~96.0% in the table). SSO, LLC is owned by Shahan and Shoushan Ohanessian who are husband and wife. |
We are not aware of any arrangements that could result in a change of control.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Related Persons
As of June 30, 2025, the Chief Executive Officer had $1,134,583, the President $863,883 and the Chief Financial Officer $109,000, respectively, in accrued compensation that they have voluntarily deferred until future periods. Payments of $60,000 and $18,000 were made to the President and Chief Financial Officer respectively for the three months ended June 30, 2025. For the six months ended June 30, 2025 payments of $195,000 and $36,000 were made to the President and Chief Financial Officer respectively.
At December 31, 2024, the Chief Executive Officer had $872,083, the President $721,383 and the Chief Financial Officer $85,000, respectively, in accrued compensation that they have voluntarily deferred until future periods. No payments were made for the three and six months ended June 30, 2024.
In August of 2025, we entered into executive employment agreements with Shahan Ohanessian, our Chief Executive Officer, and Shoushana Ohanessian, our President and Chairwoman of the Board which will take effect upon effectiveness of this Registration Statement. Mr. and Ms. Ohanessian are spouses and, through SSO, LLC, together beneficially own a majority of our outstanding shares and voting power. The terms of the agreements were approved by our board of directors and provide for base salaries, guaranteed cash bonuses, and extensive equity-based compensation. In addition, the agreements contain severance, change-in-control, and advisory provisions that could result in substantial future payments and equity issuances to Mr. and Ms. Ohanessian. Given their control of the company, the agreements constitute related party transactions.
On April 10, 2024, the Company signed a stock purchase agreement with a member of the Board of Advisors for 35,524 shares and for gross proceeds of $200,000.
On July 15, 2024, the Company signed a stock purchase agreement with a member of the Board of Advisors for 30,211 shares and for gross proceeds of $300,000.
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The validity of the shares sold by us under this prospectus will be passed upon for us by William R. Eilers, Esq.
Smith Eilers, PLLC, through its partners, collectively hold 375,000 shares of common stock, less than half a percent of the total issued and outstanding upon commencement of trading.
Rosenberg Rich Baker Berman, P.A. our former independent registered public accountant, has audited our financial statements included in this prospectus and Registration Statement to the extent and for the periods set forth in their audit report. Rosenberg Rich Baker Berman, P.A. has presented its report with respect to our audited financial statements. In addition, report for the six month ended June 30, 2025 and 2024 was reviewed by Bush and Associates, CPA who shall serve as our independent registered public accountant for the foreseeable future.
CHANGES IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On May 9, 2025, we received notice from Rosenberg Rich Baker Berman, P.A. (“RRBB”) our independent registered public accounting firm, that they no longer will be our auditors moving forward for 2025.
RRBB’s report of independent registered public accounting firm dated March 28, 2025, except for the effects of the restatement and revisions discussed in Note 2 to the consolidated financial statements to which the date is September 9, 2025, on the VenHub Global Inc.’s consolidated balance sheet as of December 31, 2024 and 2023 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2024 and for the period January 31, 2023 (inception) through December 31, 2023, and the related notes collectively referred to as the financial statements, did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainties, audit scope or accounting principles, except for an explanatory paragraph in such report regarding substantial doubt about our ability to continue as a going concern.
During the period from January 31, 2023 (VenHub Global Inc.’s inception) through December 31, 2024 and the subsequent interim period through May 9, 2025, there were no “disagreements” (as such term is defined in Item 304(a)(1)(iv) of Regulation S-K) with RRBB on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of RRBB, would have caused RRBB to make reference thereto in its reports on VenHub Global Inc’s financial statements for such periods. During the period from January 31, 2023 (VenHub Global Inc’s inception) through December 31, 2024 and the subsequent interim period through May 9, 2025, there have been no “reportable events” (as such term is defined in Item 304(a)(1)(v) of Regulation S-K).
We have provided RRBB with a copy of the foregoing disclosures and requested that RRBB furnish us with a letter addressed to the SEC stating whether it agrees with the above statements and, if not, stating the respects in which it does not agree. A copy of the letter from RRBB dated September 30, 2025, is filed as Exhibit 23.3 to the registration statement of which this prospectus forms a part.
On May 20, 2025, the Company approved the engagement of Bush & Associates CPA LLC (“Bush”) as our independent registered public accounting firm, effective upon the Auditor Change Effective Date. During the period from January 31, 2023 (VenHub Global Inc.’s inception) through December 31, 2024 and the subsequent interim period through May 9, 2025, neither we, nor anyone acting on our behalf, consulted with Bush regarding the application of accounting principles to a specified transaction (either completed or proposed), the type of audit opinion that might be rendered on our financial statements, or any matter that was either the subject of a “disagreement,” as defined in Item 304(a)(1)(iv) of Regulation S-K, or a “reportable event,” as defined in Item 304(a)(1)(v) of Regulation S-K.
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COMMISSION POSITION ON INDEMNIFICIATION FOR SECURITIES ACT LIABILITIES
Revised Statutes Section 78.7502Our Articles of Incorporation provides that we shall indemnify our directors and officers to the fullest extent permitted by Nevada law and that none of our directors will be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability:
| ● | for any breach of the director’s duty of loyalty to the Company or its stockholders; |
| ● | for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law; |
| ● | under Nevada Revised Statutes for the unlawful payment of dividends; or |
| ● | for any transaction from which the director derives an improper personal benefit. |
These provisions require us to indemnify our directors and officers unless restricted by Nevada law and eliminate our rights and those of our stockholders to recover monetary damages from a director for breach of his or her fiduciary duty of care as a director except in the situations described above. The limitations summarized above, however, do not affect our ability or that of our stockholders to seek non-monetary remedies, such as an injunction or rescission against a director for breach of his or her fiduciary duty.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
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BUSINESS OF VENHUB AND CERTAIN INFORMATION ABOUT VENHUB
Unless the context otherwise requires, any reference in this section of this proxy statement/prospectus to the “Company,” “we,” “us,” “our” or “VenHub” refers to VenHub Global, Inc. and its consolidated subsidiaries prior. Some of the information contained in this section or set forth elsewhere in this proxy statement/prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.
Company Overview
VenHub Global, Inc. (“VenHub” or the “Company”) was incorporated in the state of Wyoming on January 31, 2023 as “Autonomous Solutions, Inc.” and domiciled in Delaware with the name VenHub Global, Inc. on August 15, 2024. The Company is currently in the process of domiciling in the state of Nevada.
Vision and Mission Statements
To become a global leader in autonomous retail solutions, revolutionizing the shopping experience through cutting-edge innovation, advanced technology, and a commitment to sustainability, while delivering a seamless, efficient, and accessible shopping experience for consumers and equipping retail partners with scalable, cost-effective solutions that address the evolving demands of today’s dynamic marketplace.
VenHub Global, Inc.
The Company is developing “VenHub” as its flagship brand, aiming to revolutionize the retail landscape by blending the smart of traditional stores with the efficiency of cutting-edge robotics. VenHub’s technology is designed to deliver a fully autonomous shopping experience that operates 24/7, providing consumers with seamless access to products at any time, with just a few taps on their smartphones or online device.
Currently Available Features (Version 1 Smart Stores): Our Version 1 Smart Stores are currently available and include autonomous robotic systems for product selection, bagging, and delivery; inventory tracking and restocking alerts; a mobile application for browsing and purchasing; and store owner access to basic operational analytics. At present, our deployed AI and machine learning systems are focused on operational functions such as product verification through computer vision, robotic navigation, and predictive maintenance of hardware. These capabilities improve order accuracy, fulfillment efficiency, and system uptime.
In Development: We are actively developing enhancements such as ID verification technology for age-restricted products (e.g., alcohol and tobacco), expanded AI-driven analytics for store owners, and customer support infrastructure including 24/7 service and training materials. We are also developing AI-driven personalization features, including recommender engines intended to suggest products based on purchase history, browsing behavior, and complementary products. These personalization applications remain in testing and are not yet deployed in live store environments.
Future Opportunities: In addition, we are evaluating future potential features such as biometric authentication for secure transactions, solar-powered energy alternatives, and expanded product format options (including larger and mobile Smart Stores).
By utilizing advanced sensors, artificial intelligence (AI), and robotics, VenHub currently delivers a smooth and autonomous shopping experience, focused on accuracy, efficiency, and reliability. We believe that over time, our AI-driven algorithms will evolve to incorporate personalization features that can tailor product recommendations and customer interactions as these capabilities ae developed and deployed.
For store owners, VenHub is designed to materially eliminate the need for a traditional workforce, leading to significant savings on labor costs and unlocking the potential for increased profitability. By leveraging a combination of AI, sensors, and robotics, VenHub currently provides core autonomous functionality and we are developing additional features intended to enhance long-term performance and user experience.
VenHub is strategically positioned to transform everyday shopping, with a vision of creating a world where the shopping experience is effortless, highly convenient, and accessible to all.
Since April 13, 2023, VenHub has facilitated an offering of its Preferred Class B Shares pursuant to Regulation CF with an offering price ranging between $2.83 per share and $9.94 per share for a weighted average of $4.77 per share (the “CF Offering”). To date, VenHub has sold 596,410 shares of Preferred Class B Shares. VenHub will maintain the CF Offering until such time that a Record Date has been determined, at which point, VenHub will terminate the CF Offering on a date no later than five (5) business days from the determined Record Date.
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Corporate Structure
VenHub operates through four wholly owned subsidiaries: VenHub, LLC, VenHub Services, LLC, VenHub IP, LLC, and VenHub Stores, LLC. VenHub, LLC, VenHub Services, LLC, and VenHub IP, LLC, were incorporated as Delaware limited liability companies on September 19,2024, (the “Operating Subsidiaries”) and are designed to focus on specific operational areas of the company. The Operating Subsidiaries are also being domesticated in the state of Nevada pursuant to NRS 92A.270. VenHub Stores, LLC was incorporated in Nevada on June 4, 2025 and is designed to focus on ownership of Company-owned stores (the Operating Subsidiaries and VenHub Stores, LLC, are collectively referred to as the “VenHub Subsidiaries”). Prior to their formation, all business activities were consolidated under the Parent Company, VenHub Global, Inc.
VenHub, LLC
VenHub, LLC, a wholly owned subsidiary of VenHub Global, Inc., oversees and/or manages the end-to-end sourcing, assembly, and distribution of VenHub Smart Stores. The subsidiary manages the procurement of high-quality components and materials, ensuring that each Smart Store is built to the highest standards of craftsmanship and reliability. VenHub, LLC oversees and/or manages the entire assembly process, ensuring that every Smart Store meets the rigorous quality expectations set by the Parent Company. Additionally, VenHub, LLC is responsible for the sales, installation, and seamless integration of these Smart Stores for its clients.
VenHub Services, LLC
VenHub Services, LLC, another subsidiary of VenHub Global, Inc., focuses on delivering comprehensive software and operational support for the VenHub Smart Stores. It provides Software as a Service (SaaS) solutions that power the Smart Stores, ensuring seamless customer access to the technology. VenHub Services, LLC also manages the licensing of this software, offering the necessary tools for clients to optimize their store operations. Additionally, the subsidiary provides ongoing software support, maintenance, and operational assistance to guarantee uninterrupted functionality and maximum efficiency for its Smart Store users.
VenHub IP, LLC
VenHub IP, LLC plays a pivotal role in managing the intellectual property portfolio that supports the innovative technology behind VenHub Smart Stores. This subsidiary is responsible for licensing its proprietary intellectual assets, including patents, trademarks, and other innovations, to both VenHub, LLC and VenHub Services, LLC. By centralizing the ownership and management of VenHub’s intellectual property, VenHub IP, LLC ensures the protection and continued enhancement of the company’s competitive advantage across its product and service offerings.
VenHub Stores, LLC
VenHub Stores, LLC focuses on the ownership of Company-owned stores. Currently, there is one (1) Company-owned store located in the Los Angeles Airport (LAX). The Company intends to research the viability of opening more Company-owned stores through VenHub Stores, LLC for the purposes of seeding strategic marketplaces, for research and development purposes, and when required by local municipalities and or others where we cannot offer our stores otherwise to purchasers.
The operations of all four VenHub Subsidiaries are and will be closely coordinated, ensuring an integrated and streamlined approach to delivering VenHub’s cutting-edge autonomous retail solutions. As the Company develops additional product offerings and services and expands, additional subsidiaries may be developed and or established to optimize growth and address other corporate requirements.
Business Overview
VenHub is at the forefront of revolutionizing the retail landscape through the development of fully autonomous, technology-driven Smart Stores. The Company is dedicated to integrating advanced robotics and AI into our product offerings to create seamless, efficient, and user-friendly retail experiences. Our development process has been meticulously crafted to meet the growing demand for automation and personalized customer experiences in the retail industry. VenHub’s long-term strategy is to build a scalable platform company in autonomous retail, with the potential to create value through Smart Store deployments, data monetization, and software licensing. As the platform scales, the Company may explore additional monetization levers such as white-labeled deployments, geographic joint ventures, or strategic partnerships with large-format retailers.
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Summary of VenHub Smart Store Features
The following features have been categorized for our VenHub Smart Stores into three groups: (i) features that are currently available in our Version 1 Smart Stores, (ii) features that are actively in development, and (iii) future opportunities that are conceptual and may be introduced depending on available resources, technical feasibility, and market demand. The following table summarizes these categories:
| Category | Available
Now (Version 1 Smart Stores) |
In Development | Future
Opportunities (Conceptual) | |||
| Core Store Operations | Autonomous robotic picking, bagging, and delivery; mobile app ordering; basic analytics for store owners. | Expanded AI-driven analytics; enhanced forecasting tools. | Advanced biometric authentication for secure transactions. | |||
| Customer Experience | 24/7 autonomous operation; product browsing and checkout via mobile app. | 24/7 customer support infrastructure; training materials and self-service portal. Development of AI-driven personalization features, such as recommender engines to suggest products based on purchase history and preferences (currently in testing, not yet deployed). | Future expansion of AI-driven personalization capabilities, enabling tailored shopping experiences as technology matures | |||
| Compliance Features | Standard security and inventory tracking. | ID verification technology for age-restricted sales (alcohol/tobacco). | Expanded compliance modules as new regulations emerge. | |||
| Energy & Infrastructure | Energy-efficient lighting; battery backup. | Solar-powered alternatives (in development). | Next-generation sustainability features. | |||
| Formats & Scalability | 200 sq. ft. modular Smart Stores; expandable side-by-side units. | Mobile Smart Stores (on wheels); retrofit Smart Stores for existing spaces. | Larger-format Smart Stores; joint ventures with big-box retailers. | |||
| Security | Bulletproof glass, access controls, cameras, intrusion detection software. | Enhanced robotics-enabled lockers for package handling. | AI-driven predictive security and theft-prevention tools. |
Market Opportunity
VenHub’s revolutionary Smart Stores are poised to redefine the convenience store industry by leveraging cutting-edge automation, artificial intelligence (AI), and innovative design. According to research from Markets and Markets, the global retail automation market, valued at $27.6 billion in 2024, is projected to grow to $44.3 billion by 2029, representing a compound annual growth rate (CAGR) of approximately 10%. This growth reflects increasing retailer demand for efficient, automated solutions to streamline operations, enhance customer experiences, and address labor shortages. VenHub’s advanced technology aligns perfectly with this trajectory, offering seamless, automated retail experiences.
Based on data from Research and Markets, the unmanned convenience store market is expected to expand dramatically, from $67.0 million in 2019 to $1.6 billion by 2027, at a remarkable CAGR of approximately 52%. This explosive growth underscores a shift in consumer preferences toward autonomous, contactless shopping experiences powered by AI and robotics. VenHub’s Smart Stores, equipped with self-operational systems and autonomous product management, cater directly to this demand, positioning the company as a leader in this burgeoning market.
In recent years, retail theft has escalated to historic levels, with shrinkage reaching $112.1 billion in 2022, a significant increase from $93.9 billion in 2021, according to the National Retail Security Survey (2023). This persistent issue highlights the inadequacies of traditional retail security solutions. VenHub’s AI-powered security systems, biometric verification, and automated inventory tracking provide a comprehensive solution to combat theft and reduce shrinkage, offering substantial cost savings for retailers.
The retail industry is undergoing a seismic shift toward automation and AI integration. According to a report from Verizon News Center (March 2023), up to 70% of routine store tasks are expected to be automated by 2025, while Servion projects that 95% of customer interactions will be powered by AI by the same year. VenHub’s Smart Stores are designed to meet these technological demands, featuring advanced capabilities such as smart inventory systems, personalized customer engagement, and autonomous maintenance.
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The global convenience store market, comprising approximately 152,000 U.S. stores (as per NACS data, December 31, 2023) and 1 million globally (Convenience Store News, January 2023), was valued at $2.1 trillion in 2021 and is projected to grow to $3.1 trillion by 2028, representing a CAGR of approximately 6%, according to Grand View Research. VenHub’s modular and mobile Smart Store format provides a scalable solution to capture market share in this vast industry, serving both urban hubs and underserved regions. By addressing critical challenges and aligning with transformative industry trends, VenHub is uniquely positioned to capitalize on the opportunities in the evolving retail landscape.
Potential Levers for Future Growth
Even with the more than 1,000 plus pre orders from potential store owners, the Company has various other strategic opportunities to position VenHub for sustainable growth. Strategic initiatives are currently underway pertaining to geographic expansion, strategic partnerships, increased penetration of partners, the expansion of store formats, the expansion of product types, utilizing larger store footprints, and incorporating enhanced technology applications.
Currently Available. Our Smart Store design supports modular expansion today, allowing units to be scaled side-by-side to increase capacity.
In Development. We are developing additional formats such as mobile Smart Stores (relocatable modules on wheels) and modernized retro-fit Smart Stores (conversions of existing retail spaces). These designs are in development but not yet commercially available. While we are currently assessing cost and technical requirements, precise timing for market introduction has not been determined.
Future Opportunities. Over the longer term, we may explore larger Smart Store footprints, additional product category support (such as pet food, cosmetics, pharmacy, and electronics), and geographic expansion outside the U.S. These initiatives remain conceptual at this stage and will depend on available capital, market demand, and regulatory considerations.
Geographic Expansion. Based on the initial interest in pre orders from store owners primarily located in the United States, and knowing this interest was generated primarily from word-of-mouth and no material marketing expenditures, the Company believes there are numerous opportunities to expand into Europe, the Middle East and Africa, Latin America, and Asia. The underlying software and technology have been designed to accommodate for various SKU shapes and sizes, languages, currencies, and mobile applications.
Strategic Partnerships. The composition of the existing pre orders from potential store owners does not currently include any strategic corporate clients. VenHub believes various opportunities will evolve with brand partners, convenience store retail partners, consumer service providers such as gas stations and EV charging stations, athletic stadiums, and college, university, and corporate campuses.
Increase Penetration of Partners. As the Company scales and deploys numerous Smart Stores throughout several geographic markets, VenHub believes that there could be interest from a variety of local partners in their respective geographic regions who could assist VenHub with its geographic expansion. Areas of focus will include expanding local vendor relationships, Smart Store installer training, regulatory compliance, and potential store owner relationships. The Company will also emphasize localized consumer preferences and adhering to regional regulatory compliance requirements. VenHub will also continue to bolster collaborations with tech startups and other tech-oriented industry participants to provide continued access to innovative technologies.
Store Format Expansion. In addition to the existing fixed, 200 square foot Smart Store, the Company has designs for mobile Smart Stores and modernized retro-fit Smart Stores. Each of these store formats can potentially further extend VenHub’s addressable market.
| ● | Mobile Smart Stores: A VenHub mobile Smart Store on wheels would offer flexible and easily relocatable retail solutions. The mobile Smart Stores will have the ability to provide seamless shopping experiences in diverse locations including concerts, and various sporting and seasonal events. |
| ● | Modernized Retro-Fit Smart Stores: A VenHub retrofit Smart Store could transform existing retail spaces with smart, AI-powered solutions. The retrofit Smart Stores would provide efficiency, inventory management, and improved customer experience. |
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Product Type Expansion. VenHub believes there are numerous products that can be serviced by the Smart Stores beyond the traditional convenience store SKUs. The Company continues to evolve its product capabilities and has targeted pet food, cosmetics, pharmacy, certain groceries, and packaged consumer electronics as near-term opportunities.
Larger Stores. Based on the modular design of the VenHub Smart Stores, the Company currently has the capability to increase the footprint of the Smart Stores. This capability provides for increased SKU capacity for store owners. VenHub anticipates expanding into the larger Smart Store footprints once the Company has firmly established its production and assembly protocols, at scale, for the exiting Smart Store footprint.
Technology Enhancements.
Currently Available. Version 1 Smart Stores include robotics for product selection, core AI-driven functions focused on operational efficiency such as product verification and predictive maintenance, security features (bulletproof glass, cameras, intrusion detection), and mobile app integration for customers and store owners. Personalized product recommendations are not currently deployed; AI-driven personalization features remain under development as described below.
In Development. We are actively developing enhancements such as the use of autonomous mobile robots (AMRs) to support expanded store footprints and retrieval from additional shelving. AMRs are currently in early stage review and testing and are expected to enhance SKU capacity and support higher-value product categories. We are also exploring the integration of solar-powered energy alternatives to expand siting flexibility for store owners and evaluating robotic storage lockers for package delivery and pickup. We are also in early review and development of mobile Smart Stores, which would allow store owners the ability to add mobility as a feature. In addition, we are developing AI-driven personalization features, such as recommender engines to suggest products based on purchase history and preferences. These features remain in testing and are not yet deployed in live store environments.
Future Opportunities. Looking further ahead, we may integrate advanced biometric authentication, expanded AI-driven personalization capabilities at scale to provide tailored shopping experiences, and additional energy efficiency solutions.
VenHub’s Competitive Positioning
We believe we are one of the early leaders in providing end-to-end fully autonomous convenience store services using AI robotics. Our Smart Stores are designed to operate 24 hours per day, seven days a week. With no employees required to operate the Smart Sore, store owners have no store employee labor costs. We believe this provides a competitive cost advantage to store owners, particularly as labor costs have increased historically.
Each VenHub Smart Store will be designed with bullet proof glass, steel doors with padlock and electric locks, robust access control systems, and 24/7 monitoring with real-time alerts via the store owner app interface. Each Smart Store will include interior and exterior sensors as well as intrusion software for the robots. We believe these security features, combined with our self-service delivery windows, provide store owners with the ability to avoid retail shrinkage.
We believe our AI-enabled store owner app interface provides a comprehensive real-time inventory optimization platform that is unprecedented in the convenience store industry. In our view, these data driven insights competitively position VenHub to attract new store owners that could then significantly scale our operations from an emerging AI and robotics-enabled convenience store provider.
VenHub Competitive Landscape
The autonomous retail and smart vending space is rapidly evolving, with companies such as Amazon Go, AiFi, and Zippin introducing cashierless technology and vending innovations, among many potential other entrants and participants. However, VenHub distinguishes itself through a fully modular physical store platform with robotic picking arms, integrated AI, and an end-to-end operating model for independent store ownership. Unlike competitors focused solely on SaaS or retail chain use, VenHub enables entrepreneurial access to autonomous retail infrastructure, making it a first mover in this owner-operator model at scale.
Sales and Marketing
VenHub’s sales and marketing strategy plans are being designed to build brand awareness, attract a diverse range of customers, and establish the Company as a leader in the rapidly growing autonomous retail sector. The strategy is structured around a multi-channel approach that leverages digital marketing, influencer partnerships, public relations, and targeted advertising. Sales channels will include direct sales teams, partnerships with franchise operators, and online marketing campaigns aimed at industries such as retail, food service, healthcare, and education.
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VenHub’s sales and marketing strategy plans are being developed to prioritize key industries such as retail automation, autonomous grocery stores, and smart vending solutions, which is anticipated to allow the Company to quickly penetrate high-demand markets. Additionally, partnerships with large retailers, municipalities, and educational institutions are expected to drive early adoption and customer acquisition.
VenHub’s sales and marketing revenue model anticipates generating revenue through a combination of Smart Store hardware sales, monthly SaaS fees, maintenance and support contracts, advertising and sponsorships (e.g., branded panels), and licensing fees for intellectual property. Revenue from Smart Store sales is expected to be front-loaded, while SaaS, support, and advertising streams offer long-term recurring income.
Customer Support and Service
Exceptional customer support is critical for ensuring customer satisfaction, addressing issues, and fostering long-term loyalty. VenHub is committed to designing and implementing a plan that will provide world-class customer support through VenHub Services, LLC, including the following:
Currently Available: At present, we provide basic onboarding support, including user guides and initial setup assistance, to early customers of our Version 1 Smart Stores.
In Development: We are in the process of developing more robust support infrastructure that we expect to implement in connection with our initial commercial deployments in 2025. This includes:
| ● | 24/7 Support: A customer service model designed to provide round-the-clock assistance via chat, email, and phone. Development is ongoing, and while we currently expect rollout to align with our first wave of commercial deployments, specific timing and costs are subject to available resources and operational readiness. |
| ● | Self-Service Options: A planned self-service portal with FAQs, troubleshooting guides, and account management tools. This resource is in development and is expected to be phased in during 2025. |
| ● | Training and Resources: We are preparing detailed training materials such as video tutorials, step-by-step guides, and interactive content to enhance the customer experience. Development costs are still being assessed and timelines remain subject to available resources. |
Future Opportunities: Over time, we may expand our support model to include AI-driven customer service bots, predictive maintenance tools, and regionalized support teams. These initiatives remain conceptual at this stage and are dependent on scaling our commercial operations and availability of capital.
Smart Store Pre-Orders
As of June 30, 2025, we had received 1,467 pre-orders for our Smart Stores. We define a “pre-order” as a reservation placed by a potential customer pursuant to our standard Preorder/Reservation Agreement. A pre-order represents an expression of interest in purchasing a Smart Store but does not constitute a binding purchase commitment.
Under the terms of our Preorder Agreement:
| ● | Customers place a pre-order by submitting a Preorder Fee, which is held in a separate account and applied toward the final purchase price once a definitive purchase agreement is executed. |
| ● | Pre-orders do not lock in pricing, production slots, delivery dates, or final specifications of the Smart Store. Customers may cancel their pre-order at any time for a refund of the Preorder Fee. |
| ● | Neither the customer nor the Company is obligated to complete a transaction until a final VenHub Module Purchase Agreement (“Final Sales Agreement”) is executed and a deposit is collected. At that point, binding rights and obligations arise. |
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To manage production, we have established a tiered system. Customers with Tier 1 pre-orders receive priority in our manufacturing and delivery schedule, followed by Tier 2 and Tier 3 customers. Within each tier, order priority is generally based on the date the Preorder Fee was received.
Pre-Order Tiers
Customers may place a pre-order under one of three tiers:
| ● | Tier 1 Pre-Orders require a $2,500 Preorder Fee. Tier 1 customers receive priority production status, early access to deployment, and are placed at the front of the production line once their pre-order is converted into a signed agreement. |
| ● | Tier 2 Pre-Orders require a $250 Preorder Fee. Tier 2 customers receive dedicated production slots after all Tier 1 orders are completed. |
| ● | Tier 3 Pre-Orders require no upfront fee. Tier 3 customers are placed after Tiers 1 and 2, and are notified at least 90 days prior to their scheduled production window. |
Conversion and Deposits
As of June 30, 2025:
| ● | One pre-order had been converted into one signed purchase agreement. |
| ● | None of the pre-orders had yet resulted in completed Smart Store sales. |
| ● | We had collected approximately $136,895 in refundable pre-order deposits |
Geographic Distribution
Pre-orders span 77 U.S. states and territories and 10 countries. Of the 1,467 pre-orders received, 1,062 (representing 1,183 Smart Store units) were placed by customers in the United States. The largest concentrations are in California (196 pre-orders for 248 units), Florida (96 pre-orders for 108 units), Texas (90 pre-orders for 95 units), Georgia (3 pre-orders for 3 units), Iowa (1 pre-order for 1 unit), and Louisiana (1 pre-order for 1 unit). At the city level, early concentrations include Los Angeles, California (19 pre-orders for 36 units) and Las Vegas, Nevada (9 pre-orders for 9 units), which align with our planned initial commercial deployments. Additional pre-orders have been received internationally, including from the United Kingdom, Canada, Puerto Rico, Ecuador, Brazil, India, the Netherlands, Mexico, and Greece.
While we have received over 1,000 pre-orders for VenHub Smart Stores, these pre-orders are non-binding reservations and do not represent signed purchase contracts. The reference on our website to “over $300 million in pre-orders” reflects the aggregate potential contract value if all pre-orders were to convert to sales at current Smart Store pricing. As required by Nevada law, we emphasize that this figure is a non-binding indication of interest only. This figure is intended to illustrate the level of interest expressed by potential customers, but it should not be interpreted as revenue, backlog, or a guarantee of future sales. There can be no assurance that any of these pre-orders will convert into binding contracts or completed sales.
Proof of Concept and Beta Model Development
In May 2023, VenHub successfully completed the proof-of-concept model of its Smart Store, marking a significant milestone in the Company’s journey toward commercialization. While this initial model demonstrated full functionality, it did not yet encompass all the advanced features planned for our commercial version. The proof-of-concept provided valuable data and insights, which we have applied to the design of the beta model. The beta version, which has recently been completed, integrated feedback from our initial trials and incorporates the full range of features needed for initial commercial operations, which we launched in January 2025. This model will be the foundation upon which we build towards scalable commercial sales, ensuring a smooth transition from our initial product development to our market launch. VenHub is targeting ramping up our initial commercial deployments in 2025 with location throughout the greater Los Angeles, CA and Las Vegas, NV location followed by an expansion starting in the western half of the U.S. followed by a continuation in the eastern half of the U.S. in 2026 via its mega center strategy. We plan on working with third parties with experience in manufacturing core parts of our smart stores that VenHub will assemble to support a ramp up of our production in 2026 and 2027.
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Commercial Deployments and Production Ramp-Up
We are targeting our initial commercial deployments of VenHub Smart Stores in 2025, beginning with pilot installations in Los Angeles, California and Las Vegas, Nevada. These deployments will be supported by assembly at our Los Angeles facility with a transition to our Las Vegas facility. Our goal in 2025 is to validate operational readiness at commercial scale and refine our processes for logistics, installation, and customer support and to transition to our Las Vegas facility, along with entering into initial agreements and pilots with third party assembly of components that will allow us to accelerate the ramp up of our production.
Production Facilities and Milestones.
To scale operations beyond the pilot stage, we are pursuing a multi-phase production facility strategy:
| ● | 2025 — Pilot Deployments: Limited production from our Los Angeles facility to support initial installations in Los Angeles and Las Vegas. Milestones include permitting, equipment installation, and workforce onboarding and the set up and early stage start-up of our Las Vegas facility, along with entering into and commencing pilot partnerships with third party assembly of components to allow for the acceleration of production as we enter into 2026. |
| ● | 2026 — Mega Center Phase I: Ramp-up of our first large-scale production facility (the “Mega Center”), which we expect to bring online in late 2025 and early 2026. This facility is designed with an annual capacity of approximately 2,500 Smart Stores when fully operational. Initial milestones include equipment commissioning and process validation. We currently expect the facility to begin initial output in the fourth quarter of 2025 with phased production increases thereafter. This is our Las Vegas facility. |
| ● | 2027 — Mega Center Phase II/Additional Micro Centers: Expansion of Mega Center capacity and potential development of additional micro assembly centers closer to regional demand hubs. We expect these facilities, once established, to reduce shipping costs and installation lead times. Our target is to achieve annualized production capacity of approximately 2,500 additional Smart Stores by the end of 2027. We are presently looking at an east coast location for the second Mega Center and we will determine micro centers as we bring and support additional regions and locations. |
Capital Resources.
We estimate that the capital required for facility build-out, equipment purchases, and staffing to support our ramp-up through 2027 will be approximately $2 million to $5 million. To date, we have not secured all of the capital necessary for this build-out. We currently expect to fund these milestones through a combination of proceeds from debt or equity financings, customer deposits, and, once available, cash flow generated from Smart Store sales.
Our Product — VenHub Smart Stores
The VenHub Smart Store is an advanced, fully autonomous retail platform designed to revolutionize vendor management and customer engagement. In an increasingly dynamic and competitive marketplace, the ability to effectively manage supplier relationships and optimize operations is essential for business success. VenHub Smart Stores offer a comprehensive solution that not only simplifies vendor management but also provides businesses with the tools needed to enhance customer experiences, streamline operations, and reduce costs.
Key Highlights
VenHub Smart Stores serve as fully automated vending and smart stores that operate 24/7 without the need for on-site staff. The platform delivers a seamless, intuitive shopping experience through mobile apps, allowing customers to browse, select, and purchase products with ease. By leveraging cutting-edge AI technology, robotics, and real-time analytics, the VenHub Smart Store provides an unparalleled level of smart and operational efficiency.
VenHub’s proprietary Smart Stores are self-contained units initially sized at 200 square feet. The Smart Stores are modular and can flex in size into 2x–3x, or greater, store areas. If additional capacity is required, multiple Smart Stores can operate side-by-side. VenHub’s Smart Stores have been designed for indoor and outdoor use. Each Smart Store is capable of processing 600-900 SKUs and is capable of servicing up to 80 customers per hour.
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Physical characteristics of the Smart Stores include energy efficient lighting with temperature-controlled units. Interactive refrigerator coolers provide store owners with the ability to offer chilled products such as water and soda. The Smart Stores include power redundancy features with up to 12 hours of battery backup capabilities. VenHub’s Smart Stores include various branding panels that can provide incremental revenue opportunities via marketing agreements with various vendors. The assembly of each Smart Store is flexible, with store frames that can be folded down to allow for efficient transportation, either for the initial installation or for relocation purposes. Each Smart Store can be installed in less than seven days.
Safety features include 24/7 security monitoring, bulletproof glass, and self-service delivery windows. Each Smart Store includes interior and exterior sensors as well as intrusion software for the robots.
Each VenHub Smart Store is fully customizable to meet the specific needs of individual clients. Businesses can tailor the product offerings to suit local market demands, ensuring that the store’s inventory is aligned with consumer preferences. Current pre-order customers have expressed interest in utilizing VenHub Smart Stores for a wide array of product categories, including but not limited to:
| ● | Packaged Food and beverages: Packaged food items, snacks, and drinks. |
| ● | Health and beauty products: Personal care items, cosmetics, and wellness products. |
| ● | Household essentials: Everyday necessities such as cleaning supplies, toiletries, and basic household goods. |
| ● | Electronics: Smartphones, tablets, chargers, and headphones. |
| ● | Specialty branded items: Exclusive or high-end products specific to a brand or niche market. |
| ● | Alcohol: Depending on local regulations, VenHub Smart Stores can be configured to sell alcoholic beverages in compliance with licensing laws. |
Robotic Arms Technology
VenHub’s Smart Stores use robotic arms that have been manufactured by a leader in the global robotics industry. VenHub has performed more than 1,500 hours of testing and each robotic arm has a two-year warranty.
Each Smart Store operates with two robotic arms. The robotic arms function in tandem with each other and are also synchronized with the refrigerator cooler doors that store chilled products. If for some reason one robotic arm malfunctions, the other robotic arm can operate independently and can still complete customer purchase orders. Delivery optimization is based on proprietary synchronous, caching, and hierarchy software that delivers efficient picking, sorting, and packaging of products by weight. VenHub’s in-house firmware connects the robotic arms with the Company’s various software applications. The Company’s collective technology applications provide the Smart Stores with the ability to deliver up to 80 customer orders per hour.
VenHub’s Vision Technology
Computer vision technology has been integrated with the robotic arms. The technology uses machine learning algorithms to continuously adapt and recognize new products, allowing the Smart Stores to expand their inventory and optimize shelf management without manual reprogramming. For product picking, VenHub utilizes state-of-the-art image segmentation and point cloud generation to determine product positions with 1mm-2mm accuracy. The Company’s in-hub server can process each red, green, blue depth (“RGBD”) frame in less than 0.05 seconds, which allows for real time corrections. This technology results in 99.0% identification accuracy while adapting to offsets in product positions due to seismic activity or human activity. The vision system also provides for frequent updates of inventory count within a row to automate inventory management.
Regarding product placement, the Company uses its vision system plus a proprietary product placement algorithm to maximize the number of products per order. Placing position data is also used to clear items from the delivery system for cancelled and refunded orders. VenHub’s vision technology is also used in tandem with its robot gripper data to validate orders and ensure that customers have received all of the items they ordered.
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VenHub’s Store Owner Platform
Core to the VenHub store owner platform is a sophisticated AI-driven technology system, which integrates software with smart components and a store owner app interface. This sophisticated AI-driven analytics engine can continuously monitor sales trends, customer preferences, and inventory levels to optimize store operations. This AI system will enable the Smart Store to dynamically adjust its product offerings and inventory based on real-time data. For instance, the system will identify high-demand products in specific regions and automatically replenish stock to ensure continuous availability. Conversely, it can reduce or replace low-demand items, maximizing shelf space and inventory efficiency.
Smart Components
VenHub’s unique architecture involves robotic arms, vision technology, grippers, rails, delivery units, refrigerator coolers, software, and firmware that are all integrated providing the Company with the ability for numerous data capture opportunities, whereby AI-driven learning will then continuously enhance the performance of VenHub’s Smart Stores. Various efficiencies range from predictive ordering to automated inventory replenishment to avoid stockouts or overstocking.
Key features of the Smart Components data capture platform include:
| ● | Measurement: VenHub’s data capture capabilities provide the Company the ability to measure sales by SKU, sales patterns, store visitor patterns, and profits by SKU. |
| ● | Analytics: The Company’s store owner platform also has the ability to analyze inventory optimization, identify location-based patterns, and summarize geographic power usage |
| ● | Operations: The store owner can utilize the learnings from the captured data to improve operations with a focus on inventory management, purchase orders, security monitoring, and robot status for maintenance and repairs. |
Store Owner App Interface
VenHub is developing a cloud-based store owner app interface that is based on a centralized system that oversees the day-to-day operations of a store owner’s Smart Stores. The store owner app interface provides store owners with the flexibility to access Smart Store performance from anywhere, at any time. VenHub’s store owner app interface offers powerful reporting tools and dynamic dashboards that provide deep insights to assist store owners with supplier management, forecasting, automated ordering, inventory management, and seasonal planning.
Key capabilities include:
| ● | Real-Time Data Access: The store owner app interface delivers real-time insights into vendor activities, offering store owners the ability to monitor vendor performance metrics as they occur. Whether tracking delivery times, cost variances, or quality issues, VenHub’s software will provide up-to-the-minute data that informs timely and effective decision-making. |
| ● | Customizable Dashboards: VenHub’s customizable dashboards allow store owners to track KPIs that are most relevant to their business objectives. Store owners will be able to configure dashboards to display metrics such as cost savings, order fulfillment rates, and vendor risk levels. |
| ● | Detailed Reporting: VenHub’s software can generate comprehensive reports that provide an in-depth view of vendor performance, cost efficiency, and overall supply chain health. These reports can be tailored to specific timeframes or metrics, providing store owners with the ability to analyze trends, identify areas for improvement, and optimize vendor strategies. |
| ● | Inventory Management: VenHub’s system uses robotics to automate stock monitoring, replenishment, and predictive ordering, ensuring that products are consistently available without manual intervention. The automated inventory management process reduces labor costs and minimizes the risk of stockouts or overstocking. |
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| ● | Product Customization: Store owners will be able to curate their product selections based on regional consumer preferences and market demand. VenHub’s AI system will provide insights into purchasing patterns, helping store owners make data-driven decisions about inventory and product mix. In addition, the system will collect and analyze customer data to offer personalized recommendations, creating a shopping experience that is tailored to each individual consumer. |
| ● | Vendor Management: The Company has developed a centralized vendor hub to manage all vendor-related activities. The vendor hub incorporates user-friendly tools to store and manage vendor documents, including vendor profiles, contracts, contract renewals (including alerts), performance reviews, and certifications. The vendor hub also includes advanced search and filtering capabilities to allow store owners to find the right vendor for specific needs. |
VenHub’s Consumer App
VenHub’s mission is to provide consumers with a seamless shopping experience. Consumers will be able to interact with the Smart Stores via VenHub’s mobile app, which allows consumers to browse products, place orders, and make payments effortlessly. The store’s interface is designed to be intuitive, ensuring a frictionless shopping experience for all users.
Consumers will be able to download the VenHub app and sign in with their email address or with their Google, Apple, or Microsoft accounts. Once the app is downloaded, consumers will be able to place orders via any connected device and their purchases will be ready within minutes at the VenHub Smart Store. Consumers will be able to place orders for pickup with scheduled pick-up times. Consumers will also be able to place orders using delivery apps such as Grubhub, DoorDash, and Uber Eats.
The VenHub app allows consumers to pay using mobile devices, desktops, or voice assistants such as Siri and Alexa. The VenHub app will also support a variety of digital payment methods including credit cards, Apple Pay, Paypal, Stripe, and Square.
Consumers will be able to pick up their orders at the Smart Stores by placing the QR Code at the designated delivery window. VenHub’s Smart Stores are also capable of validating on-site age-restricted products with strict authentication measures including facial recognition and fingerprint verification. Age-restricted orders will be verified for pre-authorized users prior to accepting an order.
Security Features
VenHub’s Smart Store ecosystem is being built on a foundation of robust security and scalability, making it an ideal solution for businesses of all sizes. From small enterprises managing a few vendors to large corporations overseeing complex supply chains, VenHub offers a flexible and secure platform that can adapt to evolving business needs.
Key physical security attributes include:
| ● | Comprehensive Surveillance: Advance security cameras and motion detection systems are installed inside and outside of the Smart Store. |
| ● | Enhanced Security Features: The Smart Stores are equipped with vibration sensors, bulletproof glass, body sensors, and access sensors to detect unauthorized entry. |
| ● | Fortified and Controlled Access: The Smart Stores include steel doors with padlock and electric locks, robust access control systems, and 24/7 monitoring with real-time alerts via the store owner app interface. |
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Key digital security attributes include:
| ● | Encrypted Communications: Ensures secure data transmission and includes muti-factor authentication. |
| ● | Closed Loop System: VenHub maintains a secure and isolated network environment. |
| ● | IP-Based Firewall: Protects against cyber threats with advanced firewall technology. |
Intellectual Property
Intellectual property (“IP”) is critical to VenHub’s strategy, safeguarding the innovative technologies that drive our competitive advantage. Through patents, the Company protects our robotics, AI, and smart infrastructure solutions, creating barriers to entry for competitors and unlocking licensing and partnership opportunities. IP protection ensures our ability to innovate independently and differentiate our offerings in the market.
| ● | Impact of IP on Business Success: The strength of the Company’s IP portfolio directly influences our market leadership and growth potential. Securing and enforcing patents prevents competitors from replicating our innovations, preserving our revenue streams and enabling long-term monetization. Strong IP also bolsters investor confidence and supports strategic partnerships, further enhancing our market position. |
| ● | The Lifespan and Strategic Management of Patents: Provisional patents provide an initial 12-month protection period, during which we refine and transition innovations to utility patents with a 20-year lifespan. This timeline allows the Company to protect our advancements while continuously investing in new IP to maintain a dynamic, forward-looking portfolio that ensures long-term market relevance. |
| ● | Leveraging IP for Growth and Risk Management: The Company’s IP strategy not only protects our technology but also positions us for growth by enabling licensing, co-development, and partnerships. We mitigate risks through thorough patent drafting, prior art searches, and legal defense planning, ensuring our innovations remain secure as we lead the automated retail industry. |
| ● | Driving Innovation and Market Leadership: VenHub’s IP portfolio is a cornerstone of our business, enabling us to deliver cutting-edge solutions and maintain a competitive edge. By prioritizing innovation and robust IP management, we ensure sustainable growth and continue to shape the future of automated retail. |
Patents Pending
As of October 1 2025, the Company had 25 unique patent applications, consisting of 19 provisional patents and 6 utility patent applications. The patents were filed with the United States Patent and Trademark Office (USPTO) by the inventors, Shahan and Shoushana “Suzy” Ohanessian, our founders. We are in the process of formally assigning the patents to our wholly owned subsidiary, VenHub IP, LLC. These patents form a critical part of our strategy to protect our technological innovations and products. Provisional patents provide an initial filing date and grant the ability to label innovations as “patent pending,” but do not grant enforceable rights. To secure long-term protection, we intend to transition any provisional applications to non-provisional utility patents, initiating the USPTO’s thorough examination process for patentability. Our intellectual property portfolio reflects our commitment to innovation, with applications covering a range of technologies, including automated systems, advanced robotics, retail security, and smart infrastructure. We recognize the importance of safeguarding our proprietary technology, and through our planned utility patent filings, we aim to establish enforceable intellectual property rights that provide us with a competitive advantage in the market.
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Below is a list of our current patents pending:
| Application No. | Title | Filing Date | ||
| 63/606,111 | Automated Gantry System for Precise Item Handling, Storage and Delivery | 12/05/2023 | ||
| 18/970,312 | Automated Gantry System for Precise Item Handling, Storage, and Delivery | 12/05/2024 | ||
| 63/627,091 | Innovative Expandable Housing Unit with Hydraulic Expansion and Locking System for Enhanced Mobility and Structural Integrity | 1/31/2024 | ||
| 19/042,357 | Expandable and Collapsible Building Unit | 1/31/2025 | ||
| 63/636,727 | PrecisionPack: Automated Product Packaging and Delivery System with Advanced Bagging Technology | 4/20/2024 | ||
| 19/183,421 | Automated Product Packaging and Delivery System with Advanced Bagging Technology | 4/18/2025 | ||
| 63/636,730 | SyncFridge: Smart Synchronized Refrigerator System for Seamless Item Retrieval | 4/20/2024 | ||
| 19/183,272 | Automated Door Control System for Refrigerated Product Storage | 4/18/2025 | ||
| 63/791,979 | Modular Snap-In Component Mounting and Power Distribution System | 4/21/2025 | ||
| 63/639,337 | Versatile Pneumatic End Effector System with Rotating Gripper Attachment for Enhanced Product Handling | 4/26/2024 | ||
| 19/191,132 | Versatile Pneumatic End Effector | 4/28/2025 | ||
| 63/820,832 | Automated Security System With Intrusion Detection and Robotic Arm Defense | 6/10/2025 | ||
| 63/820,837 | Real-Time Cabinet Position Display System for Automated Retail Environments with Adjustable Shelf Heights | 6/10/2025 | ||
| 63/820,845 | Self-Cleaning and Sanitizing Retail Shelves | 6/10/2025 | ||
| 63/820,892 | Advanced Automated Packaging and Delivery System with Intelligent Boxing Technology | 6/10/2025 | ||
| 63/826,078 | Sonic Deterrent System for Unattended Retail Stores | 6/18/2025 | ||
| 63/827,236 | Smart Inventory Management Using Predictive AI | 6/20/2025 | ||
| 63/837,248 | AI-Enhanced Motion Detection System for Advanced Security Monitoring in Commercial Environments | 7/2/2025 | ||
| 63/840,274 | Gridlock Floor-Based Snap-In Power Distribution System for Seamless Component Integration | 7/8/2025 | ||
| 63/854,007 | Protective Film System for Bullet-Resistant Glass Surfaces | 7/30/2025 | ||
| 63/853,981 | Smart Bullet-Resistant Glass Surface with Adjustable Opacity | 7/30/2025 | ||
| 63/853,992 | Mobile Autonomous Store System for Dynamic Retail Environments | 7/30/2025 | ||
| 63/862,818 | Intelligent Backup Power Management System for Enhanced Resilience and Security in SmartStores | 8/13/2025 | ||
| 63/871,840 | GPS-Enabled Smart Anti-Theft Tags for Enhanced Retail Security | 8/28/2025 | ||
| 63/872,615 | Sliding Shelf System for Autonomous Repositioning of Shelving Units | 8/29/2025 | ||
| 63/872,700 | Tamper Evident Self Destructing Tags for Enhanced Security of High-Value Retail Items | 8/29/2025 | ||
| 63/636,730 | SyncFridge: Smart Synchronized Refrigerator System for Seamless Item Retrieval (Expired Provisional Application) | 4/20/2024 | ||
| 19/183,272 | Automated Door Control System for Refrigerated Product Storage (Pending Utility Application) | 4/18/2025 | ||
| 63/791,979 | Modular Snap-In Component Mounting and Power Distribution System (Pending New Provisional Application) | 4/21/2025 | ||
| 63/639,337 | Versatile Pneumatic End Effector System with Rotating Gripper Attachment for Enhanced Product Handling (Expired Provisional Application) | 4/26/2024 | ||
| 19/191,132 | Versatile Pneumatic End Effector (Pending Utility Application) | 4/28/2025 | ||
| 63/820,832 | Automated Security System With Intrusion Detection and Robotic Arm Defense (Pending New Provisional Application) | 6/10/2025 | ||
| 63/820,837 | Real-Time Cabinet Position Display System for Automated Retail Environments with Adjustable Shelf Heights (Pending New Provisional Application) | 6/10/2025 | ||
| 63/820,845 | Self-Cleaning and Sanitizing Retail Shelves (Pending New Provisional Application) | 6/10/2025 | ||
| 63/820,892 | Advanced Automated Packaging and Delivery System with Intelligent Boxing Technology (Pending New Provisional Application) | 6/10/2025 | ||
| 63/826,078 | Sonic Deterrent System for Unattended Retail Stores (Pending New Provisional Application) | 6/18/2025 | ||
| 63/827,236 | Smart Inventory Management Using Predictive AI | 6/20/2025 | ||
| 63/837,248 | AI-Enhanced Motion Detection System for Advanced Security Monitoring in Commercial Environments | 7/2/2025 | ||
| 63/840,274 | Gridlock Floor-Based Snap-In Power Distribution System for Seamless Component Integration | 7/8/2025 |
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The key areas of focus for our intellectual property include:
| ● | Robotics: Pneumatic end effector system, integrated retail shelves system (including display, installation, and replacement), and security system with automated robotic guards. |
| ● | Artificial Intelligence: Motion sensor technology and biometric verification, smart inventory management, virtual reality, and repair. |
| ● | Automation: Autonomous product management (handling, storage, and delivery), mobile store system (real-time position display, cabinet rearrangement), and self-operational system (self-repair and self-clean). |
| ● | Store Operations: Assets and techniques (housing unit, mounting, refrigeration, power distribution, and backup), tech-enabled operations (vendor management, sanitation, LED lighting, and EMI shielding), and security protection (tracking, tagging, and detection). |
| ● | Process: Precise item placement, intelligent bagging, and customer-tailored delivery methods. |
Trademarks
We have filed a trademark application for the mark “VenHub” with the United States Patent and Trademark Office (USPTO), under serial number 97785070. The application was filed on February 7, 2023, and is currently under examination. This trademark is a key asset for protecting our brand identity and marketing efforts. We will continue to monitor the application process and take necessary actions to secure registration of the “VenHub” mark as part of our intellectual property strategy.
Research and Development
Innovation is the driving force behind VenHub’s product development strategy. We will continue to invest in research and development to stay at the forefront of technological advancements in automations and robotics augmented by AI, machine learning, and the continued integration of the Internet of Things (IoT).
These efforts are expected to continuously position VenHub’s Smart Stores at the forefront of the convenience store industry.
The key areas of focus in our research and development strategies will include AI and Machine Learning, Enhanced Personalization, and Augmented Reality Shopping.
VenHub plans to continue to focus its research and development efforts to further improve its comprehensive proprietary software platform that has been designed to simplify and optimize vendor management, enhance operational efficiency, and drive strategic decision-making.
Manufacturing and Supply
VenHub, a Nevada corporation, currently operates out of a leased facility in Las Vegas, NV, which serves as the Company’s principal research and development facility. This facility has the capacity to assemble approximately eight Smart Stores per month. The Company in June of 2025 entered into lease in Las Vegas, NV and is currently working to build this location out as its initial West Coast mega center. As the Company scales, it plans to establish a strategic manufacturing and support network, including mega centers and regional micro centers, to meet increasing demand and enhance operational efficiency. VenHub acknowledges that scaling from beta testing to full-scale deployments involves operational risks, including but not limited to manufacturing consistency, onboarding procedures for new store owners, and developing robust customer support systems. As such, the initial go-to-market phase will prioritize measured growth to ensure quality assurance, customer satisfaction, and operational stability.
Mega Centers
The Company is in the process of opening one mega center in Las Vegas, NV and plans to open an additional mega center on the east coast. The west coast mega center was leased in the second quarter of 2025 and should be operational by the third quarter of 2025, with the east coast mega center following a similar timeline. These mega centers will serve as primary hubs for the production, assembly, and large-scale logistical operations of VenHub’s Smart Stores.
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Each mega center will be retrofitted from existing warehouse facilities, minimizing capital expenditure and enabling the Company to scale operations rapidly without requiring significant upfront investment. The centers will feature state-of-the-art production capabilities and efficient logistics to support annual production capacity of up to 2,500 Smart Stores per mega center. Additionally, the mega centers will include showrooms and meeting spaces to showcase VenHub’s Smart Stores to prospective customers and partners. The estimated operational size of each mega center is approximately 50,000 square feet.
Micro Centers
To complement the mega centers, VenHub plans to establish regional micro centers based on localized demand for its Smart Stores. These micro centers will be focused on providing maintenance, repair, and operational support to Smart Stores in their respective regions. Strategically located near customer markets, these centers will enable quick response times for replacements and urgent maintenance needs, ensuring high levels of service and customer satisfaction.
The micro centers will also serve as training hubs, offering comprehensive programs for local vendors and store owners to enhance operational knowledge and efficiency. Similar to the mega centers, microcenters will be retrofitted from existing warehouse facilities, with an estimated operational size of 15,000 square feet. This capital-efficient approach allows the Company to scale proportionately with demand while minimizing upfront costs.
Manufacturing and Supply Chain
VenHub will rely on a diverse and robust supply chain, sourcing components and materials from a combination of domestic and international suppliers. The supply chain strategy emphasizes securing high-quality, cost-effective materials and components necessary for the manufacturing and assembly of Smart Stores.
VenHub’s Smart Stores require a combination of raw materials and specialized components, including structural steel, refrigeration units, robotics hardware, electronic components, sensors, and display systems. These materials and components are sourced through a combination of domestic and international suppliers.
Raw Materials Availability
Most structural materials, such as steel and aluminum, are widely available in the United States; however, prices are subject to commodity market fluctuations. Refrigeration and display units are available from multiple vendors, though lead times may vary depending on demand cycles. Certain electronic components, such as semiconductors and advanced sensors, are subject to global supply constraints, which may result in extended lead times or increased costs.
Supplier Concentration
While the Company seeks to diversify its supplier base, certain specialized components, including robotics assemblies and select semiconductor chips, are currently sourced from a limited number of vendors. As a result, the Company could face supply disruptions if these vendors encounter production delays, quality issues, or geopolitical restrictions. To mitigate these risks, VenHub is developing secondary supplier relationships and evaluating long-term agreements to secure critical components.
Supply Chain Strategy
The Company’s supply chain strategy emphasizes:
| ● | Partnering with both domestic and international suppliers to balance cost, quality, and compliance requirements; |
| ● | Prioritizing suppliers located in proximity to the Company’s assembly and distribution centers to reduce logistics costs and lead times; and |
| ● | Implementing rigorous quality control standards and compliance oversight, including adherence to environmental and labor standards. |
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By combining supplier diversification with proactive risk management, the Company seeks to ensure consistent availability of raw materials and components while maintaining flexibility to adapt to changing market conditions.
VenHub will implement rigorous quality control standards across its supply chain and work closely with suppliers to ensure compliance with applicable regulations, including environmental and labor standards. By leveraging this flexible and resilient supply chain strategy, the Company aims to support efficient operations and seamless scalability as demand for Smart Stores grows.
Government Regulation
VenHub operates in a highly regulated environment, subject to federal, state, and local laws governing various aspects of its business. These regulations include, but are not limited to, consumer protection laws, data privacy and security requirements, product safety standards, labor laws, and environmental regulations. Compliance with these regulations is critical to the design, manufacturing, deployment, and operation of VenHub’s Smart Stores.
At the federal level, VenHub must adhere to laws such as the Federal Trade Commission Act (FTC Act), which governs advertising and consumer protection, and the Americans with Disabilities Act (ADA), which requires that our stores are accessible to individuals with disabilities. Additionally, as our operations involve data collection and AI-powered functionalities, we are subject to privacy regulations such as the California Consumer Privacy Act (CCPA), the Federal Data Protection and Information Security Act, and, where applicable, the General Data Protection Regulation (GDPR).
On the state and local levels, VenHub’s Smart Stores are subject to zoning, building codes, and licensing requirements specific to each jurisdiction where our stores are installed. Compliance with these regulations includes obtaining necessary permits for site deployment, ensuring adherence to safety standards, and meeting local requirements for energy usage and waste disposal. Additionally, environmental laws, including those related to recycling and emissions, may impact the manufacturing and deployment of our products.
As VenHub expands into new geographic markets, the Company is actively developing and working on building a compliance framework adaptable to local regulatory regimes, including health department certifications, local food handling laws, biometric data use requirements, and alcohol vending laws, if and when required. VenHub may partner with local operators or pursue city-specific licensing models to address jurisdictional barriers. Given that most of the real estate responsibilities, including site selection, leasing, and compliance, rest with the smart store owner, VenHub will work within the legal and regulatory framework in support of our customers.
VenHub’s compliance program will include regular monitoring of regulatory changes, internal audits, and employee training to ensure adherence to applicable laws. Any material changes to regulations or failure to comply could impact our operations, financial performance, or reputation. By proactively managing these obligations, VenHub aims to minimize regulatory risks and uphold the highest standards of ethical and legal compliance.
We are generally subject to laws and regulations relating to the robotics and convenience store automation industries in the jurisdictions in which we conduct our business or in some circumstances, of those jurisdictions in which we offer our convenience store automation systems, as well as the general laws and regulations that apply to all businesses, such as those related to privacy and personal information, tax and consumer protection. These laws and regulations are developing and vary from one jurisdiction to another and future legislative and regulatory action, court decisions or other governmental action, which may be affected by, among other things, political pressures, attitudes and climates, as well as personal biases, may have a material and adverse impact on our operations and financial results.
Data Privacy and Security
VenHub is committed to the responsible use and safeguarding of customer, vendor, and operational data. As part of our business operations, we will collect and utilize data to optimize the functionality of our Smart Stores, enhance customer experience, and improve operational efficiency. This data may include, but will not be limited to, transaction records, inventory management data, and, where applicable, customer biometric and behavioral information. All data collected will be handled in compliance with applicable privacy laws and regulations, including but not limited to the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR) where applicable.
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To ensure data security, the Company will employ robust safeguards, including advanced encryption protocols, secure cloud storage solutions, and multi-layered access controls. Regular audits, vulnerability assessments, and employee training programs will further strengthen our data protection framework. Additionally, the Company will adhere to developing and monitoring strict internal policies regarding data retention, access, and sharing, ensuring that data is used solely for its intended purposes and only shared with trusted third parties as necessary to support business operations or comply with legal obligations.
Artificial Intelligence and Machine Learning
VenHub will integrate advanced artificial intelligence (AI) and machine learning (ML) technologies into its Smart Stores to enhance automation, security, and customer interactions. These technologies will enable functionalities such as real-time inventory tracking, personalized customer experiences, and biometric verification for secure transactions. VenHub’s AI-driven systems are and will be designed to continuously improve through machine learning algorithms, ensuring the accuracy, efficiency, and scalability of our solutions.
The Company recognizes the importance of ethical AI use and is committed to ensuring that our AI systems operate transparently and without bias. The Company’s development processes will include rigorous testing and validation to maintain compliance with regulatory standards and industry best practices. By leveraging AI responsibly, the Company aims to provide innovative, efficient, and secure retail solutions while safeguarding the trust and confidence of our customers, partners, and stakeholders.
Employees and Human Capital Resources
The Company currently employs two full-time employees and over 20 independent contractors. These individuals support key areas of the Company’s operations, including management, technology development, and production. The Company plans to expand its workforce as it scales, including the potential conversion of some independent contractors to full-time employees. Additionally, the Company intends to engage a Professional Employer Organization (PEO) to optimize costs associated with scaling, streamline payroll and compliance processes, and develop comprehensive fringe benefit programs to attract and retain top talent during the early development cycle of the business.
As of the date of this filing, our senior management team leads strategic planning, business development, and operations. Our technology team focuses on advancing the Company’s robotic AI platform, with an emphasis on software design and enhancing efficiencies for both consumers and store operators. Production and assembly team members prioritize improving processes to support the scalable deployment of our Smart Stores. As the Company grows, we anticipate increasing headcount in these critical areas to support ongoing innovation and operational expansion.
The Company places strong emphasis on fostering an innovative and collaborative work environment. In alignment with SEC Regulation S-K 101(c)(2)(ii), the Company considers human capital measures and objectives material to its operations, including employee recruitment, retention, training, and diversity initiatives. These measures aim to maintain a skilled workforce capable of driving the Company’s strategic goals. Specific programs include providing training in advanced robotics, AI technologies, and operational best practices.
The Company’s flexible business model allows it to adjust team resources based on sales growth and operational needs. This adaptability supports sustainable growth while aligning with the Company’s financial objectives and strategic priorities.
Corporate Information
VenHub Global, Inc. was incorporated in the state of Wyoming on January 31, 2023 as “Autonomous Solutions, Inc.” On August 15, 2024, the Company domesticated in the state of Delaware as “VenHub Global, Inc.” the Company is currently in the process of redomiciling in Nevada which shall be completed prior to the effectiveness of this Registration Statement. Our executive offices are located at 5360 Procyon St. Las Vegas NV 89118. Our website is https://www.VenHub.com. The information contained on our website or accessible thereby shall not be deemed to be incorporated into this Offering Circular.
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Selected Risks Associated with the Business
Our business is subject to many risks, as more fully described in the section titled ”Risk Factors” starting on page 4 of this Offering Circular. You should read and carefully consider these risks, together with the risks set forth under the section titled ”Risk Factors” and all of the other information in this Offering Circular, including the financial statements and the related notes included elsewhere in this Offering Circular, before deciding whether to invest in our securities. If any of the risks discussed in this Offering Circular actually occur, our business, financial condition or operating results could be materially and adversely affected. In particular, such risks include, but are not limited to, the following:
| ● | We have a limited operating history upon which to evaluate our performance and have not yet generated profits or revenue. |
| ● | Our technology is not yet fully developed, and there is no guarantee that we will be able to develop and produce a fully working production ready model of our core product. |
| ● | We will be required to raise additional capital in order to continue to develop our technology and commercial ready versions of our product. |
| ● | We rely on a small management team to execute our business plan. |
| ● | We will need to raise additional capital, which might not be available or might be available on unfavorable terms, if at all. |
Our auditor has raised substantial doubt as to our ability to continue as a “going concern.”
We have registered several trademarks related to our name, “VenHub,” as well as VenHub’s logo. We believe our name and logo are important brand identifiers for our customers.
Description Of Properties And Facilities
We do not own any real property. The Company’s principal business and corporate address is 518 S. Fair Oaks Ave, Pasadena, CA 91105, which is comprised of office and warehouse/assembly space On August 7, 2023, the Company signed a lease for the property which has a fixed 3% increase annually expiring in April 2027. (right to use)
On February 11, 2025, the Company signed a lease for a new warehouse in Bell Gardens, CA. The purpose of the space is to store materials for future store orders and is month to month with a base rent of $15,000.
On April 10, 2025, the Company entered into a new lease agreement for an assembly production facility in Las Vegas, Nevada. The right to use, triple net lease is for a term of two years with a base rent of $12,371.
On May 29, 2025, the Company signed a right of entry Los Angeles County Metro Transportation Authority for its flagship Company owned store. The right of entry is month to month with a $2,000 monthly fee.
We are continuing to explore expansion of our production and facilities to the East Coast, Central US and Southern US. Once our domestic expansion has been completed, we plan to expand into other continents and countries. We plan on developing locations to meet demand while also partnering with other parties to optimize customer reach and costs associated with deploying our offerings.
Legal Proceedings
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, in the opinion of our management, would individually or taken together have a material adverse effect on our business, financial condition, results of operations or cash flows. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Registration Statement on Form S-1 under the Securities Act, and the rules and regulations promulgated thereunder, with respect to the Common Stock offered hereby. This prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the exhibits thereto. While we have summarized the material terms of all agreements and exhibits included in the scope of this Registration Statement, for further information regarding the terms and conditions of any exhibit, reference is made to such exhibits. We may be subject to the reporting and other requirements of Section 15(d) of the Securities Exchange Act of 1934 and will continue to file periodic reports with the Securities and Exchange Commission, including a Form 10-K for the year ended December 31, 2025, and periodic reports on Form 10-Q during that period. We will make available to our shareholders annual reports containing financial statements audited by our independent auditors and our quarterly reports containing unaudited financial statements for each of the first three quarters of each year; however, we will not send the annual report to our shareholders unless requested by an individual shareholder.
For further information with respect to us and the Common Stock, reference is hereby made to the Registration Statement and the exhibits thereto, which may be inspected and copied at the principal office of the SEC, 100 F Street NE, Washington, D.C. 20549, and copies of all or any part thereof may be obtained at prescribed rates from the Commission’s Public Reference Section at such addresses. Also, the SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. To request such materials, please contact Shahan Ohanessian our President and Chief Executive Officer.
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INDEX
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Stockholders of VenHub Global, Inc.
Results of Review of Interim Financial Information
We have reviewed the balance sheet of VenHub Global, Inc. (the Company) as of June 30, 2025, and March 31, 2025, and the related statements of operations, stockholder’s deficit, and cash flows for the periods then ended, and the related notes (collectively referred to as the interim financial statements). Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company's operating losses, working capital deficit and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Review Results
These interim financial statements are the responsibility of the Company's management. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We have served as the Company’s auditor since 2025.
/s/ Bush & Associates CPA, LLC
Bush & Associates CPA, LLC (PCAOB 6797)
Henderson, Nevada
October 3, 2025
F-2
VENHUB GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,687,820 | $ | 1,352,892 | ||||
| Inventory | 1,079,638 | 900,543 | ||||||
| Deferred offering cost | — | 88,704 | ||||||
| Prepaid expenses | 92,988 | 33,707 | ||||||
| Total current assets | 4,860,446 | 2,375,846 | ||||||
| Non-current assets | ||||||||
| Security deposit | 71,074 | 16,074 | ||||||
| Property and equipment, net | 592,818 | 109,664 | ||||||
| Right of use asset | 930,316 | 188,918 | ||||||
| Total non-current assets | 1,594,208 | 314,656 | ||||||
| Total assets | $ | 6,454,654 | $ | 2,690,502 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 417,140 | $ | 491,868 | ||||
| Sales tax payable | 40,100 | — | ||||||
| Current operating lease liability | 174,254 | 174,254 | ||||||
| Customer deposits | 136,895 | — | ||||||
| Deferred revenue | 1,750,000 | 137,895 | ||||||
| Accrued payroll and compensation | 2,082,466 | 1,678,466 | ||||||
| Total current labilities | 4,600,855 | 2,482,483 | ||||||
| Noncurrent liabilities | ||||||||
| Interest payable | 266,578 | 65,889 | ||||||
| Right of use liability | 954,833 | 269,761 | ||||||
| Promissory note | 2,500,000 | — | ||||||
| Convertible debt at fair value | 4,258,211 | 3,542,797 | ||||||
| Total noncurrent liabilities | 7,979,622 | 3,878,447 | ||||||
| Total liabilities | 12,580,477 | 6,360,930 | ||||||
| Commitments and contingencies (note 3 and 7) | ||||||||
| Stockholders’ deficit | ||||||||
| Preferred Stock A – $0.001 par value; 100,000 shares authorized; 100,000 shares issued and outstanding as of June 30, 2025 and December 31, 2024 | 100 | 100 | ||||||
| Preferred Stock B – $0.001 par value; 20,000,000 shares authorized; 616,271 shares issued and outstanding as of June 30, 2025 and 593,742 as of December 31, 2024 | 616 | 594 | ||||||
| Common stock – $0.001 par value; 100,000,000 shares authorized; 32,509,105 shares issued and outstanding as of June 30, 2025 and 26,500,959 as of December 31, 2024 | 32,509 | 26,501 | ||||||
| Additional paid-in capital | 43,488,813 | 16,071,724 | ||||||
| Accumulated deficit | (49,647,861 | ) | (19,769,347 | ) | ||||
| Total stockholders’ deficit | (6,125,823 | ) | (3,670,428 | ) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | 6,454,654 | $ | 2,690,502 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
VENHUB GLOBAL, INC. (NEVADA)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2025 (Unaudited) | 2024 (Audited) | 2025 (Unaudited) | 2024 (Audited) | |||||||||||||
| Revenue | ||||||||||||||||
| Sales | $ | 13,615 | $ | — | $ | 513,615 | $ | — | ||||||||
| Total revenue | 13,615 | — | 513,615 | — | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Direct costs | 6,829 | — | 330,217 | — | ||||||||||||
| Total cost of goods sold | 6,829 | — | 330,217 | — | ||||||||||||
| Gross profit | 6,786 | — | 183,398 | — | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | 1,675,630 | 1,161,752 | 10,412,664 | 4,570,185 | ||||||||||||
| Payroll and compensation | 317,500 | 317,500 | 635,000 | 635,000 | ||||||||||||
| Research and development | 131,016 | 251,693 | 432,371 | 329,773 | ||||||||||||
| Total operating expenses | 2,124,146 | 1,730,945 | 11,480,035 | 5,534,958 | ||||||||||||
| (Loss) from operations | (2,117,360 | ) | (1,730,945 | ) | (11,296,637 | ) | (5,534,958 | ) | ||||||||
| Other expenses | ||||||||||||||||
| Settlement expense | 18,288,430 | — | 18,288,430 | — | ||||||||||||
| Interest expense | 120,000 | — | 228,033 | — | ||||||||||||
| Change in fair value of convertible debt | 3,849 | — | 65,414 | — | ||||||||||||
| Total other expenses | 18,412,279 | — | 18,581,877 | — | ||||||||||||
| Income tax provision | — | — | — | — | ||||||||||||
| Net (loss) | (20,529,639 | ) | (1,730,945 | ) | (29,878,514 | ) | (5,534,958 | ) | ||||||||
| (Loss) per share | ||||||||||||||||
| Basic and diluted | $ | (0.68 | ) | $ | (0.06 | ) | $ | (1.03 | ) | $ | (0.21 | ) | ||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic and diluted | 30,307,051 | 26,021,956 | 28,765,414 | 25,650,665 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
VENHUB GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 (UNAUDTIED)
| Common Stock | Preferred Stock A | Preferred Stock B | Additional | Total | ||||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of shares | Amount | Number of shares | Amount | Paid-In Capital | Accumulated Deficit | Stockholders’ Equity | ||||||||||||||||||||||||||||
| Beginning, January 1, 2025 | 26,500,959 | $ | 26,501 | 100,000 | $ | 100 | 593,742 | $ | 594 | $ | 16,071,724 | $ | (19,769,347 | ) | $ | (3,670,428 | ) | |||||||||||||||||||
| Issuance of common stock | 1,668,662 | 1,668 | — | — | — | — | 7,607,431 | — | 7,609,099 | |||||||||||||||||||||||||||
| Issuance of preferred stock B, crowdfunding | — | — | — | — | 10,974 | 11 | 102,690 | — | 102,701 | |||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (9,348,875 | ) | (9,348,875 | ) | |||||||||||||||||||||||||
| Ending March 31, 2025 | 28,169,621 | $ | 28,169 | 100,000 | $ | 100 | 604,716 | $ | 605 | $ | 23,781,845 | $ | (29,118,222 | ) | $ | (5,307,503 | ) | |||||||||||||||||||
| Issuance of common stock | 66,785 | 67 | — | — | — | — | 304,473 | — | 304,540 | |||||||||||||||||||||||||||
| Settlement shares | 3,462,375 | 3,462 | — | — | — | — | 15,784,968 | — | 15,788,430 | |||||||||||||||||||||||||||
| Issuance of common stock – warrants | 810,324 | 811 | — | — | — | — | 3,499,189 | 3,500,000 | ||||||||||||||||||||||||||||
| Issuance of preferred stock B, crowdfunding | — | — | — | — | 11,555 | 11 | 118,338 | — | 118,349 | |||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (20,529,639 | ) | (20,529,639 | ) | |||||||||||||||||||||||||
| Ending June 30, 2025 | 32,509,105 | $ | 32,509 | 100,000 | $ | 100 | 616,271 | $ | 616 | $ | 43,488,813 | $ | (49,647,861 | ) | $ | (6,125,823 | ) | |||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
VENHUB GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 (AUDITED)
| Common Stock | Preferred Stock A | Preferred Stock B | Additional | Total | ||||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of shares | Amount | Number of shares | Amount | Paid-In Capital | Accumulated Deficit | Stockholders’ Equity | ||||||||||||||||||||||||||||
| Beginning, January 31, 2024 | 24,454,000 | $ | 24,454 | 100,000 | $ | 100 | 317,677 | $ | 318 | $ | 9,492,015 | $ | (10,376,645 | ) | $ | (859,758 | ) | |||||||||||||||||||
| Issuance of preferred stock A | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Issuance of common stock | 1,317,999 | 1,317 | — | — | — | — | 2,898,281 | — | 2,899,598 | |||||||||||||||||||||||||||
| Issuance of preferred stock B, crowdfunding | — | — | — | — | 95,322 | 95 | 566,244 | — | 566,339 | |||||||||||||||||||||||||||
| Stock purchase agreement | — | — | — | — | — | — | 35,000 | 35,000 | ||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (3,804,013 | ) | (3,804,013 | ) | |||||||||||||||||||||||||
| Ending March 31, 2024 | 25,771,999 | $ | 25,771 | 100,000 | $ | 100 | 412,999 | $ | 413 | $ | 12,991,540 | $ | (14,180,658 | ) | $ | (1,162,834 | ) | |||||||||||||||||||
| Issuance of common stock | 223,261 | 223 | — | — | — | — | 490,951 | — | 491,174 | |||||||||||||||||||||||||||
| Stock purchase agreement | 35,524 | 36 | — | — | — | — | 199,964 | — | 200,000 | |||||||||||||||||||||||||||
| Issuance of preferred stock B, crowdfunding | — | — | — | — | 98,472 | 99 | 568,166 | — | 568,265 | |||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (1,700,145 | ) | (1,700,145 | ) | |||||||||||||||||||||||||
| Ending June 30, 2024 | 26,030,784 | $ | 26,030 | 100,000 | $ | 100 | 511,471 | $ | 512 | $ | 14,250,621 | $ | (15,880,803 | ) | $ | (1,603,540 | ) | |||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-6
VENHUB GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Six Months Ended June 30, |
||||||||
| 2025 (Unaudited) |
2024 (Audited) |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) from continuing operations | $ | (29,878,514 | ) | $ | (5,534,958 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Settlement expense | 18,288,430 | — | ||||||
| Share based compensation | 7,913,639 | 3,390,772 | ||||||
| Depreciation expense | 27,952 | 23,150 | ||||||
| Unrealized loss on convertible debt | 65,414 | — | ||||||
| Change in operating assets and liabilities: | ||||||||
| Inventory | (179,095 | ) | — | |||||
| Deferred offering cost | (88,704 | ) | — | |||||
| Interest payable | 200,689 | — | ||||||
| Prepaid expenses | (59,281 | ) | (5,000 | ) | ||||
| Deferred revenue | 1,750,000 | 70,250 | ||||||
| Customer deposits | (1,000 | ) | — | |||||
| Security deposit | (55,000 | ) | — | |||||
| Change in operating right of use asset | (741,398 | ) | 35,626 | |||||
| Change in operating right of use liability | 685,072 | (82,079 | ) | |||||
| Accounts payable and accrued expenses | 74,728 | 88,513 | ||||||
| Sales tax payable | 40,100 | |||||||
| Accrued payroll and compensation | 404,000 | 609,300 | ||||||
| Net cash (used) in operating activities | (1,552,968 | ) | (1,404,426 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Property and equipment, net | (483,154 | ) | — | |||||
| Property and equipment, net | — | — | ||||||
| Net cash (used) in investing activities | (483,154 | ) | — | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from crowdfunding | 221,050 | 1,134,604 | ||||||
| Proceeds from convertible debt, net | 650,000 | — | ||||||
| Proceeds from common stock issuance | — | 235,000 | ||||||
| Proceeds from warrant issuance | 3,500,000 | — | ||||||
| Proceeds from related party notes | — | 13,156 | ||||||
| Net cash provided by financing activities | 4,371,050 | 1,382,760 | ||||||
| Net (decrease) increase in cash and cash equivalents | 2,334,928 | (21,666 | ) | |||||
| Cash and cash equivalents, beginning of period | 1,352,892 | 46,760 | ||||||
| Cash and cash equivalents, end of period | $ | 3,687,820 | $ | 25,094 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-7
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 1. | ORGANIZATION AND LINE OF BUSINESS |
VenHub, Global Inc. (which may be referred to as the “Company”, “we,” “us,” or “our” doing business as Venhub) was incorporated 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”). The Company is currently in the process of redomiciling in Nevada which shall be completed prior to the effectiveness of this Registration Statement.
The Company is a business-to-business operation that provides an innovative approach to the retail industry, specifically in the convenance store sector.
VenHub 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.
On September 16, 2024, the Company created three wholly owned subsidiary limited liability companies:
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 was incorporated in Nevada on June 4, 2025, and is designed to focus on ownership of Company-owned stores.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or any other interim period or for any other future year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the period ended December 31, 2024, included in the Company’s 2024 Annual Report filed herewith.
Going Concern
As of June 30, 2025, the Company has sold two stores and assembled one Company owned store which was operational on June 6, 2025. However, it will likely incur losses prior to achieving profitability. The Company has incurred losses since inception, has a working capital deficit, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. During the next twelve months, the Company intends to fund its operations with funding from a crowdfunding campaign (see Note 6) equity financing (see note 13), debt financing (see note 10) and funds from revenue producing activities from fulfilling the pre order list. If the Company cannot secure additional short-term capital, it may cease operations. These financial statements and related notes thereto do not include any adjustments that might result from these uncertainties.
F-8
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Inventory
Inventories are stated at the lower of cost or estimated realizable value. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company’s product based on management’s judgment, future commercialization is considered probable, and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The following table illustrates inventory as of June 30, 2025, and December 31, 2024:
| June 30, 2025 | December 31, 2024 | |||||||
| Raw material | 889,248 | 751,574 | ||||||
| Work in progress | 190,390 | 148,969 | ||||||
| Inventory | $ | 1,079,638 | $ | 900,543 | ||||
Inventory consists primarily of raw materials, purchased components, subassemblies, and finished robotic units. Work in process includes partially assembled robotic systems and artificial intelligence hardware integrated with proprietary software that are in various stages of completion.
Reclassification
Certain amounts reported in the prior year financial statements have been reclassified to conform to the current year’s presentation.
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 depreciation and amortization based on estimated useful lives of property and equipment and the fair value of shares issued for compensation.
Risks and Uncertainties
The Company has a limited operating history. The Company’s business and operations are sensitive to general business and economic conditions in the United States. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company’s financial condition and the results of its operations.
Cost of Goods Sold
Cost of Goods Sold (COGS) includes the purchase price of inventory, inbound freight, packaging materials, and costs associated with product assembly or customization. COGS is recorded at the time revenue is recognized, which typically coincides with the transfer of control of goods to the customer.
For service-based revenue streams, Cost of Goods Sold includes payroll and related expenses for customer support and implementation teams, third-party hosting and infrastructure costs, software license fees, and depreciation of systems used to deliver services.
F-9
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
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.
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 June 30, 2025, the Company had $3,687,820 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.
Intercompany Transactions
The Company engages in transactions with its subsidiaries and other related entities as part of its normal business operations. These transactions are conducted on terms and conditions that are similar to those with third parties.
Property and Equipment
Property and equipment will be 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 June 30, 2025, the Company had $592,818 of property and equipment, net. The Company had $109,664 of property and equipment, net at December 31, 2024.
Depreciation will be 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.
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, 2024.
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.
F-10
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
As of June 30, 2025, the net book value of capitalized company-owned store and display assets was $362,082, which is included in “Property and Equipment, net” on the consolidated balance sheets. There was no depreciation expense related to company-owned store assets/display centers for the three and six months ended June 30, 2025 and 2024. Depreciation expense will begin in July.
Depreciation expense for the three and six months ended June 30, 2025, was $12,723 and $27,952 respectively. For the three and six months ended June 30, 2024 depreciation expense was $12,169 and $23,150 respectively.
Deferred Revenue
Deferred revenue is a liability on the Company’s balance sheet that represents payment for preorders of the Company’s stores and for store sales not yet in production. Deferred revenue is recognized as earned revenue on the income statement as the good or service is delivered to the customer. Beginning January 1, 2025 the Company re-classified customer deposits to clarify between the two.
Customer Deposits
Customer deposits are recorded as a liability on the condensed consolidated balance sheets, as the Company has not yet transferred control of the promised goods or services to the customer in accordance with ASC 606, Revenue from Contracts with Customers. Upon satisfaction of the related performance obligations, these amounts will be recognized as revenue. Customer deposits are refundable until the underlying order is fulfilled.
Fair Value Measurements
U.S. GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):
| 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 11 for liabilities measured at fair value at June 30, 2025, and December 31, 2024.
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. |
F-11
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
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.
Smart Stores
Revenue from the sale of Smart Stores is recognized at a point in time, generally upon delivery when control of the Smart Store transfers to the customer. Smart Store arrangements typically require that the customer also enter into a SaaS subscription agreement, as the SaaS platform is essential to the full operation of the Smart Store.
SaaS Services
The Company’s SaaS platform provides customers with cloud-based inventory management, artificial intelligence–driven personalization, and autonomous operating functionality. The Company has concluded that SaaS services are a distinct performance obligation within the context of the contract. Revenue from SaaS arrangements will be recognized ratably over the term of the subscription agreement, which is generally one year, as the services are provided. To date, however, the Company has not charged customers for SaaS services in connection with its initial Smart Store deployments. These services have been provided at no cost as part of the Company’s early-stage commercialization strategy, and accordingly, no revenue related to SaaS services has been recognized for the periods presented.
Maintenance and Support Services
Customers may elect to enter into maintenance and support agreements or alternatively request services from the Company on an ad hoc, pay-as-needed basis. Maintenance and support services, when provided under a contractual arrangement, are accounted for as a separate performance obligation and recognized ratably over the term of the contract. Similar to SaaS, the Company has not charged its initial store customers for maintenance services to date, and no revenue has been recognized for these services for the periods presented.
Licensing of Intellectual Property
At present, the Company does not license its intellectual property separately from Smart Store sales. Should the Company enter into licensing arrangements in the future, such arrangements will be evaluated to determine whether they provide a right to use or a right to access the Company’s intellectual property and revenue will be recognized accordingly.
The Company’s evaluation under ASC 606-10-25-19 through 25-22 determined that while the Smart Store and SaaS are each capable of being distinct, the SaaS platform is essential to the full operation of the Smart Store, as disclosed in the Smart Store revenue recognition policy. As noted above, the Company has not recognized revenue for SaaS or maintenance services for the periods presented because such services were provided free of charge. Revenue is recognized at a point in time or over time, depending on the nature of the performance obligation.
To date, the Company has not charged customers for SaaS or maintenance services in connection with its initial Smart Store deployments; accordingly, no revenue related to SaaS or maintenance services has been recognized. The Company expects to begin charging for such services in the future and will recognize revenue over the service period in accordance with ASC 606.
For the three and six months ended June 30, 2025, the Company entered into SaaS subscription agreements in connection with the opening of its North Hollywood and Glendale Smart Stores. Although SaaS is a distinct performance obligation under ASC 606, the Company elected to provide such services free of charge as part of its early commercialization strategy. Accordingly, while the contracts were identified and performance obligations allocated, the transaction price attributable to SaaS was zero, and no SaaS revenue was recognized for the three and six months ended June 30, 2025. Management expects that, in future periods, SaaS services will be billed and revenue recognized ratably over the contract term as the services are provided.
F-12
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Consistent with ASC 606-10-25-19 through 22, we considered whether, the customer can benefit from the good or service either on its own or together with other readily available resources; and the good or service is separately identifiable from other promises in the contract.
As each contract is distinct from each other and stand alone, the Company has determined that each is a separate performance obligation, and not bundled together.
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. For services or subscription-based contracts, revenue is recognized over time as the services are rendered.
The Company disaggregates revenue based on the nature of the goods or services, geographical region, and timing of revenue recognition, as presented below:
Three Months Ended June 30, 2025
| Revenue Category | Timing of Recognition | Revenue | ||||
| Store Sales | Point in Time | $ | — | |||
| Product Sales | Point in Time | $ | 13,615 | |||
| SaaS Revenue | Over Time | $ | — | |||
| Maintenance Revenue | Over Time | $ | — | |||
Six Months Ended June 30, 2025
| Revenue Category | Timing of Recognition | Revenue | ||||
| Store Sales | Point in Time | $ | 500,000 | |||
| Product Sales | Point in Time | $ | 13,615 | |||
| SaaS Revenue | Over Time | $ | — | |||
| Maintenance Revenue | Over Time | $ | — | |||
There was no revenue for the three and six months ended June 30, 2024.
Organizational Costs
In accordance with FASB ASC 720, organizational costs, including accounting fees, legal fee, and costs of incorporation, are expensed as incurred.
Advertising
The Company expenses advertising costs as they are incurred. All advertising expenses are in relation to the Company’s crowdfunding efforts (see Note 6). The Company incurred $263,375 and $239,841 in advertising expense for the three months ended June 30, 2025, and 2024, respectively. The Company incurred $404,363 and $481,600 of advertising expense for the six months ended June 30, 2025 and 2024, respectively.
Research and Development
Research and development costs are charged to operations when incurred and are included in operating expenses. All research and development costs relate to developing our smart store technology. Costs incurred for the three months ended June 30, 2025, and 2024, were $131,016 and $251,693 respectively. For the six months ended June 30, 2025, and 2024 costs incurred were $432,371 and $329,773 respectively.
F-13
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
The Company met the criteria for capitalization of costs related to products to be sold at the beginning of the fourth quarter of 2024. The smart store is ready for commercial production which is supported by conclusive design approvals, market testing, and validated production processes. Subsequent costs incurred to set up production and the transition to a commercial production phase began resulting in capitalization of product costs, rather than expensing them as research and development. See our inventory accounting policy for further information.
Share-Based Compensation
The Company recognizes expense for its share-based compensation based on the fair value of the awards at the time they are granted. For the purposes of estimating share-based compensation expense for these awards, the Company estimates the fair value of common stock issued at or near the date of grant using a combination of an income approach and a market approach under Section 409A of the United States Internal Revenue Code. Share-based compensation is included in general and administrative expenses. Refer to Note 8 for more information.
Convertible Notes
The Company has elected to account for all of its Notes using the fair value option in accordance with ASC 825. Management has made this election in order to combine the accounting for the embedded derivative features created by the contingent call and put options within the Notes. The aggregate unpaid principal balance of the 2024 and 2025 Notes is $4,000,000. The Company has recognized $3,849 and $65,414 in change in fair value of convertible debt associated with instrument-specific credit risk for the three and six months ended June 30, 2025. There was no unrealized gain or loss for the three and six months ended June 30, 2024. The fair value of the notes is determined based a combination of changes in the federal funds rate, as well as a Black Scholes model for the embedded derivative and is classified as level 3 within the fair value hierarchy. The fair value of the Convertible Notes may change significantly as additional data is obtained, impacting the Company’s assumptions regarding probabilities of outcomes used to estimate the fair value of these liabilities. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods.
Based on the Company’s election of the fair value option, debt issuance costs of $100,000 were expensed immediately. For more information, refer to Note 10 and Note 11.
Software Development Costs
The Company accounts for costs of computer software to be sold, leased, or otherwise marketed in accordance with ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed. Software development costs incurred prior to the establishment of technological feasibility are expensed as incurred. Once technological feasibility is established, costs incurred in the development of the product are capitalized until the product is available for general release to customers.
Capitalized software costs are amortized over the estimated economic life of the related product, which generally ranges from five to seven years, using the greater of (i) the ratio of current period revenues to the total of current and anticipated future revenues for the product or (ii) the straight-line method. The Company evaluates capitalized software costs for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
As of June 30, 2025, capitalized software development costs totaled $107,000. As we are still developing the software, no amortization has been recognized for the three or six months ended June 30, 2025 or 2024.
F-14
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
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 13 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 is currently evaluating this ASU to determine its impact on the Company’s disclosures.
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.
| 3. | COMMITMENTS AND CONTINGENCIES |
On May 16, 2025, the Company entered into a settlement agreement with Target Global Acquisition I Corp. Pursuant to the Settlement and Release Agreement, the Parties mutually agreed to terminate the Agreement and Plan of Merger, by and among Venhub and TGAA Parties, dated as of December 2, 2024. On May 21, 2025, the full Settlement Consideration was delivered, and the Business Combination Agreement, terminated in accordance with their terms (subject to the survival of certain confidentiality provisions).
As consideration for the termination, the Parties agreed to the following consideration to be provided to TGAA:
| ● | $225,000.00 in cash; |
| ● | a secured promissory note in an amount equal to $2,500,000; and |
| ● | 3,462,375 shares of Venhub common stock. |
F-15
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 3. | COMMITMENTS AND CONTINGENCIES (cont.) |
The Company recognized the loss under ASC 450-20-25-2 as an estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions are met: Information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and the amount of loss can be reasonably estimated.
Events of default: if there shall be any Event of Default (as defined below) hereunder, at the option and upon the declaration of the Holder and upon written notice to the Company (which election and notice shall not be required in the case of an Event of Default under subsection (i) or (ii) below), this Note shall accelerate and all principal and unpaid accrued interest shall become due and payable. The occurrence of any one or more of the following shall constitute an “Event of Default”:
| (i) | any Borrower files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing; |
| (ii) | an involuntary petition is filed against any Borrower (unless such petition is dismissed or discharged within 45 days under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee or assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of such Borrower); |
| (iii) | (a) the security interest created by this Note shall at any time fail to constitute a valid security interest on all of the Collateral (as defined below) purported to be encumbered hereby or (b) any Borrower challenges the validity of the security interest created by this Note; |
| (iv) | the Borrowers fail to make any payments when due and payable under this Note that continues for more than 5 business days; |
| (v) | the Borrowers fail to satisfy any covenant, obligation or other requirement (A) under Sections 3(d), (f), (g) and (h) of this Note or (B) otherwise under this Note or any agreements related thereto that, with respect to this clause (B), is not cured within 30 days of notice or the Borrowers’ knowledge; |
| (vi) | any representation or warranty made by the Borrowers pursuant to this Note shall prove to be incorrect, false or misleading; or |
| (vii) | the occurrence of an “event of default” or similar event with respect to any other debt of the Borrowers in excess of $750,000 that permits the lenders or holders of such debt to accelerate the amounts due and payable thereunder; provided that if such “event of default” or similar event is cured or waived within 30 days after the occurrence thereof, and the lenders or holders thereof have not accelerated the amounts due and payable thereunder, the corresponding Event of Default pursuant to this clause shall be automatically deemed cured. |
Upon any declaration of acceleration, the Maturity Date shall be deemed to be the date of such acceleration and the principal and interest under this Note shall become immediately due and payable and the Holder shall be entitled to exercise all of its rights and remedies hereunder, under applicable law, and as provided for under this Note, whether at law or in equity. The failure of the Holder to declare this Note due and payable upon the occurrence and during the continuation of an Event of Default shall not be a waiver of its right to do so, and the Holder shall retain the right to declare this Note due and payable.
See Note 7 for lease commitments.
F-16
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 4. | SHARE CAPITAL |
On November 26, 2024, the Company amended its certificate of incorporation such that Class A Preferred conversion ratio was changed from 1000/1 to 379.35029/1 per share.
| 5. | RELATED PARTY TRANSACTIONS |
The Company’s Chief Executive Officer and the Company’s President, are married. The marital relationship between these two executive officers represents a related-party relationship under ASC 850-10-50-1.
While both individuals serve in executive leadership positions, all compensation with each officer has been approved by the Company’s Board of Directors, excluding the related parties, to ensure such arrangements are on terms deemed reasonable and consistent with arms-length practices.
No additional related-party transactions between the Chief Executive Officer, the President, and the Company were identified beyond their normal compensation arrangements disclosed elsewhere in these consolidated financial statements.
As of June 30, 2025, the Chief Executive Officer had $1,134,583, the President $863,883 and the Chief Financial Officer $109,000, respectively, in accrued compensation that they have voluntarily deferred until future periods. Payments of $60,000 and $18,000 were made to the President and Chief Financial Officer respectively for the three months ended June 30, 2025. For the six months ended June 30, 2025, payments of $195,000 and $36,000 were made to the President and Chief Financial Officer respectively.
At December 31, 2024, the Chief Executive Officer had $872,083, the President $721,383 and the Chief Financial Officer $85,000, respectively, in accrued compensation that they have voluntarily deferred until future periods. No payments were made for the three and six months ended June 30, 2024.
Refer to Note 9 for related party stock purchase agreements.
| 6. | CROWDFUNDING OFFERING |
The Company is offering (the “Crowdfunded Offering”) up to $5,000,000 of Preferred Stock B class shares. The Company is attempting to raise a minimum amount of $25,000 in this offering and up to $5,000,000 maximum. The Company must receive commitments from investors totaling the minimum amount by the offering deadline listed in the Form C, as amended in order to receive any funds. The Company achieved the minimum raise as of June 30, 2025. There were 11,555 and 22,529 shares issued at $9.94 a share for the three and six months ended June 30, 2025, totaling net proceeds of $118,349 and $221,050. The Company issued a total of 98,472 and 193,794 shares for the three and six months ended June 30, 2024, at $9.94 and $5.93 a share for net proceeds of $568,265 and $1,134,604 respectively related to the crowdfunding.
| 7. | LEASES |
Operating Leases
For leases with a term of 12 months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities, and we recognize lease expense for such leases on a straight-line basis over the lease term.
On August 7, 2023, the Company signed a lease for new office space in Pasadena, which has a fixed 3% increase annually expiring in April 2027.
On April 10, 2025, the Company signed a lease for new office space in Las Vegas, which is a triple net lease expiring in April 2027 with two option renewal periods totaling up to four additional years that the Company is likely subsequently to proceed with.
The Company analyzed these leases and determined that these agreement meet the definition of a lease under ASU 842, Leases, as it provides management with the exclusive right to direct the use of and obtain substantially all of the economic benefits from the identified leased asset, which is the office space and showroom. Management also analyzed the terms of these arrangements and concluded they should be classified as an operating lease, as none of the criteria were met for finance lease classification. As there was only one identified asset, no allocation of the lease payments was deemed necessary. Management did not incur any initial direct costs associated with this lease. Per review of the lease agreements, there was no variable terms identified and there is no implicit rate stated. Therefore, the Company determined the present value of the future minimum lease payments based on the incremental borrowing rate of the Company. The incremental borrowing rate was determined to be 8.5%, as this is the rate which represents the incremental borrowing rate for the Company, on a collateralized basis, in a similar economic environment with similar payment terms.
F-17
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 7. | LEASES (cont.) |
On February 11, 2025, the Company signed a lease for a new warehouse in Bell Gardens, CA The purpose of the space is to store materials for future store orders and is month to month.
On May 29, 2025, the Company signed a right of entry Los Angeles County Metro Transportation Authority for its flagship Company owned store. The right of entry is month to month with a $1,500 monthly fee.
The future minimum payments on operating leases for each of the next five years and in the aggregate amount to the following:
| 2025 | $ | 182,218 | ||
| 2026 | 360,557 | |||
| 2027 | 220,771 | |||
| 2028 | 148,450 | |||
| 2029 | 148,450 | |||
| Thereafter | 197,933 | |||
| Total lease payments | 1,258,379 | |||
| Less: present value discount | (129,292 | ) | ||
| Total operating lease liabilities | 1,129,087 | |||
| Less current portion | 174,254 | |||
| Long term portion | 954,833 |
The weighted-average remaining term of the Company’s operating leases was 4.5 years and the weighted-average discount rate used to measure the present value of the Company’s operating lease liabilities was 8.5% as of June 30, 2025.
Right of use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right of use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases does not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease right of use asset also includes lease incentives. The Company’s lease terms include an option to extend or terminate the lease and it is reasonably certain that the Company will exercise that option to extend. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
In determining the discount rate to use in calculating the present value of lease payments, the Company estimates the rate of interest it would pay on a collateralized loan with the same payment terms as the lease by utilizing bond yields traded in the secondary market to determine the estimated cost of funds for the particular tenor.
| 8. | SHARE BASED COMPENSATION |
The Company has issued stock to certain third-party contractors and directors of the Company in exchange for services provided. All stock issued to third parties vested immediately upon issuance. The Company issued a total of 66,785 and 1,735,447 shares of common stock recognizing share-based compensation expense for these awards totaling $304,540 and $7,913,639 for the three and six months ended June 30, 2025. For the three and six months ended June 30, 2024, the Company issued 223,261 and 1,541,260 shares of common stock recognizing share-based compensation expense for these awards totaling $491,174 and $3,390,772 for the three and six months ended June 30, 2024.
| 9. | STOCK PURCHASE AGREEMENTS |
On January 21, 2024, the Company signed a stock purchase agreement, for 14,000 shares for gross proceeds of $35,000 with a third-party investor.
F-18
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 10. | CONVERTIBLE NOTE |
On August 16, 2024, December 2, 2024 and February 14, 2025, the Company executed convertible promissory note purchase agreements (the “Purchase Agreements”) with a third-party investor VenHub would issue a series of notes (individually the “Note” and collectively, the “Notes”) as part of a private, unregistered offering. The Purchase Agreements provided for the following terms for Notes to be issued:
| ● | Maturity date ending five years from execution of each Note (the “Maturity Date”) |
| ● | Interest is payable semiannually on February 15 and August 15, beginning February 15, 2025 (the “Interest Payment Date”) |
| ● | Interest accrues based on a 360-day year |
| ● | Interest is payable (i) in kind (“PIK Interest”) which is added to the principal amount of each Note and (ii) in cash (“Cash Interest”) on each Interest Payment Date |
| ● | Interest rates for the first year ending August 15, 2025, are 9% for PIK interest and 3% for Cash Interest |
| ● | Interest rates increase each of the following two years beginning August 16 to a maximum of 12% PIK Interest and 6% Cash Interest |
| ● | Unpaid interest and principal are due in cash at the Maturity Date |
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.
The Notes have repayment and conversion features, as described in the following:
| 1. | Upon execution of a financing or series of financings for gross cash proceeds of at least $25 million, including issuance of Notes (a “Qualified Financing”) prior to a business combination, as defined in the Notes (a “Business Combination”): |
Note shall be, at the election of the Holder, (i) converted into a number of shares of Common Stock equal to the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) six dollars ($6.00) and rounding down to the nearest whole number of shares, (ii) redeemed for cash by the Company at a value equal to 1.2 multiplied by the MOIC, or (iii) both converted into shares of Common Stock and redeemed for cash at an aggregate value equal to 1.2 multiplied by the MOIC in such proportion as determined by the Holder.
| 2. | Upon execution of a Qualified Financing after a Business Combination, but prior to August 19, 2025: |
Note shall be, at the election of the Holder, (i) converted into shares of Common Stock at the then applicable Note Conversion Price (defined below), (ii) redeemed for cash by the Company at a value equal to 1.2 multiplied by the MOIC, or (iii) both converted into shares of Common Stock and redeemed for cash at an aggregate value equal to 1.2 multiplied by the MOIC in such proportion as determined by the Holder.
F-19
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 10. | CONVERTIBLE NOTE (cont.) |
| 3. | At any time following the consummation of a Business Combination and prior to the Maturity Date: |
The Holder of the Note may elect to convert the Note at the then-applicable Note Conversion Price (defined below), subject to the Optional Redemption by the Company (defined below).
Note Conversion Price
| (i) | Following the consummation of a Business Combination by the Company and for sixty (60) days thereafter, the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) $7.50 and rounding down to the nearest whole number of shares. |
| (ii) | From the date that is sixty (60) days following the consummation of a Business Combination until the first anniversary of the consummation of the Business Combination, the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) the product obtained by multiplying (y) the trailing 20-day volume weighted average price (“VWAP”) per share of the Common Stock on Nasdaq as of the Conversion Date and (z) 0.8, and rounding down to the nearest whole number of shares. |
| (iii) | From the first anniversary of the consummation of the Business Combination until the second anniversary of the consummation of the Business Combination, the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) the product obtained by multiplying (y) the 20-day VWAP per share of Common Stock on Nasdaq measured as of the Conversion Date and (z) 0.85 and rounding down to the nearest whole number of shares. |
| (iv) | From the second anniversary of the consummation of the Business Combination until the Maturity Date, the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) the product obtained by multiplying (y) the 20-day VWAP per share of Common Stock on Nasdaq measured as of the Conversion Date and (z) 0.9, and rounding down to the nearest whole number of shares. |
| 4. | Optional Redemption by the Company: |
At any time after August 19, 2026, and prior to the Maturity Date, at the Company’s option upon at least one (1) Business Day’s prior written notice, the Company may redeem for cash all (but not less than all) of the Outstanding Principal Balance on this Note at a price equal to 1.25 multiplied by the MOIC (defined below).
MOIC
A multiple of invested capital, to be calculated as follows: (i) the sum of all amounts received in cash by the Holder (including, without limitation, interest paid in cash and PIK Interest) in respect of the Outstanding Principal Balance evidenced by this Note divided by (ii) the Initial Outstanding Principal Balance; for the avoidance of doubt the Outstanding Principal Balance shall be reduced by the amount of any portion of the Note that has been converted.
| 5. | In the event that the Company does not consummate a Business Combination or Qualified Financing on or before February 19, 2026: |
Subject to compliance with NRS 78.288 and provided the Company has sufficient surplus as defined in NRS 78.288(2), the Company shall redeem all (but not less than all) of the Outstanding Principal Balance on this Note including any accrued and unpaid interest (including PIK Interest), by no later than April 30, 2026.
F-20
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 11. | FAIR VALUE MEASUREMENT |
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values. There were no transfers between fair value measurement levels during the three or six months ended June 30, 2025, or 2024.
The Company’s financial assets and liabilities measured at fair value at June 30, 2025, and December 31, 2024 are as follows:
| Fair Value Measurements as of June 30, 2025 | ||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Convertible debt at fair value | $ | — | $ | — | $ | 4,258,211 | $ | 4,258,211 | ||||||||
| Fair Value Measurements as of December 31, 2024 | ||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Convertible debt at fair value | $ | — | $ | — | $ | 3,542,797 | $ | 3,542,797 | ||||||||
The derivative portion of the convertible note was valued using a Black-Scholes simulation model. As a result of the election to apply the fair value option, the value of the conversion feature is not separately presented on the balance sheet.
The following assumptions were used in determining the fair value of the convertible notes as of June 30, 2025, and December 31, 2024 are as follows:
| June 30, 2025 | December 31, 2024 | |||||||
| Risk free right | 4.83 | % | 4.83 | % | ||||
| Stock price | $ | 4.56 | $ | 4.56 | ||||
| Dividend yield | 0 | % | 0 | % | ||||
| Volatility | 67 | % | 67 | % | ||||
| 12. | SEGMENT REPORTING |
The Company is managed at the consolidated level and therefore operates and reports as a single segment. The Company’s Chief Executive Officer is its Chief Operating Decision Maker (“CODM”). The Company’s CODM assesses significant segment expenses in comparison to forecasts and historical results to make decisions on capital allocation strategies. The measure of segment assets is reported on the balance sheets as total assets. All material long-lived assets are located in the United States.
The following table illustrates significant segment expenses that are regularly provided to the CODM for the three and six months ended June 30, 2025 and 2024:
| Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| General and administrative expenses | 1,185,231 | 1,161,752 | ||||||
| Payroll and compensation | 317,500 | 317,500 | ||||||
| Research and development | 324,940 | 251,693 | ||||||
| Total operating expenses | 1,827,671 | 1,730,945 | ||||||
F-21
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 12. | SEGMENT REPORTING (cont.) |
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| General and administrative expenses | 10,622,265 | 4,570,185 | ||||||
| Payroll and compensation | 635,000 | 635,000 | ||||||
| Research and development | 626,295 | 329,773 | ||||||
| Total operating expenses | 11,883,560 | 5,534,958 | ||||||
| 13. | STOCKHOLDERS EQUITY |
On June 30, 2025, the Company entered into subscription agreement with certain 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 (the “Subscriber Warrants”) for a total subscription amount of $3,500,000 (the “Offering”).
The Subscriber Warrants have an exercise price of $4.32 per share and expire five years from the date of issuance (June 30, 2030). The Subscriber Warrants exercise price and number of underlying shares may be adjusted for customary antidilution events. The Company analyzed the Subscriber Warrants and determined that they met the requirements under ASC 815-40 to be classified in stockholders’ equity.
The Company allocated proceeds from the Offering to the shares of Common Stock sold and the Warrants issued on a relative fair value basis. The measurement of fair value of the Subscriber Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $4.56, exercise price of $4.32, term of five years, volatility of 46.0%, risk-free rate of 3.8%, and expected dividend rate of 0.0%). The grant date fair value of the Subscriber Warrants was estimated to be $862,000 and is reflected within additional paid-in capital (based on a relative fair value allocation along with the proceeds allocated to the shares of common stock issued) in the Company’s balance sheet as of June 30, 2025.
| 14. | EARNINGS (LOSS) PER SHARE |
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, Earnings Per Share. Basic EPS is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS adjusts basic EPS for the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For all periods presented, the Company reported a net loss, and therefore the effect of all potential common stock equivalents was anti-dilutive. As such, basic and diluted net loss per share are the same.
Net Loss Per Share
| Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025) | Six Months Ended June 30, 2024 | |||||||||||||
| Net loss | $ | (20,529,639 | ) | $ | (1,730,945 | ) | $ | (29,878,514 | ) | $ | (5,534,958 | ) | ||||
| Weighted average common shares outstanding – basic and diluted | 30,307,051 | 26,021,956 | 28,765,414 | 25,650,665 | ||||||||||||
| Net loss per share – basic | $ | (0.68 | ) | $ | (0.07 | ) | $ | (1.04 | ) | $ | (0.21 | ) | ||||
| Net loss per share – diluted | $ | (0.68 | ) | $ | (0.07 | ) | $ | (1.04 | ) | $ | (0.21 | ) | ||||
F-22
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024
| 14. | EARNINGS (LOSS) PER SHARE (cont.) |
The following table presents the number of potentially dilutive securities that were excluded from the computation of diluted net loss per share because their effect would have been antidilutive:
| Three and Six Months Ended June 30, 2025 | Three and Six Months Ended June 30, 2024 | |||||||
| Warrants to purchase common stock | 810,324 | — | ||||||
| Convertible preferred stock | 37,935,029 | 100,000,000 | ||||||
| Convertible notes payable | 567,761 | — | ||||||
| Total antidilutive securities | 39,313,114 | 100,000,000 | ||||||
| 15. | SUBSEQUENT EVENTS |
Since June 30, 2025, an additional 81,273 shares of Class B Preferred Shares have been issued at $9.94 a share for net proceeds of $574,841.
In August 2025, the Company entered into new employment agreements with its Chief Executive Officer and its President, which will become effective upon the effectiveness of this registration statement. these agreements, each executive will receive an annual base salary of $1,000,000 and $750,000, respectively. Cash bonuses may be awarded under the agreements; however, such bonuses are not guaranteed annually and are subject to the availability of surplus cash, approval of the Board of Directors, and achievement of specified conditions. To date, no amounts have been accrued for such bonuses.
The agreements also provide for equity-based awards, including (i) annual equity grants, (ii) geographic expansion bonuses of 1,000,000 shares for each U.S. state and 2,000,000 shares for each country in which the Company opens or operates stores, awarded annually, and (iii) performance milestone awards of 1,000,000 shares upon every 30 Smart Stores launched or sold and 2,000,000 shares upon the listing of the Company’s common stock on a national securities exchange. The agreements further provide for standard severance and change-in-control protections.
These agreements could result in significant future compensation expense and stockholder dilution depending on the Company’s operational and financing performance.
The Company has filed articles of conversion with the state of Nevada to become a Nevada corporation and awaits final approval from the Secretary of State of Nevada.
F-23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of VenHub Global, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of VenHub Global, Inc. (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2024 and for the period January 31, 2023 (inception) through December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the year ended December 31, 2024 and for the period January 31, 2023 (inception) through December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company’s operating losses, working capital deficit and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Rosenberg Rich Baker Berman, P.A.
We served as the Company’s auditor from 2023 to 2024.
Somerset, New Jersey
March 28, 2025, except for the effects of the restatement and revisions discussed in Note 2 to the consolidated financial statements to which the date is September 9, 2025.
F-24
VENHUB GLOBAL, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,352,892 | $ | 46,760 | ||||
| Inventory | 900,543 | — | ||||||
| Deferred offering cost | 88,704 | — | ||||||
| Prepaid expenses | 33,707 | — | ||||||
| Total current assets | 2,375,846 | 46,760 | ||||||
| Non-current assets | ||||||||
| Security deposit | 16,074 | 16,074 | ||||||
| Property and equipment, net | 109,664 | 155,963 | ||||||
| Right of use asset | 188,918 | 245,350 | ||||||
| Total non-current assets | 314,656 | 417,387 | ||||||
| Total assets | $ | 2,690,502 | $ | 464,147 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 491,868 | $ | 20,179 | ||||
| Deferred revenue | 137,895 | 66,145 | ||||||
| Current operating lease liability | 174,254 | 152,556 | ||||||
| Accrued payroll and compensation | 1,678,466 | 614,166 | ||||||
| Loan payable – related party | — | 26,844 | ||||||
| Total current labilities | 2,482,483 | 879,890 | ||||||
| Noncurrent liabilities | ||||||||
| Interest payable | 65,889 | — | ||||||
| Right of use liability | 269,761 | 444,015 | ||||||
| Convertible debt at fair value | 3,542,797 | — | ||||||
| Total noncurrent liabilities | 3,878,447 | 444,015 | ||||||
| Total liabilities | 6,360,930 | 1,323,905 | ||||||
| Commitments and contingencies (note 3 and 7) | ||||||||
| Stockholders’ deficit | ||||||||
| Preferred Stock A - $0.001 par value; 100,000 shares authorized; 100,000 shares issued and outstanding as of December 31, 2024 and December 31, 2023 | 100 | 100 | ||||||
| Preferred Stock B- $0.001 par value; 20,000,000 shares authorized; 593,742 shares issued and outstanding as of December 31, 2024 and 317,677 as of December 31, 2023 | 594 | 318 | ||||||
| Common stock - $0.001 par value; 100,000,000 shares authorized; 26,500,959 shares issued and outstanding as of December 31, 2024 and 24,454,000 as of December 31, 2023 | 26,501 | 24,454 | ||||||
| Additional paid-in capital | 16,071,724 | 9,492,015 | ||||||
| Accumulated deficit | (19,769,347 | ) | (10,376,645 | ) | ||||
| Total stockholders’ deficit | (3,670,428 | ) | (859,758 | ) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | 2,690,502 | $ | 464,147 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-25
VENHUB GLOBAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Year Ended December 31, 2024 (As Restated) | For the Period January 31, 2023 (inception) to December 31, 2023 (As Restated) | |||||||
| Revenue | ||||||||
| Sales | $ | — | $ | — | ||||
| Total revenue | — | — | ||||||
| Cost of goods sold | ||||||||
| Direct costs | — | — | ||||||
| Total cost of goods sold | — | — | ||||||
| Gross profit | — | — | ||||||
| Operating expenses | ||||||||
| General and administrative expenses | 6,888,041 | 9,647,830 | ||||||
| Payroll and compensation | 1,270,000 | 614,166 | ||||||
| Research and development | 875,975 | 114,649 | ||||||
| Total operating expenses | 9,034,016 | 10,376,645 | ||||||
| (Loss) from operations | (9,034,016 | ) | (10,376,645 | ) | ||||
| Other expenses | ||||||||
| Interest expense | 165,889 | — | ||||||
| Change in fair value of convertible debt | 192,797 | — | ||||||
| Total other expenses | 358,686 | — | ||||||
| Income tax provision | — | — | ||||||
| Net (loss) | (9,392,702 | ) | (10,376,645 | ) | ||||
| Earnings (loss) per share | ||||||||
| Basic and diluted | $ | (0.36 | ) | $ | (0.61 | ) | ||
| Weighted average common shares outstanding | ||||||||
| Basic and diluted | 26,017,018 | 16,884,296 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-26
VENHUB GLOBAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2024
| Common Stock | Preferred Stock A | Preferred Stock B | Additional | Total | ||||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of shares | Amount | Number of shares | Amount | Paid-In Capital | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||
| Beginning, January 1, 2024 | 24,454,000 | $ | 24,454 | 100,000 | $ | 100 | 317,677 | $ | 318 | $ | 9,492,015 | $ | (10,376,645 | ) | $ | (859,758 | ) | |||||||||||||||||||
| Issuance of common stock | 1,981,224 | 1,980 | — | — | — | — | 4,515,182 | — | 4,517,162 | |||||||||||||||||||||||||||
| Stock purchase agreement | 65,735 | 67 | — | — | — | — | 535,000 | — | 535,067 | |||||||||||||||||||||||||||
| Issuance of preferred stock B, crowdfunding | — | — | — | — | 276,065 | 276 | 1,529,527 | — | 1,529,803 | |||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (9,392,702 | ) | (9,392,702 | ) | |||||||||||||||||||||||||
| Ending December 31, 2024 | 26,500,959 | $ | 26,501 | 100,000 | $ | 100 | 593,742 | $ | 594 | $ | 16,071,724 | $ | (19,769,347 | ) | $ | (3,670,428 | ) | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-27
VENHUB GLOBAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE PERIOD JANUARY 31, 2023 (INCEPTION) TO DECEMBER 31, 2023
| Common Stock | Preferred Stock A | Preferred Stock B | Additional | Total | ||||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of shares | Amount | Number of shares | Amount | Paid-In Capital | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||
| Beginning, January 31, 2023 | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
| Issuance of preferred stock A | — | — | 100,000 | 100 | — | — | (100 | ) | — | — | ||||||||||||||||||||||||||
| Issuance of common stock | 24,454,000 | 24,454 | — | — | — | — | 8,741,983 | — | 8,766,437 | |||||||||||||||||||||||||||
| Issuance of preferred stock B, crowdfunding | — | — | — | — | 317,677 | 318 | 750,132 | — | 750,450 | |||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (10,376,645 | ) | (10,376,645 | ) | |||||||||||||||||||||||||
| Ending December 31, 2023 | 24,454,000 | $ | 24,454 | 100,000 | $ | 100 | 317,677 | $ | 318 | $ | 9,492,015 | $ | (10,376,645 | ) | $ | (859,758 | ) | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-28
VENHUB GLOBAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Year Ended December 31, 2024 | For the Period January 31, 2023 (inception) to December 31, 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss) | $ | (9,392,702 | ) | $ | (10,376,645 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share based compensation | 4,515,182 | 8,766,437 | ||||||
| Unrealized loss on convertible notes | 192,797 | — | ||||||
| Amortization of debt issuance costs | 100,000 | — | ||||||
| Depreciation expense | 48,279 | 7,780 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Inventory | (900,543 | ) | — | |||||
| Deferred offering cost | (88,704 | ) | — | |||||
| Interest payable | 65,889 | — | ||||||
| Prepaid expenses | (33,707 | ) | — | |||||
| Deferred revenue | 71,750 | 66,145 | ||||||
| Security deposit | — | (16,074 | ) | |||||
| Change in operating right of use asset | 56,432 | (245,350 | ) | |||||
| Change in operating use of liability | (152,556 | ) | 596,571 | |||||
| Accounts payable | 471,689 | 20,179 | ||||||
| Accrued payroll and compensation | 1,064,300 | 614,166 | ||||||
| Net cash (used) in operating activities | (3,981,894 | ) | (566,791 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Property and equipment, net | — | (163,743 | ) | |||||
| Net cash (used) in investing activities | — | (163,743 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from crowdfunding | 1,529,803 | 750,450 | ||||||
| Proceeds from convertible note, net | 3,250,000 | — | ||||||
| Proceeds from stock purchase agreements | 535,067 | — | ||||||
| Proceeds (repayments) from related party notes | (26,844 | ) | 26,844 | |||||
| Net cash provided by financing activities | 5,288,026 | 777,294 | ||||||
| Net increase in cash and cash equivalents | 1,306,132 | 46,760 | ||||||
| Cash and cash equivalents, beginning of period | 46,760 | — | ||||||
| Cash and cash equivalents, end of period | $ | 1,352,892 | $ | 46,760 | ||||
| Supplemental non-cash investing and financing activities | ||||||||
| Issuance of founders shares | — | 20,000,000 | ||||||
| Common stock issued for service | 1,979,224 | 4,454,000 | ||||||
| Operating lease right of use asset in exchange for right of use liability | — | 245,350 | ||||||
| Issuance of Series A Preferred stock to founders | — | 100,000 | ||||||
| Sales of Series B Preferred stock | 1,511,288 | 317,677 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-29
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 1. | ORGANIZATION AND LINE OF BUSINESS |
VenHub, Global Inc. (which may be referred to as the “Company”, “we,” “us,” or “our” doing business as Venhub) was incorporated 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”).
The Company is a business-to-business operation that provides an innovative approach to the retail industry, specifically in the convenance store sector.
VenHub 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.
On September 16, 2024, the Company created three wholly owned subsidiary limited liability companies:
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.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).
Going Concern
As of December 31, 2024, the Company has developed its prototype, however, has not produced any revenue and will likely incur losses prior to achieving profitability. The Company has incurred losses since inception, has a working capital deficit, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. During the next twelve months, the Company intends to fund its operations with funding from a crowdfunding campaign (see Note 6) and funds from revenue producing activities from fulfilling the pre order list. If the Company cannot secure additional short-term capital, it may cease operations. These financial statements and related notes thereto do not include any adjustments that might result from these uncertainties.
Inventory
Inventories are stated at the lower of cost or estimated realizable value. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company’s product based on management’s judgment, future commercialization is considered probable, and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The following table illustrates inventory as of December 31, 2024, and 2023:
| 2024 | 2023 | |||||||
| Raw material | 751,574 | — | ||||||
| Work in progress | 148,969 | — | ||||||
| Inventory | $ | 900,543 | $ | — | ||||
Inventory consists primarily of raw materials, purchased components, subassemblies, and finished robotic units. Work in process includes partially assembled robotic systems and artificial intelligence hardware integrated with proprietary software that are in various stages of completion.
F-30
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Reclassification
Certain amounts reported in the prior year financial statements have been reclassified to conform to the current year’s presentation.
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 depreciation and amortization based on estimated useful lives of property and equipment and the fair value of shares issued for compensation.
Risks and Uncertainties
The Company has a limited operating history. The Company’s business and operations are sensitive to general business and economic conditions in the United States. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company’s financial condition and the results of its operations.
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.
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, 2024, the Company had $1,352,892 cash on hand and no cash equivalents. At December 31, 2023 the Company had $46,760 of cash on hand and no cash equivalents.
Intercompany Transactions
The Company engages in transactions with its subsidiaries and other related entities as part of its normal business operations. These transactions are conducted on terms and conditions that are similar to those with third parties.
Property and Equipment
Property and equipment will be 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, 2024, the Company had $109,664 of property and equipment, net.
Depreciation will be 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.
F-31
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
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, 2024.
Depreciation expense for the year ended December 31, 2024, was $48,622 and $7,780 for the period from January 31, 2023 (inception) to December 31, 2023.
Deferred Revenue
Deferred revenue is a liability on the Company’s balance sheet that represents payment for preorders of the Company’s stores. Deferred revenue is recognized as earned revenue on the income statement as the good or service is delivered to the customer.
Fair Value Measurements
U.S. GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):
| 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 11 for liabilities measured at fair value at December 31, 2024 and there were none required for December 31, 2023.
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. |
F-32
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
For the periods presented in the financials, there was no revenue as the Company is still developing its product.
Organizational Costs
In accordance with FASB ASC 720, organizational costs, including accounting fees, legal fee, and costs of incorporation, are expensed as incurred.
Advertising
The Company expenses advertising costs as they are incurred. All advertising expenses are in relation to the Company’s crowdfunding efforts (see Note 6). The Company incurred $771,864 and $318,154 advertising expense for the year ended December 31, 2024, and for the period January 31, 2023 (inception) through December 31, 2023, respectively.
Research and Development
Research and development costs are charged to operations when incurred and are included in operating expenses. All research and development costs relate to developing our prototype smart store. Costs incurred for the year ended December 31, 2024, were $875,975. For the period January 31, 2023 (inception) through December 31, 2023, the Company incurred $114,649 of research and development expense.
The Company met the criteria for capitalization of costs related to products to be sold at the beginning of the fourth quarter of 2024. The smart store is ready for commercial production which is supported by conclusive design approvals, market testing, and validated production processes. Subsequent costs incurred to set up production and the transition to a commercial production phase began resulting in capitalization of product costs, rather than expensing them as research and development. See our inventory accounting policy for further information.
Share-Based Compensation
The Company recognizes expense for its share-based compensation based on the fair value of the awards at the time they are granted. For the purposes of estimating share-based compensation expense for these awards, the Company estimates the fair value of common stock issued at or near the date of grant using a combination of an income approach and a market approach under Section 409A of the United States Internal Revenue Code. Share-based compensation is included in general and administrative expenses. Refer to Note 8 for more information.
Convertible Notes
The Company has elected to account for all of its Notes using the fair value option in accordance with ASC 825. Management has made this election in order to combine the accounting for the embedded derivative features created by the contingent call and put options within the Notes. The aggregate unpaid principal balance of the 2024 Notes is $3,250,000. There were no convertible notes in 2023. The Company has recognized $192,797 in change in fair value of convertible debt associated with instrument-specific credit risk for the year ended December 31, 2024. There was no unrealized gain or loss for the year ended December 31, 2024. The fair value of the notes is determined based a combination of changes in the federal funds rate, as well as a Black Scholes model for the embedded derivative and is classified as level 3 within the fair value hierarchy. The fair value of the Convertible Notes may change significantly as additional data is obtained, impacting the Company’s assumptions regarding probabilities of outcomes used to estimate the fair value of these liabilities. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods.
Based on the Company’s election of the fair value option, debt issuance costs of $100,000 were expensed immediately. For more information, refer to Note 10 and Note 11.
F-33
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
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 13 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 is currently evaluating this ASU to determine its impact on the Company’s disclosures.
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.
Restatement of Previously Issued Consolidated Financial Statements
While preparing its year end December 31, 2024 financials, the Company identified an omission (the “Omission”) in the Company’s historical consolidated financial statements for the year ended December 31, 2024 and for the period January 31, 2023 (inception) to December 31, 2023. The Company has since added earnings per share and weighted average common shares outstanding presentation to the statement of operations for the year ended December 31, 2024 and the period January 31, 2023 (inception) to December 31, 2023. We have also updated our footnotes to include an earnings per share disclosure (note 14) and further disclosure for both share based compensation (note 8) and inventory (note 2) policies. There were no material changes to the financials as a result of this omission.
| 3. | COMMITMENTS AND CONTINGENCIES |
From time to time, the Company may be involved in lawsuits, claims, investigations, and proceedings arising out of the ordinary course of business. As of December 31, 2024, there are no matters pending that, in the opinion of management and legal counsel, are expected to have a material adverse effect on the Company’s financial position or results of operations. Any costs relating to these matters are recognized when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
See Note 7 for lease commitments.
F-34
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 4. | SHARE CAPITAL |
Amendment to Stock Share Classes
In February 2023 the Company filed with Wyoming Secretary of State to amend the number, par value, and class of shares the Company will have authority to issue. In August of 2024, the Company domiciled in the state of Delaware. The Company is authorized to issue 100,000,000 Common shares with 1 vote a share, 100,000 Preferred Class A shares, which can convert at 1000/1 to common shares at 2,000 votes a share, and 20,000,000 Preferred Class B shares which can convert at 1/1 common shares with no voting rights, all at the Company’s discretion and each with a specified par value of $0.001. No preferred or commons shares have the right to receive dividends.
On November 26, 2024, the Company amended its certificate of incorporation such that Class A Preferred conversion ratio was changed from 1000/1 to 379.35029/1 per share.
| 5. | RELATED PARTY TRANSACTIONS |
As of December 31, 2024, the Company owed $0 in related party notes. As of December 31, 2023, the Company owed $26,844 to SSO Inc., a related party controlled by the Chief Executive Officer. These funds were to help pay for operational expenses and working capital. This note does not accrue interest and there are no set repayment terms.
As of December 31, 2024, the Chief Executive Officer had $802,083, the President $791,383 and the Chief Financial Officer $85,000, respectively, in accrued compensation that they have voluntarily deferred until future periods. Payments of $40,700, $130,000 and $35,000 were made to each respectively during the year ended December 31, 2024. As of December 31, 2023 both the Chief Executive Officer and President had each $307,083 in accrued compensation that they voluntarily deferred until future periods.
On February 1, 2023, the Company issued 100,000 series A shares and 20,000,000 common founder shares to SSO Inc., an entity controlled by our Chief Executive Officer.
Refer to Note 9 for related party stock purchase agreements.
| 6. | CROWDFUNDING OFFERING |
The Company is offering (the “Crowdfunded Offering”) up to $5,000,000 of Preferred Stock B class shares. The Company is attempting to raise a minimum amount of $25,000 in this offering and up to $5,000,000 maximum. The Company must receive commitments from investors totaling the minimum amount by the offering deadline listed in the Form C, as amended in order to receive any funds. The Company achieved the minimum raise as of December 31, 2024. The Company issued a total of 276,065 shares for the year ended December 31, 2024, from $5.93 to $9.94 a share for net proceeds of $1,529,803. There were 317,677 shares issued from $2.83 to $5.94 for the period January 31, 2023 (inception) to December 31, 2023, totaling net proceeds of $750,450, related to the crowdfunding.
| 7. | LEASES |
Operating Leases
For leases with a term of 12 months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities, and we recognize lease expense for such leases on a straight-line basis over the lease term.
On August 7, 2023, the Company signed a lease for new office space in Pasadena, which has a fixed 3% increase annually expiring in April 2027. The Company analyzed this lease and determined that this agreement meets the definition of a lease under ASC 842, Leases, as it provides management with the exclusive right to direct the use of and obtain substantially all of the economic benefits from the identified leased asset, which is the office space and showroom. Management also analyzed the terms of this arrangement and concluded it should be classified as
an operating lease, as none of the criteria were met for finance lease classification. As there was only one identified asset, no allocation of the lease payments was deemed necessary. Management did not incur any initial direct costs associated with this lease. Per review of the lease agreement, there was no variable terms identified and there is no implicit rate stated. Therefore, the Company determined the present value of the future minimum lease payments based on the incremental borrowing rate of the Company. The incremental borrowing rate was determined to be 8.5%, as this is the rate which represents the incremental borrowing rate for the Company, on a collateralized basis, in a similar economic environment with similar payment terms.
F-35
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 7. | LEASES (cont.) |
The future minimum payments on operating leases for each of the next five years and in the aggregate amount to the following:
| 2025 | $ | 203,949 | ||
| 2026 | 212,107 | |||
| 2027 | 72,324 | |||
| Total lease payments | 488,380 | |||
| Less: present value discount | (44,365 | ) | ||
| Total operating lease liabilities | 444,015 | |||
| Less current portion | 174,254 | |||
| Long term portion | 269,761 |
The weighted-average remaining term of the Company’s operating leases was 2.5 years and the weighted-average discount rate used to measure the present value of the Company’s operating lease liabilities was 8.5% as of December 31, 2024.
Right of use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right of use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases does not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease right of use asset also includes lease incentives. The Company’s lease terms include an option to extend or terminate the lease and it is reasonably certain that the Company will exercise that option to extend. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
In determining the discount rate to use in calculating the present value of lease payments, the Company estimates the rate of interest it would pay on a collateralized loan with the same payment terms as the lease by utilizing bond yields traded in the secondary market to determine the estimated cost of funds for the particular tenor.
| 8. | SHARE BASED COMPENSATION |
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation — Stock Compensation. Stock-based compensation expense is measured at the grant-date fair value of the award and recognized in the statement of operations over the requisite service period. For awards that vest immediately upon grant, the Company recognizes the full expense on the grant date.
The Company has issued stock to certain third-party contractors and directors of the Company in exchange for services provided. All stock issued to third parties vested immediately upon issuance. The Company issued a total of 1,981,224 and 3,984,744 shares of common stock and recognized share-based compensation expense for these awards totaling $4,515,182 and $8,766,437 for the year ended December 31, 2024, and for the period January 31, 2023 (inception) to December 31, 2023, respectively.
All stock-based compensation expense is included within operating expenses in the statements of operations.
F-36
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 8. | SHARE BASED COMPENSATION (cont.) |
Valuation Methodology
The fair value of common stock issued for services was determined based on contemporaneous third-party valuations of the Company’s common stock or other observable market inputs at the date of issuance.
Unrecognized Compensation Cost
Because all awards vested immediately upon issuance, the Company had no unrecognized compensation cost related to unvested stock-based awards as of December 31, 2024 and 2023.
On August 15, 2024, the Board of Directors, in accordance with NRS 78.315, ratified and approved all equity issuances which were dually authorized and paid in full since inception.
| 9. | STOCK PURCHASE AGREEMENTS |
On January 21, 2024, the Company signed a stock purchase agreement, for 14,000 shares for gross proceeds of $35,000 with a third-party investor.
On April 10, 2024, the Company signed a stock purchase agreement with a member of the Board of Advisors for 35,524 shares and for gross proceeds of $200,000.
On July 15, 2024, the Company signed a stock purchase agreement with a member of the Board of Advisors for 30,211 shares and for gross proceeds of $300,000.
| 10. | CONVERTIBLE NOTE |
On August 16, 2024 and December 2, 2024, the Company executed convertible promissory note purchase agreements (the “Purchase Agreements”) with a third-party investor VenHub would issue a series of notes (individually the “Note” and collectively, the “Notes”) as part of a private, unregistered offering. The Purchase Agreements provided for the following terms for Notes to be issued:
| ● | Maturity date ending five years from execution of each Note (the “Maturity Date”) |
| ● | Interest is payable semiannually on February 15 and August 15, beginning February 15, 2025 (the “Interest Payment Date”) |
| ● | Interest accrues based on a 360-day year |
| ● | Interest is payable (i) in kind (“PIK Interest”) which is added to the principal amount of each Note and (ii) in cash (“Cash Interest”) on each Interest Payment Date |
| ● | Interest rates for the first year ending August 15, 2025, are 9% for PIK interest and 3% for Cash Interest |
| ● | Interest rates increase each of the following two years beginning August 16 to a maximum of 12% PIK Interest and 6% Cash Interest |
| ● | Unpaid interest and principal are due in cash at the Maturity Date |
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.
F-37
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 10. | CONVERTIBLE NOTE (cont.) |
The Notes have repayment and conversion features, as described in the following:
| 1. | Upon execution of a financing or series of financings for gross cash proceeds of at least $25 million, including issuance of Notes (a “Qualified Financing”) prior to a business combination, as defined in the Notes (a “Business Combination”): |
Note shall be, at the election of the Holder, (i) converted into a number of shares of Common Stock equal to the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) six dollars ($6.00) and rounding down to the nearest whole number of shares, (ii) redeemed for cash by the Company at a value equal to 1.2 multiplied by the MOIC, or (iii) both converted into shares of Common Stock and redeemed for cash at an aggregate value equal to 1.2 multiplied by the MOIC in such proportion as determined by the Holder.
| 2. | Upon execution of a Qualified Financing after a Business Combination, but prior to August 19, 2025: |
Note shall be, at the election of the Holder, (i) converted into shares of Common Stock at the then applicable Note Conversion Price (defined below), (ii) redeemed for cash by the Company at a value equal to 1.2 multiplied by the MOIC, or (iii) both converted into shares of Common Stock and redeemed for cash at an aggregate value equal to 1.2 multiplied by the MOIC in such proportion as determined by the Holder.
| 3. | At any time following the consummation of a Business Combination and prior to the Maturity Date: |
The Holder of the Note may elect to convert the Note at the then-applicable Note Conversion Price (defined below), subject to the Optional Redemption by the Company (defined below).
Note Conversion Price
| (i) | Following the consummation of a Business Combination by the Company and for sixty (60) days thereafter, the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) $7.50 and rounding down to the nearest whole number of shares. |
| (ii) | From the date that is sixty (60) days following the consummation of a Business Combination until the first anniversary of the consummation of the Business Combination, the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) the product obtained by multiplying (y) the trailing 20-day volume weighted average price (“VWAP”) per share of the Common Stock on Nasdaq as of the Conversion Date and (z) 0.8, and rounding down to the nearest whole number of shares. |
| (iii) | From the first anniversary of the consummation of the Business Combination until the second anniversary of the consummation of the Business Combination, the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) the product obtained by multiplying (y) the 20-day VWAP per share of Common Stock on Nasdaq measured as of the Conversion Date and (z) 0.85 and rounding down to the nearest whole number of shares. |
| (iv) | From the second anniversary of the consummation of the Business Combination until the Maturity Date, the quotient obtained by dividing (A) the Outstanding Principal Balance on this Note as of the Conversion Date by (B) the product obtained by multiplying (y) the 20-day VWAP per share of Common Stock on Nasdaq measured as of the Conversion Date and (z) 0.9, and rounding down to the nearest whole number of shares. |
F-38
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 10. | CONVERTIBLE NOTE (cont.) |
| 4. | Optional Redemption by the Company: |
At any time after August 19, 2026, and prior to the Maturity Date, at the Company’s option upon at least one (1) Business Day’s prior written notice, the Company may redeem for cash all (but not less than all) of the Outstanding Principal Balance on this Note at a price equal to 1.25 multiplied by the MOIC (defined below):
MOIC
A multiple of invested capital, to be calculated as follows: (i) the sum of all amounts received in cash by the Holder (including, without limitation, interest paid in cash and PIK Interest) in respect of the Outstanding Principal Balance evidenced by this Note divided by (ii) the Initial Outstanding Principal Balance; for the avoidance of doubt the Outstanding Principal Balance shall be reduced by the amount of any portion of the Note that has been converted.
| 5. | In the event that the Company does not consummate a Business Combination or Qualified Financing on or before February 19, 2026: |
The Company shall redeem all (but not less than all) of the Outstanding Principal Balance on this Note including any accrued and unpaid interest (including PIK Interest), by no later than April 30, 2026.
| 11. | FAIR VALUE MEASUREMENT |
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values. There were no transfers between fair value measurement levels during the year ended December 31, 2024 or for the period January 31, 2023 (inception date) to December 31, 2023.
The Company’s financial assets and liabilities measured at fair value at December 31, 2024 are as follows:
| Fair Value Measurements as of December 31, 2024 | ||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Convertible debt at fair value | $ | — | $ | — | $ | 3,542,797 | $ | 3,542,797 | ||||||||
The derivative portion of the convertible note was valued using a Black-Scholes simulation model. As a result of the election to apply the fair value option, the value of the conversion feature is not separately presented on the balance sheet.
The following assumptions were used in determining the fair value of the convertible notes as of December 31, 2024:
| December 31, 2024 | ||||
| Risk free right | 4.83 | % | ||
| Stock price | $ | 4.56 | ||
| Dividend yield | 0 | % | ||
| Volatility | 67 | % | ||
F-39
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 12. | INCOME TAXES |
No provision or benefit for federal or state income taxes has been recorded, as the Company has incurred a net loss for the periods presented, and the Company has provided a full valuation allowance against its deferred tax assets.
At December 31, 2024 and 2023, the Company had combined federal and California net operating loss carryforwards of approximately $3,932,470 and $996,165, respectively however, the amount of taxable income that can be offset in a future year is limited to 80% of that year’s taxable income.
A net operating loss for federal income taxes does not expire. The California net operating loss expires beginning in 2043.
Utilization of net operating losses may be subject to substantial annual limitations due to the “change in ownership” provisions of the Internal Revenue Code, and similar state provisions. The annual limitations may result in the expiration of net operating losses before utilization.
Deferred Tax Assets and Liabilities
Significant components of the Company’s net deferred tax assets as of December 31, 2024, and 2023, are as follows:
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Deferred tax assets (liabilities): | ||||||||
| Net operating loss carryforwards | $ | 1,166,108 | $ | 277,661 | ||||
| Equity Based Compensation | 3,701,986 | 2,443,469 | ||||||
| R&D Expenses | 219,744 | — | ||||||
| Change in fair value of note | 53,738 | |||||||
| Accrued Expenses | 353,987 | 171,186 | ||||||
| Depreciation and amortization | — | (780 | ) | |||||
| Total gross deferred tax assets | 5,495,563 | 2,891,536 | ||||||
| Less: valuation allowance | (5,495,563 | ) | (2,891,536 | ) | ||||
| Total net deferred tax assets | $ | — | $ | — | ||||
A valuation allowance is required to be recorded when it is not more likely than not that some or all of the Company’s deferred tax assets will be realized. Given the Company’s cumulative losses and lack of sufficient taxable income history, a full valuation allowance has been recorded against its net deferred tax assets.
The Company has no uncertain tax positions at December 31, 2024 and 2023.
Since the Company is in a loss carryforward position, the Company is generally subject to US federal and state income tax examinations by tax authorities for all years for which a loss carryforward is available.
Effective Tax Rate Reconciliation
The Company’s effective income tax rate for the years ended December 31, 2024, and 2023 differs than what would be expected if the federal statutory rates were applied to income from continuing operations primarily due to the following:
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| U.S. statutory rate | 21 | % | 21 | % | ||||
| California state corporate income tax rate, net of federal benefit | 6.98 | % | 6.98 | % | ||||
| Total statutory tax rates | 27.98 | % | 27.98 | % | ||||
| Less valuation allowance | (27.98 | )% | (27.98 | )% | ||||
| Net | — | — | ||||||
The valuation allowance increased by $ 2,733,136 and $ 2,891,536 during the years ended December 31, 2024, and 2023, respectively.
F-40
VENHUB GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2024, AND THE PERIOD JANUARY 31, 2023
(INCEPTION) TO DECEMBER 31, 2023
| 13. | SEGMENT REPORTING |
The Company is managed at the consolidated level and therefore operates and reports as a single segment. The Company’s Chief Executive Officer is its Chief Operating Decision Maker (“CODM”). As we are pre-revenue the Company’s CODM assesses significant segment expenses in comparison to forecasts and historical results to make decisions on capital allocation strategies. The measure of segment assets is reported on the balance sheets as total assets. All material long-lived assets are located in the United States.
The following table illustrates significant segment expenses that are regularly provided to the CODM in 2024 and 2023:
| 2024 | 2023 | |||||||
| General and administrative expenses | 6,888,041 | 9,647,380 | ||||||
| Payroll and compensation | 1,270,000 | 614,166 | ||||||
| Research and development | 875,975 | 114,649 | ||||||
| Total operating expenses | 9,034,016 | 10,376,195 | ||||||
| 14. | EARNINGS (LOSS) PER SHARE |
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, Earnings Per Share. Basic EPS is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS adjusts basic EPS for the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For all periods presented, the Company reported a net loss, and therefore the effect of all potential common stock equivalents was anti-dilutive. As such, basic and diluted net loss per share are the same.
Net Loss Per Share
| For the Year Ended December 31, 2024 | For the Period of January 31, 2023 (inception) to December 31, 2023 | |||||||
| Net loss | $ | (9,392,702 | ) | $ | (10,376,645 | ) | ||
| Weighted average common shares outstanding – basic and diluted | 26,017,017 | 16,884,296 | ||||||
| Net loss per share – basic and diluted | $ | (0.36 | ) | $ | (0.61 | ) | ||
The following table presents the number of potentially dilutive securities that were excluded from the computation of diluted net loss per share because their effect would have been antidilutive:
| Year Ended December 31, 2024 | For the Period of January 31, 2023 (inception) to December 31, 2023 | |||||||
| Convertible preferred stock | 37,935,029 | 100,000,000 | ||||||
| Convertible notes payable | 472,372 | — | ||||||
| Total antidilutive securities | 38,407,401 | 100,000,000 | ||||||
F-41
PART II — INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth estimated expenses expected to be incurred in connection with the issuance and distribution of the securities being registered. We will pay all such expenses.
| Securities and Exchange Commission Registration Fee | $ | 49,414 | ||
| Audit Fees and Expenses | $ | 50,000 | ||
| Legal Fees and Expenses | $ | 250,000 | ||
| Transfer Agent and Registrar Fees and Expenses | $ | 25,000 | ||
| SEC Filings | $ | 15,000 | ||
| Nasdaq Application Fee | $ | 25,000 | ||
| Nasdaq Listing Fee | $ | 295,000 | ||
| Miscellaneous Expenses | $ | 10,000 | ||
| Total | $ | 719,414 |
| * | Estimate Only |
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under NRS 78.138(7), unless the officers and directors of the Company are indemnified as provided by the Nevada Revised Statutes (NRS). Unless specifically limited by a corporation’s Articles of Incorporation, Nevada law automatically provides directors with immunity from monetary liabilities. The Company’s Articles of Incorporation do not contain any such limiting language. Excepted from that immunity are:
| a. | acts or omissions which involve intentional misconduct, fraud or a knowing violation of law; |
| b. | a violation of criminal law unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; |
| c. | a transaction from which the director derived an improper personal profit; and |
| d. | willful misconduct. |
The Articles of Incorporation provide that the Company will indemnify its officer, director, legal representative, and persons serving at the request of the Company as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise to the fullest extent legally permissible under Nevada Revised Statutes (NRS) Chapter 78, particularly NRS 78.7502, against all expenses, liability and loss (including attorney’s fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by that person as a result of that connection to the Company. This right of indemnification under the Articles is a contract right, which may be enforced in any manner by such person and extends for such persons benefit to all actions undertaken in good faith on behalf of the Company.
II-1
RECENT SALES OF UNREGISTERED SECURITIES
During the period from April 15, 2023 through September 15, 2025 (the “Reporting Period”), we issued the following unregistered securities. Unless otherwise indicated, share amounts are presented on an as-issued basis.
Issuances for Services Rendered (Section 4(a)(2))
From April 15, 2023 through September 15, 2025, we issued an aggregate of 7,849,108 shares of common stock to consultants and other service providers as consideration for bona fide services (the “SR Issuances”). This total includes 375,211 shares issued on April 10, 2024 that are classified as services rendered per your instruction.
These issuances were made in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), as transactions not involving a public offering. Each recipient represented investment intent, had access to information necessary to make an informed investment decision, and was sophisticated within the meaning of the federal securities laws. No general solicitation or general advertising was used. The shares are “restricted securities” under Rule 144; appropriate restrictive legends and stop-transfer instructions were, or will be, applied.
Private Placements for Cash (Rule 506(b))
In June 2025, we completed a private placement of Units, each Unit consisting of two (2) shares of common stock and one (1) warrant to purchase one share of common stock. We sold 405,092 Units at $8.64 per Unit for gross proceeds of $3,500,000. The accompanying warrants carry a $4.32 per-share exercise price and are otherwise on customary private-placement terms. In total, the Unit sale resulted in the issuance of 810,184 common shares and 405,092 warrants.
These sales were made in reliance on Rule 506(b) of Regulation D. We did not use general solicitation or advertising. All purchasers were (or were represented to be) accredited investors within the meaning of Rule 501(a). Each purchaser represented investment intent and was afforded access to information necessary to make an informed investment decision. Certificates or book-entry statements bear appropriate restrictive legends, and stop-transfer instructions were issued. We have filed or will file a Form D and make any required state notice filings.
Use of proceeds: All cash proceeds from this financing were used to purchase parts and accessories for VenHub Smartstore testing and units for sale, consistent with our financial statement disclosures.
Issuance Pursuant to Settlement with TGAA (Section 4(a)(2))
On May 15, 2025, we issued 3,462,375 shares of common stock to the TGAA parties in connection with a settlement agreement (the “TGAA Settlement”). Under that agreement, the TGAA parties agreed to forfeit 100,000 shares to treasury upon a direct listing of our common stock, resulting in 3,362,375 shares held by the TGAA parties upon listing. These securities were issued in reliance on Section 4(a)(2) of the Securities Act; no fairness hearing occurred. No general solicitation or general advertising was used. Certificates or book-entry statements bear appropriate restrictive legends, and the shares are subject to transfer restrictions.
Regulation CF — Series B Preferred
Beginning in April 2024, we conducted a Regulation CF offering of our Series B Preferred Stock, under which we sold 675,015 shares of Series B Preferred for aggregate proceeds of $2,735,670.99 at an average price of $4.05 per share. Prior to receiving payment, 3,943 of those shares were issued, for which the Company never received payment. The Series B Preferred converts into common stock on a 1:1 basis on or about September 30, 2025 (conversion solely for illustration of potential dilution; the sales reported here were the unregistered Reg CF sales of preferred shares).
Use of proceeds: Amounts raised under Regulation CF were used to purchase parts and accessories for VenHub Smartstore testing and units for sale.
Additional Information Applicable to All Unregistered Sales
Except as described above, no underwriters were involved in the foregoing transactions, and no underwriting discounts or commissions were paid by us (other than any ordinary 506(b) placement-agent compensation, if applicable, which would be disclosed in our financial statements or a subsequent amendment). The foregoing offers and sales were made without registration under the Securities Act, and the securities may not be offered or sold in the United States absent registration or an applicable exemption from registration. We believe the above transactions were exempt from registration as noted, did not involve a public offering, and were conducted in compliance with applicable state securities (“blue sky”) laws.
II-2
EXHIBITS
| * | Filed Herewith |
II-3
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
| 1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to: |
| a) | Include any prospectus required by Section 10(a)(3) of the Securities Act; |
| b) | Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and |
| c) | Include any additional or changed material information on the plan of distribution. |
| 2) | To, for the purpose of determining any liability under the Securities Act, treat each post-effective amendment as a new Registration Statement relating to the securities offered herein, and to treat the offering of such securities at that time to be the initial bona fide offering thereof. |
| 3) | To remove from registration, by means of a post-effective amendment, any of the securities being registered hereby that remain unsold at the termination of the offering. |
| 4) | For determining liability of the undersigned Registrant under the Securities Act to any purchaser in the initial distribution of the securities, that in a primary offering of securities of the undersigned Registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| a) | Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424; |
| b) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant; |
| c) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and, |
| d) | Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser. |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our director, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.
For the purposes of determining liability under the Securities Act for any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a Registration Statement relating to an offering, other than Registration Statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the Registration Statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a Registration Statement or prospectus that is part of the Registration Statement or made in a document incorporated or deemed incorporated by reference into the Registration Statement or prospectus that is part of the Registration Statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the Registration Statement or prospectus that was part of the Registration Statement or made in any such document immediately prior to such date of first use.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Pasadena, California on the 3rd day of October 2025.
| VenHub Global, Inc. | ||
| By: | /s/ Shahan Ohanessian | |
| Name: | Shahan Ohanessian | |
| Title: | Chief Executive Officer, Director | |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Shahan Ohanessian, as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on Form S-1 of VenHub Global, Inc. and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, grant unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or her substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated.
| Signature | Title | Date | ||
| /s/ Shahan Ohanessian | Chief Executive Officer (Principal Executive Officer) |
10/3/2025 |
| Signature | Title | Date | ||
/s/ Matt Hidalgo |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
10/3/2025 |
| Signature | Title | Date | ||
| /s/ Shoushan Ohanessian | Chairwoman | 10/3/2025 |
| Signature | Title | Date | ||
| /s/ Shahan Ohanessian | Director | 10/3/2025 |
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Exhibit 3.1
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Wyoming Secretary of State Herschler Bldg East, Ste.100 & 101 Cheyenne, WY 82002-0020 Ph. 307-777-7311 |
For Office Use Only WY Secretary of State FILED: Jan 31 2023 12:19PM Original ID: 2023-001216641 |
Profit Corporation
Articles of Incorporation
| I. | The name of the profit corporation is: |
Autonomous Solutions, Inc.
| II. | The name and physical address of the registered agent of the profit corporation is: |
Capital Administrations LLC
1712 Pioneer Ave Ste 115
Cheyenne, WY 82001
| III. | The mailing address of the profit corporation is: |
1712 Pioneer Ave Ste 123
Cheyenne, WY 82001
| IV. | The principal office address of the profit corporation is: |
1712 Pioneer Ave Ste 123
Cheyenne, WY 82001
| V. | The number, par value, and class of shares the profit corporation will have the authority to issue are: |
| Number of Common Shares: 100,000,000 | Common Par Value: | $0.0000 | |
| Number of Preferred Shares: 0 | Preferred Par Value: | $0.0000 |
| VI. | The name and address of each incorporator is as follows: |
Capital Administrations, LLC
1712 Pioneer Ave Ste 115, Cheyenne, WY 82001
| VII. | Additional Article: |
All, or a portion of, the shares of the Corporation may be represented by the shares certificates in the form of certificate tokens. The electronic message, command or transaction that transmits the certificate tokens the data address to which a certificate token was issued shall be authorized at the time of issuance by one (1) or more messages, commands, or transactions signed with the network signature of two (2) officers designated in the Bylaws or by the Board of Directors of the Corporation.
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| VIII. | Additional Article: |
The capital stock, after the amount of the subscription price, or par value, has been paid in, shall not be subject to assessment to pay the debts of the corporation.
| IX. | Additional Article: |
The governing board of the corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such manner as shall be provided by the By-Laws of the Corporation, providing that the number of directors shall not be reduced to fewer than one (1).
| X. | Additional Article: |
No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission of any such director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct, fraud or a knowing violation of law. Any repeal or modification of this Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification.
| Signature: | Jasmine James | Date: 01/31/2023 |
| Print Name: | Jasmine James | |
| Title: | Incorporator | |
| Email: | tax@wyomingcompany.com | |
| Daytime Phone #: | (307) 632-3333 |
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| |
Wyoming Secretary of State Herschler Bldg East, Ste.100 & 101 Cheyenne, WY 82002-0020 Ph. 307-777-7311 |
| þ | I am the person whose signature appears on the filing; that I am authorized to file these documents on behalf of the business entity to which they pertain; and that the information I am submitting is true and correct to the best of my knowledge. |
| þ | I am filing in accordance with the provisions of the Wyoming Business Corporation Act, (W.S. 17-16-101 through 17- 16-1804) and Registered Offices and Agents Act (W.S. 17-28-101 through 17-28-111). |
| þ | I understand that the information submitted electronically by me will be used to generate Articles of Incorporation that will be filed with the Wyoming Secretary of State. |
| þ | I intend and agree that the electronic submission of the information set forth herein constitutes my signature for this filing. |
| þ | I have conducted the appropriate name searches to ensure compliance with W.S. 17-16-401. |
| þ | I affirm, under penalty of perjury, that I have received actual, express permission from each of the following incorporators to add them to this business filing: Capital Administrations, LLC |
| þ | I consent on behalf of the business entity to accept electronic service of process at the email address provided with Article IV, Principal Office Address, under the circumstances specified in W.S. 17-28-104(e). |
Notice Regarding False Filings:
Filing a false document could result in criminal penalty and
prosecution pursuant to W.S. 6-5-308.
| W.S. | 6-5-308. Penalty for filing false document.
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| (a) | A person commits a felony punishable by imprisonment for not more than two (2) years, a fine of not more than two thousand dollars ($2,000.00), or both, if he files with the secretary of state and willfully or knowingly:
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| (i) | Falsifies, conceals or covers up by any trick, scheme or device a material fact;
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| (ii) | Makes any materially false, fictitious or fraudulent statement or representation; or
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| (iii) | Makes or uses any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry. |
| þ | I acknowledge having read W.S. 6-5-308. |
| Filer is: | ☐ An Individual | þ | An Organization |
The Wyoming Secretary of State requires a natural person to sign on behalf of a business entity acting as an incorporator, organizer, or partner. The following individual is signing on behalf of all Organizers, Incorporators, or Partners.
Filer Information:
By submitting this form I agree and accept this electronic filing as legal submission of my Articles of Incorporation.
| Signature: | Jasmine James | Date: 01/31/2023 |
| Print Name: | Jasmine James | |
| Title: | Incorporator | |
| Email: | tax@wyomingcompany.com | |
| Daytime Phone #: | (307) 632-3333 |
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| |
Wyoming Secretary of State Herschler Bldg East, Ste.100 & 101 Cheyenne, WY 82002-0020 Ph. 307-777-7311 |
Consent to Appointment by Registered Agent
Capital Administrations LLC, whose registered office is located at 1712 Pioneer Ave Ste 115, Cheyenne, WY 82001, voluntarily consented to serve as the registered agent for Autonomous Solutions, Inc. and has certified they are in compliance with the requirements of W.S. 17-28-101 through W.S. 17-28-111.
I have obtained a signed and dated statement by the registered agent in which they voluntarily consent to appointment for this entity.
| Signature: | Jasmine James | Date: 01/31/2023 |
| Print Name: | Jasmine James | |
| Title: | Incorporator | |
| Email: | tax@wyomingcompany.com | |
| Daytime Phone #: | (307) 632-3333 |
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STATE OF WYOMING
Office of the Secretary of State
I, CHUCK GRAY, Secretary of State of the State of Wyoming, do hereby certify that the filing requirements for the issuance of this certificate have been fulfilled.
CERTIFICATE OF INCORPORATION
Autonomous Solutions, Inc.
I have affixed hereto the Great Seal of the State of Wyoming and duly executed this official certificate at Cheyenne, Wyoming on this 31st day of January, 2023 at 12:19 PM.
Remainder intentionally left blank.
 |
 |
| Secretary of State | |
Filed Online By: Jasmine James on 01/31/2023 | |
| Filed Date: 01/31/2023 |
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Exhibit 3.2
AMENDED AND RESTATED Bylaws
Of
VENHUB GLOBAL, INC.
Article I. Corporate Office.
| Section 1.1. | Registered Office and Agent. The registered office of the corporation shall be located in Las Vegas, Nevada. The name and address of the corporation's registered agent shall be as stated in the most recent filing with the Nevada Secretary of State. |
| Section 1.2. | Other Offices. The board of directors may at any time establish other offices at any place or places, either within or outside of the State of Nevada, where the corporation is qualified to do business. |
Article II. Meetings of Stockholders.
| Section 2.1. | Place of Meetings. Meetings of stockholders shall be held at any place, within or outside the State of Nevada, designated by the board of directors. In the absence of any such designation, stockholders’ meetings shall be held at the registered office of the corporation or the board of directors may, in its sole discretion, determine that the meeting shall not be held at any place, but will instead be held solely by means of remote communication as provided under Nevada Revised Statutes (“NRS”) Chapter 78. |
| Section 2.2. | Annual Meetings. The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors, which date shall be within thirteen (13) months of the last annual meeting of the stockholders or, if no such meeting has been held, the date of incorporation. At the meeting, directors shall be elected and any other proper business may be transacted. |
| Section 2.3. | Special Meetings. A special meeting of the stockholders may be called at any time by the board of directors, the chair of the board, the president, or by one or more stockholders holding shares in the aggregate entitled to cast not less than ten percent (10%) of the voting power as provided in NRS 78.320. |
If a special meeting is called by any person or persons other than the board of directors, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by other facsimile transmission to the chair of the board, the president or the secretary of the corporation. No business may be transacted at such special meeting other than specified in such notice. The officer receiving the request shall cause notice to be promptly given to the stockholders entitled to vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article II, that a meeting will be held at the time requested by the person or persons who called the meeting not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after the receipt of the request, the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the board of directors may be held.
| Section 2.4. | Notice of Stockholders’ Meetings. All notices of meetings of stockholders shall be given in accordance with NRS 78.370 and shall be sent or otherwise given to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting in accordance with Section 2.5 of these bylaws within the time periods required by NRS 78.370. The notice shall specify the place, date and hour of the meeting, and in the case of a special meeting, the purpose or purposes for which the meeting is called. The means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting shall also be provided in the notice. |
| Section 2.5. | Manner of Giving Notice; Affidavit of Notice. Notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at their address as it appears on the records of the corporation, or if electronically transmitted as provided in Section 8.1 of these bylaws. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein. |
| Section 2.6. | Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the articles of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chair of the meeting or (ii) the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed. |
When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any questions brought before such meeting, unless the question is one upon which, by express provision of the laws or of the articles of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question.
| Section 2.7. | Adjourned Meeting; Notice. When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. |
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| Section 2.8. | Conduct of Business. The chair of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such matters as the regulation of the manner of voting and the conduct of business. |
| Section 2.9. | Voting. The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.12 of these bylaws and subject to the provisions of NRS 78.320 and 78.352 (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements). Voting at meetings of stockholders need not be by written ballot and, unless otherwise required by the Nevada Revised Statutes, need not be conducted by an inspector of election unless so determined by the holders of the shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person at such meeting. |
Except as may be otherwise provided in the articles of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder or by proxy for each share of the capital stock having voting power held by such stockholder.
| Section 2.10. | Waiver of Notice. Whenever notice is required to be given under any provision of the NRS, the articles of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need to be specified in any written waiver of notice, or any waiver by electronic transmission, unless so required by the articles of incorporation or these bylaws. |
| Section 2.11. | Stockholder Action by Written Consent without a Meeting. Unless otherwise provided in the articles of incorporation, any action required by this article to be taken at any annual or special meeting of stockholders of the corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is (a) signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and (b) delivered to the corporation in accordance with NRS 78.320. |
Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the date the earliest dated consent is delivered to the corporation, a written consent or consents signed by a sufficient number of holders to take action are delivered to the corporation in the manner prescribed in this Section 2.11. An electronic mail or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for purposes of this Section 2.11 to the extent permitted by law. Any such consent shall be delivered in accordance with NRS 78.320.
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Any copy, facsimile, or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.
Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing (including by electronic mail or other electronic transmission as permitted by law) as provided under NRS 78.320. If the action which is consented to is such as would have required the filing of a certificate under any section of the NRS if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in NRS 78.320.
| Section 2.12. | Record Date for Stockholder Notice; Voting; Giving Consents. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action, as provided in NRS 78.350. |
If the board of directors does not so fix a record date:
| (a) | The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; |
| (b) | The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent (including consent by electronic mail or other electronic transmission as permitted by law) is delivered to the corporation; and |
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| (c) | The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. |
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.
| Section 2.13. | List of Stockholders Entitled to Vote. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least two business days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address (but not the electronic address or other electronic contact information) of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for the duration of the meeting: (i) during ordinary business hours, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held or (ii) by a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting. If the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is only available to the stockholders. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. |
| Section 2.14. | Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for them by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, facsimile, electronic or telegraphic transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may remain irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. |
Article III. Directors.
| Section 3.1. | Powers. Subject to the provisions of the NRS and any limitation in the articles of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors. |
| Section 3.2. | Number of Directors. The initial number of directors of the corporation shall be two (2) and may be increased up to a maximum of seven (7) by the affirmative vote of a majority of the directors then in office. Vacancies resulting from an increase in the number of directors may be filled in accordance with Section 3.4 of these bylaws. The authorized number of directors may also be changed by an amendment to the articles of incorporation or by an amendment to this Section 3.2, adopted by the affirmative votes of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) or by the written consent of shareholders pursuant to Section 2.11 of these bylaws. |
If for any cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient.
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| Section 3.3. | Election, Qualification and Term of Office of Directors. Except as provided in Section 3.4 of these bylaws, the board of directors shall be divided into three classes as nearly equal in number as possible. Directors of the first class shall be elected at the first annual meeting of stockholders following the adoption of this bylaw to hold office for a term expiring at the next succeeding annual meeting; directors of the second class shall be elected at the second annual meeting following the adoption of this bylaw to hold office for a term expiring at the second succeeding annual meeting; and directors of the third class shall be elected at the third annual meeting following the adoption of this bylaw to hold office for a term expiring at the third succeeding annual meeting. At each annual meeting thereafter, directors shall be elected to hold office for a term expiring at the first succeeding annual meeting following their election. |
Directors need not be stockholders unless so required by the articles of incorporation or these bylaws, wherein other qualifications for directors may be prescribed. Each director, including a director elected to fill a vacancy, shall hold office until their successor is elected and qualified or until their earlier resignation or removal. Elections of directors need not be by written ballot.
| Section 3.4. | Resignation and Vacancies. Any director may resign at any time upon notice given in writing or by electronic transmission to the attention of the secretary of the corporation. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies. |
Unless otherwise provided in the articles of incorporation or these bylaws:
| (a) | Vacancies and newly created directorships resulting from any increase in the authorized number of directors pursuant to Section 3.2 of these bylaws may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. |
| (b) | Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the articles of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office or by a sole remaining director so elected. |
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If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any stockholder may call a special meeting of stockholders in accordance with the provisions of the articles of incorporation or these bylaws, or may apply to the appropriate Nevada court for an order summarily ordering an election as provided in NRS 78.345.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the appropriate Nevada court may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of NRS Chapter 78 as far as applicable.
| Section 3.5. | Place of Meetings; Meetings by Telephone. The board of directors of the corporation may hold meetings, both regular and special, either within or outside the State of Nevada. Unless otherwise restricted by the articles of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. |
| Section 3.6. | Regular Meetings. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. |
| Section 3.7. | Special Meetings; Notice. Special meetings of the board of directors for any purpose or purposes may be called at any time by the chair of the board, the president, any vice president, the secretary or any two (2) directors. |
Notice of the time and place of special meetings shall be:
| (a) | delivered personally by hand, by courier, or by telephone; |
| (b) | sent by United States first-class mail, postage prepaid; |
| (c) | sent by facsimile; or |
| (d) | sent by electronic mail, directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the corporation’s records. |
If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least forty-eight (48) hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four (4) days before the time the meeting is to be held. Any oral notice may be communicated to a director. The notice need not specify the place of the meeting (if the meeting is to be held at the corporation’s principal executive office) nor the purpose of the meeting.
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| Section 3.8. | Quorum. At all meetings of the board of directors, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the articles of incorporation. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting. |
| Section 3.9. | Waiver of Notice. Whenever notice is required to be given under any provision of the NRS, the articles of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor other purpose of, any regular or special meeting of the directors, or a committee of directors, need to be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws. |
| Section 3.10. | Board Action by Written Consent without a Meeting. Unless otherwise restricted by the articles of incorporation or these bylaws, (i) any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing or by electronic transmission, and (ii) such consent may be documented, signed and delivered in any matter permitted by NRS 78.315. |
| Section 3.11. | Fees and Compensation of Directors. Unless otherwise restricted by the articles of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. |
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| Section 3.12. | Approval of Loans to Officers. Subject to NRS 78.140 and other applicable provisions of Nevada law, the corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a director of the corporation or its subsidiaries, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing contained in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. |
| Section 3.13. | Removal of Directors. Unless otherwise restricted by statute, by the articles of incorporation, or by these bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. |
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.
Article IV. Committees.
| Section 4.1. | Committees of Directors. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in the bylaws of the corporation and permitted by NRS 78.125, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve, adopt or recommend to the stockholders any action or matter the NRS expressly requires be submitted to the stockholders for approval, or (ii) adopt, amend or repeal the bylaws. |
| Section 4.2. | Committee Minutes. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. |
| Section 4.3. | Meetings and Action of Committees. Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.6 (regular meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice), and Section 3.10 (action by written consent without a meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the board of directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws. |
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Article V. Officers.
| Section 5.1. | Officers; Indemnification. The officers of the corporation shall be a chief executive officer, a chief financial officer/treasurer, a chief operating officer, and a secretary. The corporation may also have, at the discretion of the board of directors, a chair of the board, one or more assistant secretaries, and one or more assistant treasurers, and any such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person. |
| Section 5.2. | To the fullest extent permitted by NRS 78.7502, or any other law that may subsequently become applicable, the corporation shall indemnify and hold harmless each director and officer of the corporation who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer of the corporation, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding. Such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of their heirs, executors and administrators. The corporation shall advance expenses incurred by a director or officer in defending any such proceeding in advance of its final disposition upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation. |
| Section 5.3. | Appointment of Officers. The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.4 or 5.5 of these bylaws, shall be appointed by the board of directors, subject to the rights, if any, of an officer under any contract of employment. |
| Section 5.4. | Subordinate Officers. The board of directors may appoint, or empower the president to appoint, such other officers and agents as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine. |
| Section 5.5. | Removal and Resignation of Officers. Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors. |
Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.
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| Section 5.6. | Vacancies in Offices. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. |
| Section 5.7. | Chair of the Board. The chair of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and of the stockholders at which they shall be present, and exercise and perform such other powers and duties as may from time to time be assigned to the chair by the board of directors or as may be prescribed by these bylaws. If there is no president, then the chair of the board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.8 of these bylaws. |
| Section 5.8. | Chief Executive Officer. Subject to such supervisory powers, if any, as may be given by the board of directors to the chair of the board, if there be such an officer, the chief executive officer shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction, and control of the business and the officers of the corporation. The chief executive officer shall, if present, preside at all meetings of the stockholders and, in the absence or nonexistence of a chair of the board, at all meetings of the board of directors, and shall have the general powers and duties of management usually vested in the office of chief executive officer of a corporation and such other powers and duties as may be prescribed by the board of directors or these bylaws. |
The Chief Executive Officer shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation.
| Section 5.9. | Chief Financial Officer. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director. |
The chief financial officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the board of directors. The chief financial officer shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all transactions as chief financial officer and of the financial condition of the corporation, and shall have other powers and perform such other duties as may be prescribed by the board of directors or these bylaws.
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| Section 5.10. | Chief Operations Officer. The chief operations officer shall oversee and manage the day-to-day operations of the corporation, ensuring that the business runs efficiently and effectively. The chief operations officer shall be responsible for implementing the operational strategies set by the board of directors and the Chief Executive Officer, and shall manage the corporation’s operational activities, including production, logistics, and resource allocation. The chief operations officer shall also be responsible for ensuring that the corporation’s operations comply with all relevant laws and regulations. |
The chief operations officer shall, at all reasonable times, provide reports and information regarding the operational status of the corporation to the board of directors and shall assist in the preparation and implementation of the corporation’s strategic plans. The chief operations officer shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws.
| Section 5.11. | Secretary. The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof. |
The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these bylaws. The secretary shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws.
| Section 5.12. | Representation of Shares of Other Corporations. The chair of the board, the president, any vice president, the chief financial officer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. |
| Section 5.13. | Authority and Duties of Officers. In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors or the stockholders. |
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Article VI. Indemnity.
| Section 6.1. | Third-Party Actions. Subject to the provisions of this Article IVVI, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that they are or were a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the corporation, which approval shall not be unreasonably withheld) actually and reasonably incurred in connection with such action, suit or proceeding if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which they reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that their conduct was unlawful. |
| Section 6.2. | Actions by or in the Right of the Corporation. To the fullest extent permitted by the Nevada Revised Statutes, as the same exists or may hereafter be amended, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that they are or were a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit, if they acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Nevada district court or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Nevada district court or such other court shall deem proper. Notwithstanding any other provision of this Article VI, no person shall be indemnified hereunder for any expenses or amounts paid in settlement with respect to any action to recover short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended. |
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| Section 6.3. | Successful Defense. To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 6.1 or 6.2, or in defense of any claim, issue or matter therein, they shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred in connection therewith. |
| Section 6.4. | Determination of Conduct. Any indemnification under Sections 6.1 or 6.2 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that the indemnification of the director, officer, employee or agent is proper in the circumstances because they have met the standard of conduct set forth in Sections 6.1 or 6.2, as applicable. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding or (ii) if such quorum is not obtainable or, even if obtainable, as a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. Notwithstanding the foregoing, a director, officer, employee or agent of the corporation shall be entitled to contest any determination that the director, officer, employee or agent has not met the applicable standard of conduct set forth in Sections 6.1 or 6.2 by petitioning a court of competent jurisdiction. |
| Section 6.5. | Payment of Expenses in Advance. Expenses incurred in defending a civil or criminal action, suit or proceeding, by an individual who may be entitled to indemnification pursuant to Section 6.1 or 6.2, shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that they are not entitled to be indemnified by the corporation as authorized in this Article VI. |
| Section 6.6. | Indemnity Not Exclusive. The indemnification and advancement of expenses provided by or granted pursuant to the other sections of this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in their official capacity and as to action in another capacity while holding such office, to the fullest extent permitted by the Nevada Revised Statutes. |
| Section 6.7. | Insurance Indemnification. The corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against and incurred by them in any such capacity or arising out of their status as such, whether or not the corporation would have the power to indemnify them against such liability under the provisions of this Article VI. |
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| Section 6.8. | The Corporation. For purposes of this Article VI, references to the “corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its directors and officers, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under and subject to the provisions of this Article VI (including, without limitation, the provisions of Section 6.4) with respect to the resulting or surviving corporation as they would have with respect to such constituent corporation if its separate existence had continued. |
| Section 6.9. | Employee Benefit Plans. For purposes of this Article VI, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner they reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this Article VI. |
| Section 6.10. | Indemnity Fund. Upon resolution passed by the Board, the corporation may establish a trust or other designated account, grant a security interest or use other means (including, without limitation, a letter of credit), to ensure the payment of certain of its obligations arising under this Article VI and/or agreements which may be entered into between the corporation and its officers and directors from time to time. |
| Section 6.11. | Indemnification of Other Persons. The provisions of this Article VI shall not be deemed to preclude the indemnification of any person who is not a director or officer of the corporation or is not serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, but whom the corporation has the power or obligation to indemnify under the provisions of the NRS or otherwise. The corporation may, in its sole discretion, indemnify an employee, trustee or other agent as permitted by the NRS. The corporation shall indemnify an employee, trustee or other agent where required by law. |
| Section 6.12. | Savings Clause. If this Article VI or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each person entitled to indemnification hereunder against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement with respect to any action, suit, proceeding or investigation, whether civil, criminal or administrative, and whether internal or external, including a grand jury proceeding and an action or suit brought by or in the right of the corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated, or by any other applicable law. |
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| Section 6.13. | Continuation of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. |
| Section 6.14. | Conflicts. No indemnification or advance shall be made under this Article VI, except where such indemnification or advance is mandated by law or the order, judgment or decree of any court of competent jurisdiction, in any circumstance where it appears: |
| (a) | That it would be inconsistent with a provision of the articles of incorporation, these bylaws, a resolution of the stockholders or an agreement in effect at the time of the accrual of the alleged cause of the action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or |
| (b) | That it would be inconsistent with any condition expressly imposed by a court in approving a settlement. |
Article VII. Records and Reports.
| Section 7.1. | Maintenance and Inspection of Records. The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records. |
Any stockholder of record who has been a stockholder of record for at least 6 months immediately preceding the demand, or holding at least 5% of all outstanding shares, upon written demand under oath stating the purpose thereof, shall have the right, during the usual hours for business and after at least 5 days' written notice to the corporation, to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent of the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent so to act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Nevada or at its principal place of business.
A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in each such stockholder’s name, shall be open to the examination of any such stockholder for a period of at least 10 days prior to the meeting in the manner provided by law. The stock list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.
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| Section 7.2. | Inspection by Directors. Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to their position as a director. The appropriate Nevada district court is hereby vested with jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger and the stock list, and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper. |
| Section 7.3. | Annual Statement to Stockholders. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. |
Article VIII. Notice by Electronic Transmission.
| Section 8.1. | Notice by Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the corporation under any provision of the Nevada Revised Statutes ("NRS"), the articles of incorporation, or the bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the corporation. A corporation may give a notice by electronic mail in accordance with NRS 75.150. Notwithstanding the foregoing, a notice may not be given by an electronic transmission from and after the time that: |
| (a) | the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation; and |
| (b) | such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice. |
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed given:
| (1) | if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; |
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| (2) | if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and |
| (3) |
| (4) | if by any other form of electronic transmission, when directed to the stockholder. |
An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
| Section 8.2. | Definition of Electronic Transmission. An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process. |
| Section 8.3. | Inapplicability. Notice by a form of electronic transmission shall not apply to notices required under NRS 78.370, 78.565, and 92A.410. |
Article IX. General Matters.
| Section 9.1. | Checks. From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments. |
| Section 9.2. | Execution of Corporate Contracts and Instruments. The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer as prescribed by NRS 78.135, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. |
| Section 9.3. | Stock Certificates; Partly Paid Shares. The shares of the corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and upon request, every holder of uncertificated shares, shall be entitled to have a certificate signed by, or in the name of the corporation by, the chair or vice-chair of the board of directors, or the president or vice president, and by the chief financial officer or an assistant treasurer, or the secretary or an assistant secretary of the corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if the individual were such officer, transfer agent or registrar at the date of issue. |
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The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
| Section 9.4. | Special Designation on Certificates. If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in NRS 78.242, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. |
| Section 9.5. | Lost Certificates. Except as provided in this Section 9.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or their legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. |
| Section 9.6. | Construction; Definitions. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Nevada Revised Statutes shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person. |
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| Section 9.7. | Dividends. The directors of the corporation, subject to any restrictions contained in (i) the Nevada Revised Statutes or (ii) the corporation’s articles of incorporation, may declare and pay dividends upon the shares of its capital stock at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock. |
Before payment of any dividend, subject to the requirements and restrictions of NRS 78.288, the directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may modify or abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.
| Section 9.8. | Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors. |
| Section 9.9. | Seal. The corporation may adopt a corporate seal, which shall be adopted and which may be altered by the board of directors, and may use the same by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. |
| Section 9.10. | Transfer of Stock Certificates; Recordation of Transfer. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, and compliance with all applicable requirements under NRS 104.8401 et seq., it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books. |
| Section 9.11. | Stock Transfer Agreements. The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the Nevada Revised Statutes. |
| Section 9.12. | Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada. |
| Section 9.13. | Transfer Restrictions. Notwithstanding anything to the contrary, except as expressly permitted in this Section 9.13, a stockholder shall not transfer, whether by sale, gift or otherwise, any shares of the corporation’s stock to any person unless such transfer is approved by the board of directors prior to such transfer, which approval may be granted or withheld in the board of directors’ sole and absolute discretion. Any purported transfer of any shares of the corporation’s stock effected in violation of this Section 9.13 or the Nevada Revised Statutes shall be null and void and shall have no force or effect and the corporation shall not register any such purported transfer. |
Any stockholder seeking the approval of the board of directors of a transfer of some or all of its shares shall give written notice thereof to the secretary of the corporation that shall include: (a) the name of the stockholder; (b) the proposed transferee; (c) the number of shares of the transfer of which approval is thereby requested; and (d) the purchase price (if any) of the shares proposed for transfer. The corporation may require the stockholder to supplement its notice with such additional information as the corporation may request.
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| Section 9.14. | Conflicts with Articles of Incorporation. In the event of any conflict between the provisions of the corporation’s articles of incorporation and these bylaws, the provisions of the articles of incorporation shall govern. |
Article X. FORUM SELECTION.
| Section 10.1. | Unless the corporation consents in writing to the selection of an alternative forum, the state courts located in Nevada shall be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the corporation; (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the corporation to the corporation or the corporation's stockholders; (iii) any action asserting a claim arising pursuant to any provision of the Nevada Revised Statutes; (iv) any action to interpret, apply, enforce or determine the validity of the corporation's articles of incorporation or these bylaws; or (v) any action asserting a claim governed by the internal affairs doctrine. |
| Section 10.2. | Unless the corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, subject to and contingent upon a final adjudication in the State of Nevada of the enforceability of such exclusive forum provision. |
| Section 10.3. | Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this Article X. |
Article XI. Amendments.
The bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its articles of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.
Adopted: October 2, 2025
21
Exhibit 3.3
|
|
Wyoming Secretary of State Herschler Building East, Suite 101 122 W 25th Street Cheyenne, WY 82002-0020 Ph. 307.777.7311 Email: Business@wyo.gov
|
WY Secretary of State FILED: 02/24/2023 11:37 AM Original ID: 2023--001216641 Amendment ID: 2023-004050603 |
Profit Corporation
Articles of Amendment
I. Corporation name:
(Name must match exactly to the Secretary of State’s records.)
Autonomous Solutions, Inc.
| 2. | Article number(s) V , is amended as follows: |
*See checklist below for article number information.
| See Attachment A. |
| 3. | If the amendment provides for an exchange, reclassification, or cancellation of issued shares, provisions for implementing the amendment if not contained in the amendment itself which may be made upon facts objectively ascertainable outside the articles of amendment. |
| N/A |
| 4. | The amendment was adopted on 02/06/2023 (Date - mm/ddlyyyy) |
 |
P-Amendment – Revised June 2021
| 5. | Approval of the amendment: (Please check onlv one appropriate field to indicate the party approving the amendment.) |
| ☐ | Shares were not issued and the board of directors or incorporators have adopted the amendment. |
OR
| ☐ | Shares were issued and the board of directors have adopted the amendment without shareholder approval, in compliance with W.S. 17-16-1005. |
OR
| þ | Shares were issued and the board of directors have adopted the amendment with shareholder approval, in compliance with W.S. 17-16-1003. |
| Signature: |  |
Date: | 02/06/2023 |
| (May be executed by Chairman of Board. President or another of its officers.) | (mm/dd/yyyy) | ||
| Print Name: | Graham Norris | ||
| Contact Person: | Graham Norris | ||
| Title: | Vice-President | ||
| Daytime Phone Number: 801-932-1238 | |||
| Email: graham@norrislawyer.com | |||
| (An email address is required. Email(s) provided will receive important reminders, notices and filing evidence.) | |||
| Checklist | |
| þ | Filing Fee: $60.00 Make check or money order payable to Wyoming Secretary of State. |
| þ | Processing time is up to 15 business days following the date of receipt in our office. |
| þ | *Refer to original articles of incorporation to determine the specific article number being amended or use the next number in sequence if you are adding an article. Article number(s) is not the some as the filing ID number. |
| þ | Please mail with payment to the address at the top of this form. This form cannot be accepted via email. |
| þ | Please review the form prior to submission. The Secretary of State’s Office is unable to process incomplete forms. |
P-Amendment – Revised June 2021
Autonomous Solutions, Inc.
02/06/2023
Articles of Amendment - Attachment A
Article V.
The number, par value, and class of shares the profit corporation will have the authority to issue are:
| Number of Common Shares: | l00,000,000 | Common Par Value: | $0.001 |
| Number of Preferred Class A Shares: | 100,000 | Preferred Class A Value: | $0.001 |
| Number of Preferred Class B Shares: | 20,000,000 | Preferred Class A Value: | $0.001 |
Common Shares shall have voting rights of one (1) vote per share.
Preferred Class A Shares shall have voting rights of 2,000 votes per Preferred Class A Share. Additionally, Preferred Class A Shares may be converted to Common Shares at a ratio of 1:1,000 (1 Class A Preferred Share equals 1,000 Common Shares); such conversion shall be at the discretion of the Preferred Class A Shareholders.
Preferred Class B Shares shall have no voting rights. Additionally, Preferred Class B Shares may be converted to Common Shares at a ratio 1:1 (1 Preferred Class B Share equals 1 Common Share); such conversion of Preferred Class B Shares shall be at the sole discretion of the Company’s Board of Directors.
| RECEIPT |  Secretary of State Herschler Bldg East, Ste.100 & 101 Cheyenne, WY 82002-0020 |
| RECEIPT INFORMATION | ||
| NORRIS LAW GROUP, P.C. | ||
| 1156 SOUTH STATE STREET, SUITE 204 | Receipt #: 002922797 | |
| OREM, UT 84097 | Receipt Date: 02/24/2023 | |
| Processed By: Lori Medina |
DO NOT PAY! This is not a bill. | ||
| Description of Charges | Reference Quantity Unit Price | Total |
| Common Amendment - Profit Corporation - Domestic | 2023-004050603 1 $60.00 | $60.00 |
| TOTAL CHARGES PAID | $60.00 | |
| Description of Payment | Reference | Amount |
| Payment-Check / Money Order | 4833 | $60.00 |
| TOTAL PAYMENT | $60.00 | |
In Reference To:
Autonomous Solutions, Inc. (2023-001216641); Amendment ID: 2023-004050603
PAD or Billing Questions?
(307) 777-5343
SOSAdminServices@wyo.gov
Page 1 of 1
Exhibit 3.4
| Delaware | Page 1 | |
| The First State |
I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY CERTIFY THAT THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF “VENHUB GLOBAL, INC.” FILED IN THIS OFFICE ON THE FIFTEENTH DAY OF AUGUST, A.D. 2024, AT 2:10 O’CLOCK P.M.
4712118 8100F SR# 20243428852 |
 |
Authentication: 204175098 Date: 08-15-24 |
You may verify this certificate online at corp.delaware.gov/authver.shtml
| Delaware | Page 1 | |
| The First State |
I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF CONVERSION OF A WYOMING CORPORATION UNDER THE NAME OF “AUTONOMOUS SOLUTIONS, INC.” TO A DELAWARE CORPORATION, CHANGING ITS NAME FROM “AUTONOMOUS SOLUTIONS, INC.” TO “VENHUB GLOBAL, INC.”,FILED IN THIS OFFICE ON THE FIFTEENTH DAY OF AUGUST, A.D. 2024, AT 2:10 O’CLOCK P.M.
4712118 8100F SR# 20243428852 |
|
Authentication: 204175098 Date: 08-15-24 |
You may verify this certificate online at corp.delaware.gov/authver.shtml
| Delaware | Page 1 | |
| The First State |
I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY “VENHUB GLOBAL, INC.” IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE FIFTEENTH DAY OF AUGUST, A.D. 2024.
4712118 8300 SR# 20243428852 |
|
Authentication: 204175099 Date: 08-15-24 |
You may verify this certificate online at corp.delaware.gov/authver.shtml
STATE
OF DELAWARE
CERTIFICATE OF CONVERSION
FROM A NON-DELAWARE CORPORATION TO A
DELAWARE CORPORATION PURSUANT TO SECTION 265 OF
THE DELAWARE GENERAL CORPORATION LAW
ONE: The jurisdiction where the non-Delaware corporation was first formed is the state of Wyoming and the date the non-Delaware corporation first formed is January 31, 2023.
TWO: The jurisdiction immediately prior to filing this Certificate is the state of Wyoming.
THREE: The name of the non-Delaware corporation immediately prior to filing this Certificate is “Autonomous Solutions, Inc.”
FOURTH: The name of the corporation as set forth in the Certificate of Incorporation is “VenHub Global, Inc.”
IN WITNESS WHEREOF, the undersigned have executed this Certificate on this _12th_ day of August 2024.
| By: | Shahan Ohanessian | |
| Shahan Ohanessian | ||
| CEO, Autonomous | ||
| Solutions Inc. |
State
of Delaware Delivered 02:10 PM 08/15/2024 FILED 02:10 PM 08/15/2024 SR 20243428852 - File Number 4712118 |
State
of Delaware Delivered 02:10 PM 08/15/2024 FILED 02:10 PM 08/15/2024 SR 20243428852 - File Number 4712118 |
ARTICLES OF INCORPORATION
OF
VENHUB GLOBAL, INC.
The undersigned, being natural persons more than eighteen years of age, pursuant to Delaware General Corporation Law (the “DGCL”), hereby adopt the following Articles of Incorporation:
FIRST (Corporate Name): The name of the Corporation is:
VenHub Global, Inc.
SECOND (Registered Agent For Service of Process): The Registered Agent for Service of Process shall be Harvard Business Services, Inc., having addresses at 16192 Coastal Highway, Lewes, County of Sussex, Delaware19958.
THIRD (Authorized Shares):
| (a) | The Corporation shall be authorized to issue one hundred million shares (100,000,000) Common Stock one hundred thousand (100,000) shares of Class A Preferred Stock, and twenty million (20,000,000) shares of Class B Preferred Stock, each having a par value of$0.001. |
| (b) | Each Common share shall be entitled to one vote for all matters on which a shareholder vote is requested or required. The Preferred shares shall not be entitled to vote for any matters on which a shareholder vote is requested or required. Common Stock of the company may be issued from time to time without prior approval by the shareholders. The stock of the company may be issued for such consideration as may be fixed from time to time by the Board of Directors. The holders of the Common Stock are entitled to receive the net assets of the Corporation upon dissolution, subject to any adjustment due to any designation of additional classes of shares. The Board of Directors may restructure the issued and outstanding shares with respect to a forward or reverse split, without a shareholders’ meeting, general or special meeting. |
| (c) | Class A Preferred Stock |
| a. | The Class A Preferred Stock shall rank: (i) senior to any other class or series of outstanding Preferred Shares or classes of capital stock of the Company not explicitly ranked higher herein; (ii) prior to all of the Company’s Common Stock, (“Common Stock11); (iii) prior to any other class or series of capital stock of the Company hereafter created not explicitly ranked higher herein (“Junior Securities”); and in each case as to distributions of assets upon liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (all such distributions being referred to collectively as “Distributions”). |
| b. | The Class A Preferred Stock shall be convertible into shares of Common Stock of the Company at a ratio of one thousand (1,000) shares of Common Stock for each share of Class A Preferred Stock at the sole discretion of the holder. |
| c. | The Holders of Series A Preferred Stock shall have voting rights equal to two thousand (2,000) votes per share. |
| (d) | Class B Preferred Stock |
| a. | The Class B Preferred Stock shall have no preferential rank. |
| b. | The Class B Preferred Stock shall be convertible into shares of Common Stock of the Company at a ratio of one (I) share of Common Stock for each share of Class B Preferred Stock at the sole discretion of the Board of Directors. |
| c. | The Holders of Series A Preferred Stock shall have voting rights equal to two thousand (2,000) votes per share. |
| (e) | Each shareholder of record shall have voting rights as described above, except that in the election of directors he or she shall have the right to vote such number of shares for as many persons as there are directors to be elected. Cumulative voting shall not be allowed in the election of directors or for any other purpose. |
| (f) | The Board of Directors may, from time to time, distribute to the shareholders in partial liquidation, out of stated capital or capital surplus of the Corporation, a portion of its assets, in cash or property, subject to the limitations contained in the statutes of the State of Delaware. |
FOURTH (Purposes):
| (a) | The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the laws of the State of Delaware. |
| (b) | In furtherance of the foregoing purpose, the Corporation shall have and may exercise all the rights, powers and privileges now or hereafter conferred upon corporations organized under the laws of the State of Delaware. In addition, it may do everything necessary, suitable or proper for the accomplishment of’ any of its corporation purposes. |
FIFTH (Name and Address of Incorporator): The name and address of the Incorporator is: Shahan Ohanessian, 518 South Fair Oaks Avenue, Pasadena, CA 91105.
SIXTH (Duration): The Corporation shall have perpetual existence.
SEVENTH (Amendments to Articles ofincorporation): The Board of Directors reserves the right to amend, alter, change, or repeal any provision contained in these Articles ofincorporation in the manner now or hereafter prescribed by statute, and all rights conferred on the Corporation herein are granted subject to this reservation.
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EIGHTH (Number ofDirectors): The Board of Directors shall be composed of not less than one (1) nor more than seven (7) directors.
NINTH (Board of Directors Powers): In furtherance, and not in limitation of those powers conferred by statute, the Board of Directors is expressly authorized in the following, including, but not limited to:
| (a) | The authority to establish Bylaws for the Corporation is hereby expressly vested in the Board of Directors of this Corporation. The Board of Directors shall have the authority to alter and amend the Bylaws, from time to time, as may be necessary to conduct the business of the Corporation without the need to have shareholder approval. |
| (b) | To authorize and cause to be executed mortgages and lines of credit, with or without limitations as to the amount, upon the real and personal property of the Corporation. |
| (c) | To authorize and guaranty by the Corporation of the securities, evidences of indebtedness and obligations or other persons, corporations or business entities. |
| (d) | To set apart from any funds of the Corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve. |
| (e) | By resolution adopted by the majority of the whole Board, to designate one or more committees to consist of one or more Directors of the Corporation, which to the extent provided by resolution or in the Bylaws of the Corporation, shall have and may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have name and names as may be set forth and stated in the Bylaws of the Corporation or as may be determined from time to time by resolution adopted by the Board of Directors. All the corporate powers of the Corporation shall be exercised by the Board of Directors except as otherwise stated herein or in the Bylaws. |
TENTH (Indemnification):
| (a) | The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director, officer, employee, fiduciary or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorney fees), judgments, fines, and amounts paid in settlement actually and reasonably believed to be in the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction or upon a plea of no contest or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe his conduct was unlawful. |
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| (b) | The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee, or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit ifhe acted in good faith and in a manner he reasonably believed to be in the best interests of the Corporation; but no indemnification shall be made in respect of any claim, issue, or matter as to which such person has been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought determines upon application that, despite the adjudication of liability, but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses which such court deems proper. |
| (c) | To the extent that a director, officer, employee, fiduciary or agent of a corporation has been successful on the merits in defense of any action, suit, or proceeding referred to in (a) or (b) of this Article XI or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses (including attorney fees) actually and reasonably incurred by him in connection therewith. |
| (d) | Any indemnification under (a) or (b) of this Article XI (unless ordered by a court) and as distinguished from (c) of this Article shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, fiduciary or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in (a) or (b) above. Such determination shall be made by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit, or proceeding, or, if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested directors so directs. |
| (e) | Expenses (including attorney’s fees) incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized in Section (d) of this Article, upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. |
| (f) | The Board of Directors may exercise the Corporation’s power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under this Article. |
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| (g) | The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under these Amended Articles of Incorporation, the Bylaws, agreements, vote of the shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs and personal representatives of such a person. |
| (h) | The liability of directors and officers of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL. If the DGCL are amended to further eliminate or limit or authorize corporate action to further eliminate or limit the liability of directors or officers, the liability of directors and officers of the Corporation shall be eliminated or limited to the fullest extent permitted by DGCL as so amended from time to time. |
ELEVENTH (Additional Provisions):
| (a) | Shareholder Action Without Meeting: Any action to be taken at any annual or special shareholders’ meeting, may betaken without ameeting, without prior notice and without a vote if written consents are signed by shareholders holding at least a majority (meaning greater than 50%) of the shares entitled to vote on such matter, except however if a different proportion of voting power is required by law, the Articles ofincorporation or these Bylaws, than that proportion of written consents is required. Such written consents must be filed with the minutes of the proceedings of the shareholders of the Corporation. |
| (b) | Board of Directors Action Without Meeting: made prior or subsequent to such action, by all of the Directors entitled to vote thereon and filed with the minutes of the Corporation shall be the act of the Board of Directors, or any committee thereof, and have the same force and effect as if the same had been passed by unanimous vote at a duly called meeting of the Board or committee for all purposes. |
IN WITNESS WHEREOF the incorporator has hereunto signed the original in duplicate.
DATED THIS:
08/12/24
| Shahan Ohanessia | |
| Shahan Ohanessian - Incorporator |
5
Exhibit 3.5
|
State of Delaware Secretary of State Division of Corporations |
|||
|
Delivered 02:50PM 11122/2024 FILED 02:50 PM11122/2024 |
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| SR 20244296357 - FileNumber 4712118 |
VENHUB GLOBAL, INC.
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
The corporation organized andexisting under theGeneral Corporation Law of the State of Delaware, hereby certifies as follows:
| 1. | The name of the corporation is “VenHub Global, Inc.” |
| 2. | The Article THIRD of the Certificate oflncorporation of the corporation is hereby amended so that, as amended, said Article shall be and read in its entirety as follows: |
| a. | The Corporation shall be authorized to issue one hundred million shares (100,000,000) Common Stock, one hundred thousand (100,000) shares of Class A Preferred Stock, and twenty million (20,000,000) shares of Class B Preferred Stock, each having a par value of $0.001. |
| b. | Each Common share shall be entitled to one vote for all matters on which a shareholder vote is requested or required. Common Stock of the company may be issued from time to time without prior approval by the shareholders. The stock of the company may be issued for such consideration as may be fixed from time to time by the Board of Directors. The holders of the Common Stock are entitled to receive the net assets of the Corporation upon dissolution, subject to any adjustment due to any designation of additional classes of shares. |
| c. | Class A Preferred Stock |
| 1. | The Class A Preferred Stock shall rank: (i) senior to any other class or series of outstanding Preferred Shares or classes of capital stock of the Company not explicitly ranked higher herein; (ii) prior to all of the Company’s Common Stock, (“Common Stock”); (iii) prior to any other class or series of capital stock of the Company hereafter created not explicitly ranked higher herein (“Junior Securities”); and in each case as to distributions of assets upon liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (all such distributions being referred to collectively as “Distributions”). |
| 11. | The Class A Preferred Stock shall be convertible into shares of Common Stock of the Company at a ratio of three hundred seventy-nine and thirty five thousand twenty nine one hundred thousandths (379.35029) shares of Common Stock for each share of Class A Preferred Stock at the sole discretion of the holder. |
| 111. | The Holders of Class A Preferred Stock shall have voting rights equal to two thousand (2,000) votes per share. |
| d. | Class B Preferred Stock |
| i. | The Class B Preferred Stock shall have no preferential rank. |
| 11. | The Class B Preferred Stock shall be convertible into shares of Common Stock of the Company at a ratio of one (1) share of Common Stock for each share of Class B Preferred Stock at the sole discretion of the Board of Directors. |
| m. | The Holders of Class B Preferred Stock shall have no voting rights except as otherwise required by appliable law. |
| e. | Each shareholder of record shall have voting rights as described above, except that in the election of directors he or she shall have the right to vote such number of shares (that have the right to vote on the election of directors) for as many persons as there are directors to be elected. Cumulative voting shall not be allowed in the election of directors or for any other purpose. |
| f. | The Board of Directors may, from time to time, distribute to the shareholders in partial liquidation, out of stated capital or capital surplus of the Corporation, a portion of its assets, in cash or property, subject to the limitations contained in the statutes of the State of Delaware. |
| 3. | That said amendment was duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. |
IN WITNESS WHEREOF, the corporation has caused this Certificate to be executed by its duly authorized officer on this 22nd day of November 2024.
| VENHUB GLOBAL, INC. | ||
| By: | /s / Shahan Ohanessian | |
| Name: | Shahan Ohanessian | |
| Title: | CEO | |
Exhibit 3.6
DRAFT AMENDMENT FOR THE PURPOSES OF INCLUSION AS AN EXHIBIT TO FORM S-1.
THIS HAS NOT BEEN FILED WITH THE DELAWARE SECRETARY OF STATE.
VENHUB GLOBAL, INC.
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
The corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies as follows:
| 1. | The name of the corporation is “VenHub Global, Inc.” |
| 2. | The Article THIRD of the Certificate of Incorporation of the corporation is hereby amended so that, as amended, said Article shall be and read in its entirety as follows: |
| a. | The Corporation shall be authorized to issue one hundred million shares (100,000,000) Common Stock, one hundred thousand (100,000) shares of Class A Preferred Stock, twenty million (20,000,000) shares of Class B Preferred Stock, and one hundred thousand (100,000) shares of Class C Preferred Stock, each having a par value of $0.001. |
| b. | Each Common share shall be entitled to one vote for all matters on which a shareholder vote is requested or required. Common Stock of the company may be issued from time to time without prior approval by the shareholders. The stock of the company may be issued for such consideration as may be fixed from time to time by the Board of Directors. The holders of the Common Stock are entitled to receive the net assets of the Corporation upon dissolution, subject to any adjustment due to any designation of additional classes of shares. |
| c. | Class A Preferred Stock |
| i. | The Class A Preferred Stock shall rank: (i) senior to any other class or series of outstanding Preferred Shares or classes of capital stock of the Company not explicitly ranked higher herein; (ii) prior to all of the Company’s Common Stock, (“Common Stock”); (iii) prior to any other class or series of capital stock of the Company hereafter created not explicitly ranked higher herein (“Junior Securities”); and in each case as to distributions of assets upon liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (all such distributions being referred to collectively as “Distributions”). |
DRAFT AMENDMENT FOR THE PURPOSES OF INCLUSION AS AN EXHIBIT TO FORM S-1.
THIS HAS NOT BEEN FILED WITH THE DELAWARE SECRETARY OF STATE.
| ii. | The Class A Preferred Stock shall be convertible into shares of Common Stock of the Company at a ratio of three hundred seventy-nine and thirty five thousand twenty nine one hundred thousandths (379.35029) shares of Common Stock for each share of Class A Preferred Stock at the sole discretion of the holder. |
| iii. | The Holders of Class A Preferred Stock shall have voting rights equal to two thousand (2,000) votes per each one (1) share of Class A Preferred Stock held at the time of any vote. |
| d. | Class B Preferred Stock |
| i. | The Class B Preferred Stock shall have no preferential rank. |
| ii. | The Class B Preferred Stock shall be convertible into shares of Common Stock of the Company at a ratio of one (1) share of Common Stock for each share of Class B Preferred Stock at the sole discretion of the Board of Directors. |
| iii. | The Holders of Class B Preferred Stock shall have no voting rights except as otherwise required by appliable law. |
| e. | Class C Preferred Stock |
| i. | The Class C Preferred Stock shall have no preferential rank. |
| ii. | The Class C Preferred Stock shall have no conversion rights. |
| iii. | The Holders of Class C Preferred Stock shall have voting rights equal to exactly one thousand (1,000) votes per each one (1) share of Class C Preferred Stock held at the time of any vote. |
| f. | Each shareholder of record shall have voting rights as described above, except that in the election of directors he or she shall have the right to vote such number of shares (that have the right to vote on the election of directors) for as many persons as there are directors to be elected. Cumulative voting shall not be allowed in the election of directors or for any other purpose. |
| g. | The Board of Directors may, from time to time, distribute to the shareholders in partial liquidation, out of stated capital or capital surplus of the Corporation, a portion of its assets, in cash or property, subject to the limitations contained in the statutes of the State of Delaware. |
| 3. | That said amendment was duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. |
IN WITNESS WHEREOF, the corporation has caused this Certificate to be executed by its duly authorized officer on this __ day of _________ 2025.
| VENHUB GLOBAL, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 3.7
VenHub Global, Inc.
Audit Committee Charter
Of
the Board of Directors
Purpose
The primary purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of VenHub Global, Inc. (the “Company”) is to assist the Board in fulfilling its oversight responsibilities with respect to: (i) the Company’s accounting, auditing, and financial reporting processes; (ii) the integrity of the Company’s financial statements; (iii) the Company’s internal controls and procedures designed to promote compliance with accounting standards and applicable laws and regulations; (iv) the appointment, and evaluation of the qualifications and independence, of the Company’s independent auditors; and (v) oversight of the Company’s risk management, including cybersecurity.
Membership
The Committee shall be comprised of three (3) or more members of the Board, each of whom shall satisfy the independence requirements of The Nasdaq Stock Market LLC (“Nasdaq”) and the Securities and Exchange Commission (the “SEC”) and possess the ability to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and cash flow statement. At least one member of the Committee shall meet the requirements of the NASDAQ Marketplace Rules and, unless the Board shall otherwise determine, shall also be an “Audit Committee Financial Expert,” as defined by Item 407(d)(5)(ii) of Regulation S-K of the Securities Exchange Act of 1934 (the “Exchange Act”). Each member shall be free from any relationship that, in the opinion of the Board, would interfere with his or her exercise of independent judgment. The Board must determine that each member of the Committee: (i) qualifies as an “independent director” under the NASDAQ Marketplace Rules, unless the Board determines that an exemption to such qualification is available under the NASDAQ Marketplace Rule, (ii) meets the “independence” requirements under Section 10A of the Exchange Act, and (iii) satisfies the other requirements of Rule 4350(d)(2) of the NASDAQ Marketplace Rules.
The members of the Committee and the Chairman of the Committee shall be appointed annually by the Board of Directors. Members shall serve at the pleasure of the Board and for such term or terms as the Board may determine.
The Committee shall meet at least quarterly, or more frequently as the Committee may determine. Members of management, the Company’s independent auditors, and others shall attend meetings to provide pertinent information, as necessary. As part of its goal of fostering open communication, during its regularly scheduled meetings, the Committee shall meet in separate executive sessions with management and with the independent auditors to discuss any matters that the Committee or any of these groups believes should be discussed privately. The Chairman of the Committee shall report to the Board regularly regarding the Committee’s activities and actions, including at the first Board meeting following any Committee meeting.
The Chairman or, in the event of his absence from any meeting, another member of the Committee designated by vote of the members in attendance at such meeting, will chair all meetings of the Committee and set the agendas for such meetings. Any other member of the Committee shall have the right to submit items to be included on the agenda for any Committee meeting.
The Committee shall keep regular minutes of its meetings and report the same to the Board from time to time and upon request.
Duties and Responsibilities
The Committee shall have and may exercise the powers of the Board in matters relating to the following duties and responsibilities, to the fullest extent permitted by law:
Independent Auditors – Appointment and Oversight
| 1. | The Committee shall be directly responsible for the appointment, compensation, retention, termination, and oversight of the work of the Company’s independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting). The independent auditors shall report directly to the Committee. |
| 2. | The Committee shall approve in advance all auditing services (including comfort letters and statutory audits) performed by the independent auditors. The Committee shall approve in advance all non-audit services performed by the independent auditors as permitted under Section 10A of the Exchange Act. The Committee may delegate to one or more members the authority to grant pre-approvals required by this section, in which case the decision of such member or members shall be presented to the Committee at the next scheduled meeting of the Committee. All approvals shall be in accordance with the Committee’s Auditor Pre-Approval Policy, as amended from time to time. |
| 3. | The Committee shall annually review and discuss with the independent auditors all relationships the independent auditors have with the Company in order to evaluate their continued independence. In this regard, the Committee shall (i) review on an annual basis a written statement from the independent auditors (consistent with Independent Standards Board Standard No. 1) that discloses all relationships and services that may impact the objectivity and independence of the independent auditors; (ii) discuss with the independent auditors any disclosed relationships or services that may impact their objectivity and independence; and (iii) satisfy itself as to the independence of the independent auditors. |
| 4. | The Committee shall annually obtain and review a report by the independent auditors describing: (i) the independent auditors’ internal quality-control procedures; and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the audit firm, and any steps taken to deal with such issues. |
| 5. | The Committee shall confirm compliance by the independent auditors with laws and regulations relating to audit partner rotation. |
| 6. | The Committee shall obtain, review, and discuss quarterly reports from the independent auditors to the Committee with respect to critical accounting policies and practices, alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, including ramifications of the use of such alternative disclosure and treatments, and the treatment preferred by the independent auditors and the impact of each on the quality and reliability of the Company’s financial reporting, and other material communications with management, such as any management letter or schedule of unadjusted differences. All material communications shall be promptly provided to each member of the Committee. |
| 7. | The Committee shall review with the independent auditors and management the scope of the proposed audit plan for the current year, and at the conclusion thereof review such audit and any comments and recommendations of the independent auditors. |
| 8. | The Committee shall discuss with management and the independent auditors any accounting adjustments that were noted or proposed by the independent auditors but not adopted or reflected. |
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| 9. | The Committee shall regularly review with the independent auditors any audit problems or difficulties encountered in the course of the audit work, including any restrictions on the scope of the independent auditors’ activities or access to requested information and any significant disagreements with management and management’s response thereto. |
| 10. | The Committee shall annually review the qualifications, performance, and independence of the independent auditors and the senior members of the independent auditors’ audit engagement team. |
| 11. | The Committee shall annually prepare the report required by the proxy rules promulgated by the SEC to be included in the Company’s annual proxy statement. |
Financial Statements
| 12. | The Committee shall review and discuss with management and the independent auditors the Company’s annual audited financial statements and the Company’s quarterly financial statements (including disclosures made in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” portion thereof) prior to issuance or filing. |
| 13. | The Committee shall discuss with the independent auditors the matters required to be discussed by applicable professional auditing standards, including those regarding required communications with audit committees relating to the conduct of the audit. |
| 14. | The Committee shall recommend to the Board, if appropriate, that the Company’s annual audited financial statements be included in the Company’s annual report on Form 10-K for filing with the SEC. |
Accounting and Financial Reporting Processes and Risk Assessment
| 15. | The Committee shall periodically discuss with the independent auditors, without management being present, their judgments about the quality, appropriateness, and acceptability of the Company’s accounting principles and financial disclosure practices, as applied in its financial reporting, and the completeness and accuracy of the Company’s financial statements. |
| 16. | The Committee shall review with management and the independent auditors any legal, regulatory, or compliance matters that could have a significant impact on the Company’s financial statements, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding the Company’s financial statements or accounting policies, and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC, or other regulatory authorities. |
| 17. | The Committee shall discuss generally the types of information to be disclosed and the presentation to be made in press releases regarding the Company’s earnings, including the use of non-GAAP financial data, and in financial information and earnings guidance (if any) otherwise publicly announced or given to ratings agencies or other third parties. |
| 18. | The Committee shall review with management and, if necessary, the independent auditors and Company counsel, press releases announcing quarterly and annual financial results and other financial reporting information prior to their release. |
| 19. | The Committee shall review any off-balance sheet transactions, arrangements, and obligations (including contingent obligations) and any other relationships of the Company with unconsolidated entities that may have a current or future effect on the Company’s financial statements. |
| 20. | The Committee shall review and discuss with management, and to the extent the Committee deems necessary or appropriate, the independent auditors, the Company’s disclosure controls and procedures that are designed to ensure that the reports the Company files with the SEC comply with the SEC’s rules and forms. |
| 21. | The Committee shall review the Company’s major risk exposures, including financial, operational, cybersecurity, compliance, and strategic risks. The Committee shall also review the adequacy and effectiveness of the Company’s risk management policies and procedures, and the steps management has taken to monitor and control such exposures, including the use of risk management software and third-party assessments. |
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Internal Controls
| 22. | The Committee shall establish and oversee procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters, including establishing a hotline or other confidential communication channels. |
| 23. | The Committee shall review the reports of the Chief Executive Officer and Chief Financial Officer (in connection with their required certifications for the Company’s filings with the SEC) regarding any significant deficiencies or material weaknesses in the design or operation of internal controls, and any fraud that involves management or other employees who have a significant role in the Company’s internal controls. |
Other Responsibilities
| 24. | The Committee shall ensure that the Company shall not hire any person to perform a financial reporting oversight role who has provided more than ten hours of audit, review, or attest services as part of the independent auditors’ audit engagement team within the past year. A financial reporting oversight role refers to a role in which an individual has direct responsibility for or oversight of those who prepare the Company’s financial statements and related information, which will be included in the Company’s filings with the SEC, and also includes members of the Board who may have significant interaction with the independent auditors’ audit engagement team. |
| 25. | The Committee shall establish policies and procedures for reviewing, approving, and ratifying related party transactions in compliance with Item 404 of Regulation S-K promulgated by the SEC. The Committee shall review and approve any such transaction before it is executed and shall ensure that all related party transactions are conducted on an arm’s length basis and in the best interest of the Company. The Committee shall report to the Board any proposed Related Party Transaction that it does not approve. The Committee shall also review and report to the Board any questions of possible conflict of interest involving Board members, members of senior management, or their immediate families. |
| 26. | The Committee shall oversee the Company’s internal audit function, including (i) the appointment, replacement, dismissal, and compensation of the Company’s senior-most internal auditor and (ii) reviewing the internal audit department’s staffing, budget, and responsibilities. The Committee shall review and approve the annual internal audit plan, review significant internal audit findings and recommendations, and assess the effectiveness of the internal audit function, including its independence and objectivity. |
| 27. | The Committee shall semi-annually review and evaluate its performance, including compliance with this Charter, the effectiveness of its meetings and processes, and the achievement of its objectives. This evaluation should include soliciting feedback from management, the internal audit department, and the independent auditors. |
| 28. | The Committee shall annually review and assess the adequacy of this Charter and submit any proposed changes to the Board for approval. |
| 29. | The Committee shall perform any other activities consistent with this Charter, and the Company’s Bylaws and Certificate of Incorporation, as the Committee deems necessary or appropriate for the fulfillment of its responsibilities under this Charter, as required by applicable law or regulation, or as determined by the Board. |
Committee Resources and Advisors
The Committee shall have the authority to retain, at the expense of the Company, such independent legal and other advisors as it deems necessary to carry out its duties, subject to the approval of the Board or management.
The Committee members will be provided with continuing education opportunities in financial reporting and other areas relevant to the Committee.
The Company shall provide for appropriate funding, as determined by the Committee, in its capacity as a committee of the Board, for payment of: (i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review, or attest services for the Company; (ii) compensation to any advisors engaged by the Committee as provided above; and (iii) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
Limitation of Committee’s Role
While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits. However, the Committee should ensure that the Company’s financial statements and disclosures are complete, accurate, and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the primary responsibilities of management and the independent auditors, but the Committee should play a supervisory role.
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Exhibit 3.8
VenHub Global, Inc.
Compensation Committee Charter
of
the Board of Directors
[Reviewed & Adopted: June XX, 2025]
I. Purpose
The purpose of the Compensation Committee (the “Committee”) is to assist the Board of Directors (the “Board”) of VenHub Global Inc. (the “Company”) in fulfilling its responsibilities relating to the compensation of the Company’s executive officers and other employees as the Board deems appropriate. The Committee will establish and implement compensation policies and programs, including performance-based and long-term equity and cash compensation, to attract, retain, and motivate qualified executives and employees.
II. Membership and Power to Act
| 1. | Composition: The Committee will consist of at least three (3) members of the Board, each of whom shall satisfy the independence requirements of The Nasdaq (“NASDAQ”) and the Securities and Exchange Commission (the “SEC”). Members of the Committee shall be appointed by the Board and may be removed by the Board at its discretion. |
| 2. | Independence Requirements: |
Each member of the Committee must:
| o | Not accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company or any subsidiary thereof, other than fees received as a member of the Board or any committee of the Board. |
| o | Not be an affiliated person of the Company or any subsidiary thereof, except as otherwise permitted under NASDAQ rules. |
| 3. | Exceptional and Limited Circumstances: If the Committee consists of at least three (3) members, one director who is not independent as defined in Nasdaq Listing Rule 5605(a)(2) but is not a current officer or employee or an immediate family member of such person, may be appointed to the Committee if the Board, under exceptional and limited circumstances, determines that membership on the Committee by the individual is in the best interests of the Company and its shareholders. The Board must disclose, in the next annual proxy statement or in the Company’s next annual report on Form 10-K, the nature of the relationship and the reasons for the determination. This member may not serve longer than two (2) years. |
| 4. | Authority: The Committee shall have the authority to determine the compensation of the Chief Executive Officer (“CEO”) and all other executive officers of the Company. The Committee’s decisions regarding executive compensation shall be made by a majority vote of its members. No officer or employee shall be present during the voting or deliberations on their compensation, except when the Committee specifically requests such presence for informational purposes, after which such person shall leave the meeting. |
III. Meetings
| 1. | Frequency: The Committee shall meet as often as it deems necessary, but at least once annually, to review the compensation of the executive officers of the Company and, if it elects, other officers and employees of the Company. |
| 2. | Procedures: Meetings of the Committee will be conducted in accordance with the Company’s Bylaws. The Committee may invite any director, officer, or employee of the Company, outside counsel, or consultant to attend meetings, but such individuals shall not participate in deliberations or voting. |
IV. Responsibilities
The Committee shall have the following responsibilities:
| 1. | Compensation Policy Review: To establish and review annually the Company’s general compensation policies applicable to the CEO, executive officers, non-management directors, and, if the Committee elects other senior employees, including the relationship between Company performance and executive compensation. The Committee shall review at least annually the Company’s compensation policies and practices to determine whether they incentivize unnecessary or excessive risk-taking and report any findings to the Board. |
| 2. | Compensation Approval: To review and approve annually the compensation, including salaries, bonuses, benefits, stock options, and other forms of compensation, for the CEO, executive officers, and, if the Committee elects, other senior employees of the Company. |
| 3. | Performance Evaluation: To review and advise the Board concerning the performance of the CEO and other executive officers of the Company and to assess whether the performance goals for executive compensation have been met. |
| 4. | Industry Standards and Competitiveness: To review and consider market data regarding regional and industry-wide compensation practices and trends to ensure that the Company’s executive compensation programs are competitive and aligned with the Company’s strategic goals. |
| 5. | Equity Compensation Plans: To administer the Company’s equity-based compensation plans, including determining the individuals who will receive grants and the size and terms of such grants. |
| 6. | Executive Succession Plans: The Committee shall review at least annually and assess the Company’s plans for CEO and executive officer succession and make recommendations to the Board as when the Committee deems it appropriate. |
| 7. | Engagement of Advisors: To retain or obtain the advice of a compensation consultant, legal counsel, or other advisor as necessary to carry out its duties. The Committee shall be directly responsible for the appointment, compensation, and oversight of any advisor retained by it, and the Company shall provide appropriate funding for payment of reasonable compensation to such advisors. |
| 8. | Reporting: To prepare the Compensation Committee Report on executive compensation as required by the SEC for inclusion in the Company’s annual proxy statement or annual report on Form 10-K. |
| 9. | Additional Responsibilities: To perform such other duties and responsibilities as may be assigned by the Board from time to time or as may be required by Nasdaq rules and regulations. |
V. Reports
The Committee shall maintain minutes of its meetings and records relating to those meetings and the Committee’s activities. It shall provide reports to the Board on its activities, findings, and recommendations at least quarterly and more frequently as circumstances require. In addition, the Committee shall review and approve the Compensation Discussion and Analysis (CD&A) section for inclusion in the Company’s annual proxy statement or Form 10-K, ensuring compliance with SEC rules and regulations.
Exhibit 3.9
VenHub Global, Inc.
Nominating and Corporate Governance Committee
of the Board of Directors
[Reviewed & Adopted: June XX, 2025]
I. Purpose
The Nominating and Corporate Governance Committee (the “Governance Committee”) is a committee of the Board of Directors (the “Board”) of VenHub Global, Inc. (the “Company”). The purpose of the Governance Committee is to:
| 1. | Identify individuals who are qualified to become members of the Board, consistent with criteria approved by the Board. |
| 2. | Select, or recommend for the Board’s selection, the director nominees for each annual meeting of shareholders. |
| 3. | Develop and recommend to the Board a set of corporate governance principles applicable to the Company. |
| 4. | Oversee the annual evaluation of the Board and Company management. |
| 5. | Perform such other actions within the scope of this Governance Committee Charter as the Governance Committee deems necessary or advisable. |
II. Governance Committee Membership
| 1. | Composition: The Governance Committee shall consist of at least two (2) members of the Board. All members of the Governance Committee must be “independent directors” in accordance with independence requirements of The Nasdaq Stock Market (“Nasdaq”) and the Securities and Exchange Commission (the “SEC”). Members of the Governance Committee shall be appointed by the Board and may be removed by the Board at its discretion. |
| 2. | Independence Requirements: Each member of the Committee must: |
| o | Not accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company or any subsidiary thereof, other than fees received as a member of the Board or any committee of the Board. |
| o | Not be an affiliated person of the Company or any subsidiary thereof, except as otherwise permitted under NASDAQ rules. |
| 3. | Exceptional and Limited Circumstances: If the Committee consists of at least three (3) members, one director who is not independent as defined in Nasdaq Listing Rule 5605(a)(2) but is not a current officer or employee or an immediate family member of such person, may be appointed to the Committee if the Board, under exceptional and limited circumstances, determines that membership on the Committee by the individual is in the best interests of the Company and its shareholders. The Board must disclose, in the next annual proxy statement (or in the Company’s next annual report on Form 10-K if the Company does not file a proxy statement), the nature of the relationship and the reasons for the determination. This member may not serve longer than two (2) years. |
| 4. | Chairman: The Board shall appoint a Chairman for the Governance Committee. If the Board does not appoint a Chairman, the members of the Governance Committee may designate a Chairman by majority vote. |
III. Meetings of the Governance Committee
| 1. | Frequency: The Governance Committee shall meet as often as it deems necessary or appropriate, but no less than quarterly, with at least one meeting to occur prior to the annual meeting of shareholders. |
| 2. | Procedures: The provisions of the Company’s Bylaws that govern the conduct of Board committees shall govern the Governance Committee. The Governance Committee may adopt additional procedural rules that are not inconsistent with the Bylaws or this Charter. |
IV. Authority and Responsibilities of the Governance Committee
The Governance Committee shall have the following authority and responsibilities:
| 1. | Board Composition and Evaluation: Evaluate the size and composition of the Board, develop criteria for Board membership, and assess the independence of existing and prospective directors in accordance with Nasdaq and SEC rules. |
| 2. | Director Nomination Process: Seek and evaluate qualified individuals to become new directors as needed. Establish and maintain written procedures to review and recommend potential director nominees proposed by shareholders in accordance with the Company’s bylaws and applicable law and evaluate whether current Board members should be nominated for re-election. |
| 3. | Selection of Nominees: Select, or recommend for the Board’s selection, the director nominees for each annual meeting of shareholders and to fill any vacancies on the Board. |
| 4. | Board Structure: Evaluate the structure and operations of other Board committees. Recommend to the Board the qualifications for committee membership, committee member appointments and removals, and ensure proper committee reporting to the Board. |
| 5. | Corporate Governance Principles: Develop and recommend to the Board a set of corporate governance principles applicable to the Company and periodically review and reassess these principles. |
| 6. |
| 7. | Board and Management Evaluations: Oversee the annual evaluation of the Board’s and management’s performance, including the performance of individual directors. |
| 8. | Committee Performance Review: Annually review the Governance Committee’s own performance and the adequacy of this Governance Committee Charter. Recommend any proposed changes to the Board for approval. |
| 9. | Advisors and Consultants: Retain independent advisors, including search firms, legal counsel, or other experts, as necessary to assist in the execution of the Governance Committee’s responsibilities. The Company shall provide appropriate funding, as determined by the Governance Committee, for the payment of compensation to any advisors retained by the Governance Committee. |
| 10. | Access to Information: Have unrestricted access to the Company’s independent accountants, counsel, officers, and employees to perform its duties and responsibilities effectively. |
| 11. | Legal and Regulatory Compliance: Discuss with the Company’s counsel any legal matters that may have a significant impact on the Governance Committee’s responsibilities or the Company’s governance practices. |
| 12. | Reporting to the Board: Provide regular reports to the Board regarding the Governance Committee’s activities, recommendations, and decisions. |
| 13. | Diversity. The Committee shall consider gender, racial, ethnic, and other diversity characteristics, as well as diversity of skills, experiences, and perspectives in identifying director nominees, consistent with applicable law and regulations regarding board diversity and disclosure requirements. |
| 14. | Other Responsibilities: Perform such other activities consistent with this Governance Committee Charter, the Company’s Bylaws, applicable law, and Board directives as the Governance Committee deems necessary or appropriate to fulfill its responsibilities. |
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APPENDIX A – CRITERIA FOR DIRECTOR NOMINEES
In making recommendations to the Board of nominees to serve as directors, the Governance Committee will consider each nominee on a case-by-case basis, regardless of who recommended the nominee, and take into account all factors it considers appropriate, including but not limited to:
| ● | High personal and professional ethics, integrity, and values. |
| ● | Ability to exercise sound business judgment. |
| ● | Accomplishments in their respective fields with broad experience at the executive or policy-making level in business, government, education, technology, or public interest. |
| ● | Relevant expertise and experience, including financial acumen, which will contribute to the Board’s effectiveness. |
| ● | Ability to represent the interests of all shareholders and commitment to enhancing long-term shareholder value. |
| ● | Sufficient time and availability to devote to the Board and enhance their knowledge of the Company’s business. |
The Board also values diversity in its membership and believes it is essential to have a range of skills and perspectives represented. Specific qualities or skills that are considered necessary for at least one director include:
| ● | Experience and expertise to qualify as an “audit committee financial expert” as defined by the SEC. |
| ● | Background as an active or former executive officer of a public or private company or leader of a major complex organization, such as a commercial, scientific, government, educational, or similar institution. |
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Exhibit 5.1
Monday, October 3, 2025
| RE: | VenHub Global, Inc. Registration Statement on Form S-1 |
To Whom It May Concern:
I have been retained by VenHub Global, Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement (the “Registration Statement”), on Form S-1 and all amendments thereto to be filed by the Company with the U.S. Securities and Exchange Commission relating to the resale of up to 15,559,329 shares of common stock of the Company by those stockholders identified therein, or their permitted transferees (the “Registered Stockholders”) in connection with the Company’s direct listing on the Nasdaq Global Market (the “Offering”). You have requested that I render my opinion as to whether or not the securities issued and addressed in the Registration Statement, when sold in the manner referred to in the Registration Statement, will be legally issued, fully paid, and non-assessable. Specifically, this opinion covers 15,559,329 shares sold by the Registered Stockholders in connection with the Offering. In connection with the request, I have examined the following:
| 1. | Certificate of Incorporation of VenHub Global, Inc. |
| 2. | Designations of Series A and B Preferred Stock of VenHub Global, Inc., as amended, and the drafted Series C Preferred Stock Designation of VenHub Global, Inc., to be filed upon effectiveness of the Offering; |
| 3. | The Bylaws of VenHub Global, Inc.; |
| 4. | Current shareholder lists for all classes of stock for VenHub Global, Inc.; |
| 5. | The Registration Statement and all amendments thereto; and |
| 6. | Unanimous consent resolutions of the Company’s Boards of Directors, as they relate to private placements, issuances, and the Registration Statement; |
In my examination, I have assumed the genuineness of all signatures, the authenticity of all documents submitted to me as originals, and conformity with the originals of all documents submitted to me as copies thereof, and I have made no independent verification of the factual matters as set forth in such documents or certificates. In addition, I have made such other examinations of law and fact as I have deemed relevant in order to form a basis for the opinion hereinafter expressed.
On the basis of such examination, we are of the opinion that:
| 1. | The Offering has been duly authorized by all necessary corporate action of the Company, and the Company has sufficient shares authorized and unencumbered to fulfill the underlying offering. |
| 2. | The Offering constitutes valid and binding obligations of the Company enforceable against the Company according with the terms described therein. |
| 3. | When issued and sold by the Registered Stockholders against payment therefor pursuant to the terms of the Subscription Agreement, the Shares will be validly issued, fully paid and non-assessable. |
| 4. | VenHub Global, Inc. has approximately 162 shareholders holding 36,271,105 shares of common stock, 1 shareholder holding 100,000 shares of Series A preferred stock, and approximately 2,811 shareholders holding 671,072 shares of Series B preferred stock validly issued, fully paid and non-assessable. Upon effectiveness, there will be no holders of Series A or Series B preferred stock issued or outstanding, and there will be 74,877,206 of common stock and 100,000 shares of Series C preferred stock held by one party. |
This opinion is based on Delaware general corporate law, including statutory provisions, applicable provisions of the state Delaware constitution and reported judicial decisions interpreting those laws. I express no opinion, and none should be inferred, as to any other laws, including, without limitation, laws of any other state.
The opinions set forth herein are subject to the following qualifications: (a) I have made no independent verification of the factual matters as set forth in the documents or certificates reviewed, and (b) the opinions set forth herein are limited to the matters expressly set forth in this opinion letter, and no opinion is to be implied or may be inferred beyond the matters expressly so stated.
We hereby consent to the use of our opinion as herein set forth as an exhibit to the Registration Statement and to the use of our name under the caption “Legal Matters” in the prospectus forming a part of the Registration Statement.
Sincerely,
| /s/ William Robinson Eilers | |
| William Robinson Eilers, Esq. |
Exhibit 10.1
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - GROSS
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. Basic Provisions (“Basic Provisions”).
1.1 Parties. This Lease (“Lease”), dated for reference purposes only 8/7/23, is made by and between John E. Nettleton and Shawna R. Nettleton, Trustees of Nettleton Trust u/d/t dated October 17, 1990 and further amended September 13, 2021 (“Lessor”) and Autonomous Solutions, Inc. (a Wyoming Corporation) (“Lessee”), (collectively the “Parties,” or individually a “Party”).
1.2 Premises: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, commonly known as (street address, city, state, zip): 518 S Fair Oaks Ave, Pasadena, CA 91105 (“Premises”). The Premises are located in the County of Los Angeles, and are generally described as (describe briefly the nature of the property and, if applicable, the “Project,” if the property is located within a Project): an industrial/flex building of approximately 6,840 square feet situated on a lot of approximately 11,368 square feet. (See also Paragraph 2)
1.3 Term: 2 years and 9 months (“Original Term”) commencing 8/1/24 (“Commencement Date”) and ending 4/30/27 (“Expiration Date”). (See also Paragraph 3)
1.4 Early Possession: If the Premises are available Lessee may have non-exclusive possession of the Premises commencing ___________ (“Early Possession Date”). (See also Paragraphs 3.2 and 3.3)
1.5 Base Rent: $16,717 per month (“Base Rent”), payable on the first (1st) day of each month commencing 8/1/24. (See also Paragraph 4)
þ If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. See Paragraph 51 .
1.6 Base Rent and Other Monies Paid Upon Execution:
| (a) | Base Rent: $0 (see addendum #52) for the period ___________. |
| (b) | Security Deposit: $0 (see addendum #52) (“Security Deposit”). (See also Paragraph 5) |
| (c) | Association Fees: ___________ for the period ___________. |
| (d) | Other: ___________ for ___________. |
| (e) | Total Due Upon Execution of this Lease: $0 . |
1.7 Agreed Use: General showroom and R&D for a robotics company, not excluding other related uses permissible by law. (See also Paragraph 6)
1.8 Insuring Party. Lessor is the “Insuring Party”. The annual “Base Premium” is ___________. (See also Paragraph 8)
1.9 Real Estate Brokers. (See also Paragraph 15 and 25)
(a) Representation: Each Party acknowledges receiving a Disclosure Regarding Real Estate Agency Relationship, confirms and consents to the following agency relationships in this Lease with the following real estate brokers (“Broker(s)”) and/or their agents (“Agent(s)”):
Lessor’s Brokerage Firm Saxum West License No. 02136872 Is the broker of (check one): ☐ the Lessor; or þ both the Lessee and Lessor (dual agent).
Lessor’s Agent Joe Bolognese License No. 01966025 is (check one): ☐ the Lessor’s Agent (salesperson or broker associate); or þ both the Lessee’s Agent and the Lessor’s Agent (dual agent).
Lessee’s Brokerage Firm Saxum West License No. 02136872 Is the broker of (check one): ☐ the Lessee; or þ both the Lessee and Lessor (dual agent).
Lessee’s Agent Joe Bolognese License No. 01966025 is (check one): ☐ the Lessee’s Agent (salesperson or broker associate); or þ both the Lessee’s Agent and the Lessor’s Agent (dual agent).
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(b)
Payment to Brokers. Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Brokers
the brokerage fee agreed to in a separate written agreement (or if there is no such agreement, the sum of ___________ or ___________%
of the total Base Rent) for the brokerage services rendered by the Brokers.
1.10 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by ___________ (“Guarantor”). (See also Paragraph 37)
1.11 Attachments. Attached hereto are the following, all of which constitute a part of this Lease:
| þ | an Addendum consisting of Paragraphs 51 through 58 ; |
| ☐ | a plot plan depicting the Premises; |
| ☐ | a current set of the Rules and Regulations; |
| ☐ | a Work Letter; |
| ☐ | other (specify): ___________. |
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. While the approximate square footage of the Premises may have been used in the marketing of the Premises for purposes of comparison, the Base Rent stated herein is NOT tied to square footage and is not subject to adjustment should the actual size be determined to be different. NOTE: Lessee is advised to verify the actual size prior to executing this Lease.
2.2 Condition. Lessor shall deliver the Premises to Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date, whichever first occurs (“Start Date”), and, so long as the required service contracts described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, sump pumps, if any, and all other such elements in the Premises, other than those constructed by Lessee, shall be in good operating condition on said date, that the surface and structural elements of the roof, bearing walls and foundation of any buildings on the Premises (the “Building”) shall be free of material defects, and that the Unit does not contain hazardous levels of any mold or fungi defined as toxic under applicable state or federal law. If a non-compliance with said warranty exists as of the Start Date, or if one of such systems or elements should malfunction or fail within the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to such matter, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, malfunction or failure, rectify same at Lessor’s expense. The warranty periods shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the remaining systems and other elements of the Building. If Lessee does not give Lessor the required notice within the appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be the obligation of Lessee at Lessee’s sole cost and expense, except for the roof, foundations, and bearing walls which are handled as provided in paragraph 7. Lessor also warrants, that unless otherwise specified in writing, Lessor is unaware of (i) any recorded Notices of Default affecting the Premise; (ii) any delinquent amounts due under any loan secured by the Premises; and (iii) any bankruptcy proceeding affecting the Premises.
2.3 Compliance. Lessor warrants that to the best of its knowledge the improvements on the Premises comply with the building codes, applicable laws, covenants or restrictions of record, regulations, and ordinances (“Applicable Requirements”) that were in effect at the time that each improvement, or portion thereof, was constructed. Said warranty does not apply to the use to which Lessee will put the Premises, modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Lessee’s use (see Paragraph 50), or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or not the Applicable Requirements, and especially the zoning, are appropriate for Lessee’s intended use, and acknowledges that past uses of the Premises may no longer be allowed. If the Premises do not comply with said warranty, Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify the same at Lessor’s expense. If Lessee does not give Lessor written notice of a non-compliance with this warranty within 6 months following the Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessee’s sole cost and expense. If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Premises and/or Building, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Unit, Premises and/or Building (“Capital Expenditure”), Lessor and Lessee shall allocate the cost of such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however, that if such Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds 6 months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessee’s termination notice that Lessor has elected to pay the difference between the actual cost thereof and an amount equal to 6 months’ Base Rent. If Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at least 90 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure.
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(b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor shall pay for such Capital Expenditure and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease or any extension thereof, on the date that on which the Base Rent is due, an amount equal to 1/144th of the portion of such costs reasonably attributable to the Premises. Lessee shall pay Interest on the balance but may prepay its obligation at any time. If, however, such Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably determines that it is not economically feasible to pay its share thereof, Lessor shall have the option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within 10 days after receipt of Lessor’s termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is unable to finance Lessor’s share, or if the balance of the Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon 30 days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event, Lessee shall either: (i) immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete such Capital Expenditure at its own expense. Lessee shall not, however, have any right to terminate this Lease.
2.4 Acknowledgements. Lessee acknowledges that: (a) it has been given an opportunity to inspect and measure the Premises, (b) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the size and condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Lessee’s intended use, (c) Lessee has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Premises, (d) it is not relying on any representation as to the size of the Premises made by Brokers or Lessor, (e) the square footage of the Premises was not material to Lessee’s decision to lease the Premises and pay the Rent stated herein, and (f) neither Lessor, Lessor’s agents, nor Brokers have made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have made no representations, promises or warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor’s sole responsibility to investigate the financial capability and/or suitability of all proposed tenants.
2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary corrective work.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. Any provision herein granting Lessee Early Possession of the Premises is subject to and conditioned upon the Premises being available for such possession prior to the Commencement Date. Any grant of Early Possession only conveys a non-exclusive right to occupy the Premises. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such Early Possession. All other terms of this Lease (including but not limited to the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such period. Any such Early Possession shall not affect the Expiration Date.
3.3 Delay In Possession. Lessor agrees to use commercially reasonable efforts to deliver exclusive possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession by such date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform its other obligations until Lessor delivers possession of the Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession is not delivered within 60 days after the Commencement Date, as the same may be extended under the terms of any Work Letter executed by Parties, Lessee may, at its option, by notice in writing within 10 days after the end of such 60 day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 10 day period, Lessee’s right to cancel shall terminate. If possession of the Premises is not delivered within 120 days after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing.
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3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.
4. Rent.
4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent (“Rent”).
4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. All monetary amounts shall be rounded to the nearest whole dollar. In the event that any invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth in this Lease. Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor’s rights to the balance of such Rent, regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any Late Charge and Lessor, at its option, may require all future payments to be made by Lessee to be by cashier’s check. Payments will be applied first to accrued late charges and attorney’s fees, second to accrued interest, then to Base Rent, Insurance and Real Property Taxes, and any remaining amount to any other outstanding charges or costs.
4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to Lessor each month an amount equal to any owner’s association or condominium fees levied or assessed against the Premises. Said monies shall be paid at the same time and in the same manner as the Base Rent.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee’s faithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount already due Lessor, for Rents which will be due in the future, and/ or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor’s reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial condition of Lessee is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change in financial condition. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 90 days after the expiration or termination of this Lease, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. Lessor shall upon written request provide Lessee with an accounting showing how that portion of the Security Deposit that was not returned was applied. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. THE SECURITY DEPOSIT SHALL NOT BE USED BY LESSEE IN LIEU OF PAYMENT OF THE LAST MONTH’S RENT.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properties. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give written notification of same, which notice shall include an explanation of Lessor’s objections to the change in the Agreed Use.
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6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, byproducts or fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contamination, injury and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/or increasing the Security Deposit.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance.
(c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee’s expense, comply with all Applicable Requirements and take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any third party.
(d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys’ and consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from adjacent properties not caused or contributed to by Lessee). Lessee’s obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement.
(e) Lessor Indemnification. Except as otherwise provided in paragraph 8.7, Lessor and its successors and assigns shall indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which result from Hazardous Substances which existed on the Premises prior to Lessee’s occupancy or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease.
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(f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to Lessee’s occupancy, unless such remediation measure is required as a result of Lessee’s use (including “Alterations”, as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor, including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.
(g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessee’s commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days following such commitment. In such event, this Lease shall continue in full force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided, this Lease shall terminate as of the date specified in Lessor’s notice of termination.
6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants which relate in any manner to the Premises, without regard to whether said Applicable Requirements are now in effect or become effective after the Start Date. Lessee shall, within 10 days after receipt of Lessor’s written request, provide Lessor with copies of all permits and other documents, and other information evidencing Lessee’s compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements. Likewise, Lessee shall immediately give written notice to Lessor of: (i) any water damage to the Premises and any suspected seepage, pooling, dampness or other condition conducive to the production of mold; or (ii) any mustiness or other odors that might indicate the presence of mold in the Premises. In addition, Lessee shall provide Lessor with copies of its business license, certificate of occupancy and/or any similar document within 10 days of the receipt of a written request therefor.
6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and consultants authorized by Lessor shall have the right to enter into Premises at any time in the case of an emergency, and otherwise at reasonable times after reasonable notice, for the purpose of inspecting and/or testing the condition of the Premises and/or for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a Hazardous Substance Condition (see Paragraph 9.1(e)) is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably related to the violation or contamination. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of a written request therefor. Lessee acknowledges that any failure on its part to allow such inspections or testing will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to allow such inspections and/or testing in a timely fashion the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater for the remainder to the Lease. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee’s failure to allow such inspection and/or testing. Such increase in Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such failure nor prevent the exercise of any of the other rights and remedies granted hereunder.
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7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee’s Obligations.
(a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises, Utility Installations (intended for Lessee’s exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), ceilings, floors, stairs, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways located in, on, or adjacent to the Premises. Lessee is also responsible for keeping the roof and roof drainage clean and free of debris. Lessor shall keep the surface and structural elements of the roof, foundations, and bearing walls in good repair (see paragraph 7.2). Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Lessee’s obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition (including, e.g. graffiti removal) consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when necessary, the exterior repainting of the Building.
(b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, and (v) clarifiers. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain any or all of such service contracts, and Lessee shall reimburse Lessor, upon demand, for the cost thereof.
(c) Failure to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph 7.1, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee’s behalf, and put the Premises in good order, condition and repair, and Lessee shall promptly pay to Lessor a sum equal to 115% of the cost thereof.
(d) Replacement. Subject to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessee’s failure to exercise and perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease or any extension thereof, on the date on which Base Rent is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (i.e. 1/144th of the cost per month). Lessee shall pay Interest on the unamortized balance but may prepay its obligation at any time.
7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee, except for the surface and structural elements of the roof, foundations and bearing walls, the repair of which shall be the responsibility of Lessor upon receipt of written notice that such a repair is necessary. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises.
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7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions. The term “Utility Installations” refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be removed without doing material damage to the Premises. The term “Alterations” shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or Utility Installations” are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).
(b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor’s prior written consent. Lessee may, however, make non-structural Alterations or Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, will not affect the electrical, plumbing, HVAC, and/or life safety systems, do not trigger the requirement for additional modifications and/or improvements to the Premises resulting from Applicable Requirements, such as compliance with Title 24, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to 3 month’s Base Rent in the aggregate or a sum equal to one month’s Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee’s: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of one month’s Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation and/or upon Lessee’s posting an additional Security Deposit with Lessor.
(c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic’s or materialmen’s lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises.
(b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent.
(c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing and the provisions of Paragraph 7.1(a), if the Lessee occupies the Premises for 12 months or less, then Lessee shall surrender the Premises in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall also completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Premises) to the level specified in Applicable Requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.
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8. Insurance; Indemnity.
8.1 Payment of Premium Increases.
(a) Lessee shall pay to Lessor any insurance cost increase (“Insurance Cost Increase”) occurring during the term of this Lease. Insurance Cost Increase is defined as any increase in the actual cost of the insurance required under Paragraph 8.2(b), 8.3(a) and 8.3(b), over and above the Base Premium as hereinafter defined calculated on an annual basis. Insurance Cost Increase shall include but not be limited to increases resulting from the nature of Lessee’s occupancy, any act or omission of Lessee, requirements of the holder of mortgage or deed of trust covering the Premises, increased valuation of the Premises and/or a premium rate increase. The parties are encouraged to fill in the Base Premium in Paragraph 1.8 with a reasonable premium for the Required Insurance based on the Agreed Use of the Premises. If the parties fail to insert a dollar amount in Paragraph 1.8, then the Base Premium shall be the lowest annual premium reasonably obtainable for the Required Insurance as of the commencement of the Original Term for the Agreed Use of the Premises. In no event, however, shall Lessee be responsible for any portion of the increase in the premium cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per occurrence.
(b) Lessee shall pay any such Insurance Cost Increase to Lessor within 30 days after receipt by Lessee of a copy of the premium statement or other reasonable evidence of the amount due. If the insurance policies maintained hereunder cover other property besides the Premises, Lessor shall also deliver to Lessee a statement of the amount of such Insurance Cost Increase attributable only to the Premises showing in reasonable detail the manner in which such amount was computed. Premiums for policy periods commencing prior to, or extending beyond the term of this Lease, shall be prorated to correspond to the term of this Lease.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000. Lessee shall add Lessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization’s “Additional Insured-Managers or Lessors of Premises” Endorsement. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full insurable replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal property shall be insured by Lessee not by Lessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender or included in the Base Premium), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $5,000 per occurrence, and Lessee shall be liable for such deductible amount in the event of an Insured Loss.
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(b) Rental Value. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180 days (“Rental Value insurance”). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee, for the next 12 month period. Lessee shall be liable for any deductible amount in the event of such loss.
(c) Adjacent Premises. If the Premises are part of a larger building, or of a group of buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such building or buildings if said increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.
8.4 Lessee’s Property; Business Interruption Insurance; Worker’s Compensation Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations.
(b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils.
(c) Worker’s Compensation Insurance. Lessee shall obtain and maintain Worker’s Compensation Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a ‘Waiver of Subrogation’ endorsement. Lessee shall provide Lessor with a copy of such endorsement along with the certificate of insurance or copy of the policy required by paragraph 8.5.
(d) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee’s property, business operations or obligations under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a “General Policyholders Rating” of at least A-, VII, as set forth in the most current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates with copies of the required endorsements evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessor. Lessee shall, at least 10 days prior to the expiration of such policies, furnish Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may increase his liability insurance coverage and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby.
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8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising out of, involving, or in connection with, a Breach of the Lease by Lessee and/or the use and/or occupancy of the Premises and/or Project by Lessee and/or by Lessee’s employees, contractors or invitees. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified.
8.8 Exemption of Lessor and its Agents from Liability. Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither Lessor nor its agents shall be liable under any circumstances for: (i) injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, (ii) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Project, or (iii) injury to Lessee’s business or for any loss of income or profit therefrom. Instead, it is intended that Lessee’s sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8.
8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain or maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, for any month or portion thereof that Lessee does not maintain the required insurance and/or does not provide Lessor with the required binders or certificates evidencing the existence of the required insurance, the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater. The parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee’s failure to maintain the required insurance. Such increase in Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach with respect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessee of its obligation to maintain the insurance specified in this Lease.
9. Damage or Destruction.
9.1 Definitions.
(a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.
(b) “Premises Total Destruction” shall mean damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.
(c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.
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(d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.
(e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance, in, on, or under the Premises which requires restoration.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds (except as to the deductible which is Lessee’s responsibility) as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or (ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee’s commitment to pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which the cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is 10 days after Lessee’s receipt of Lessor’s written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee’s option shall be extinguished.
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9.6 Abatement of Rent; Lessee’s Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein.
(b) Remedies. If Lessor is obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee’s election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect. “Commence” shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.
9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.
10. Real Property Taxes.
10.1 Definition. As used herein, the term “Real Property Taxes” shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Premises or the Project, Lessor’s right to other income therefrom, and/or Lessor’s business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Building address. Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.
10.2 Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Premises provided, however, that Lessee shall pay to Lessor the amount, if any, by which Real Property Taxes applicable to the Premises increase over the fiscal tax year during which the Commencement Date Occurs (“Tax Increase”). Payment of any such Tax Increase shall be made by Lessee to Lessor within 30 days after receipt of Lessor’s written statement setting forth the amount due and computation thereof. If any such taxes shall cover any period of time prior to or after the expiration or termination of this Lease, Lessee’s share of such taxes shall be prorated to cover only that portion of the tax bill applicable to the period that this Lease is in effect. In the event Lessee incurs a late charge on any Rent payment, Lessor may estimate the current Real Property Taxes, and require that the Tax Increase be paid in advance to Lessor by Lessee monthly in advance with the payment of the Base Rent. Such monthly payment shall be an amount equal to the amount of the estimated installment of the Tax Increase divided by the number of months remaining before the month in which said installment becomes delinquent. When the actual amount of the applicable Tax Increase is known, the amount of such equal monthly advance payments shall be adjusted as required to provide the funds needed to pay the applicable Tax Increase. If the amount collected by Lessor is insufficient to pay the Tax Increase when due, Lessee shall pay Lessor, upon demand, such additional sums as are necessary to pay such obligations. Advance payments may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a Breach by Lessee in the performance of its obligations under this Lease, then any such advance payments may be treated by Lessor as an additional Security Deposit.
10.3 Additional Improvements. Notwithstanding anything to the contrary in this Paragraph 10.2, Lessee shall pay to Lessor upon demand therefor the entirety of any increase in Real Property Taxes assessed by reason of Alterations or Utility Installations placed upon the Premises by Lessee or at Lessee’s request or by reason of any alterations or improvements to the Premises made by Lessor subsequent to the execution of this Lease by the Parties.
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10.4 Joint Assessment. If the Premises are not separately assessed, Lessee’s liability shall be an equitable proportion of the Tax Increase for all of the land and improvements included within the tax parcel assessed, such proportion to be conclusively determined by Lessor from the respective valuations assigned in the assessor’s work sheets or such other information as may be reasonably available.
10.5 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee. When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee’s property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee’s property.
11. Utilities and Services.
11.1 Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered or billed to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered or billed. There shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor’s reasonable control or in cooperation with governmental request or directions.
11.2 Within fifteen days of Lessor’s written request, Lessee agrees to deliver to Lessor such information, documents and/or authorization as Lessor needs in order for Lessor to comply with new or existing Applicable Requirements relating to commercial building energy usage, ratings, and/or the reporting thereof.
12. Assignment and Subletting.
12.1 Lessor’s Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease or in the Premises without Lessor’s prior written consent.
(b) Unless Lessee is a corporation and its stock is publicly traded on a national stock exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, transfer, leveraged buyout or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as it was represented at the time of the execution of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. “Net Worth of Lessee” shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles.
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(d) An assignment or subletting without consent shall, at Lessor’s option, be a Default curable after notice per Paragraph 13.1(d), or a non-curable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a non-curable Breach, Lessor may either:
(i) terminate this Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent.
(e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.
(f) Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the time consent is requested.
(g) Notwithstanding the foregoing, allowing a de minimis portion of the Premises, i.e. 20 square feet or less, to be used by a third party vendor in connection with the installation of a vending machine or payphone shall not constitute a subletting.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor’s consent, no assignment or subletting shall : (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.
(c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor’s remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor’s determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of $500 as consideration for Lessor’s considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 36)
(f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing.
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(g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (See Paragraph 39.2)
12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessee’s obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee’s then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.
(c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor’s prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A “Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:
(a) The abandonment of the Premises; the vacating of the Premises prior to the expiration or termination of this Lease without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism; or failure to deliver to Lessor exclusive possession of the entire Premises in accordance herewith prior to the expiration or termination of this Lease.
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(b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR’S RIGHTS, INCLUDING LESSOR’S RIGHT TO RECOVER POSSESSION OF THE PREMISES.
(c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, act or acts constituting public or private nuisance, and/or an illegal activity on the Premises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee. In the event that Lessee commits waste, a nuisance or an illegal activity a second time then, the Lessor may elect to treat such conduct as a non-curable Breach rather than a Default.
(d) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial statements, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42, (viii) material safety data sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days following written notice to Lessee.
(e) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof, other than those described in subparagraphs 13.1(a), (b), (c) or (d), above, where such Default continues for a period of 30 days after written notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion.
(f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.
(g) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false.
(h) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a Guarantor’s breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease.
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13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within 10 days after written notice (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee’s behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by Lessor in such performance upon receipt of an invoice therefor. In the event of a Breach, Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor to mitigate damages caused by Lessee’s Breach of this Lease shall not waive Lessor’s right to recover any damages to which Lessor is otherwise entitled. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s interests, shall not constitute a termination of the Lessee’s right to possession.
(c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee’s right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee’s occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, the cost of tenant improvements for Lessee paid for or performed by Lessor, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as “Inducement Provisions,” shall be deemed conditioned upon Lessee’s full and faithful performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within 5 days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to 10% of each such overdue amount or $100, whichever is greater. The Parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s option, become due and payable quarterly in advance.
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13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from the 31st day after it was due. The interest (“Interest”) charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished to Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor’s obligation is such that more than 30 days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion.
(b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee’s expense and offset from Rent the actual and reasonable cost to perform such cure, provided however, that such offset shall not exceed an amount equal to the greater of one month’s Base Rent or the Security Deposit, reserving Lessee’s right to seek reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost of said cure and supply said documentation to Lessor.
14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the Building, or more than 25% of that portion of the Premises not occupied by any building, is taken by Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation paid by the condemnor for Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.
15. Brokerage Fees.
15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.9 above, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee or anyone affiliated with Lessee acquires any rights to the Premises or other premises owned by Lessor and located within the same Project, if any, within which the Premises is located, (c) if Lessee remains in possession of the Premises, with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation clause herein, then, Lessor shall pay Brokers a fee in accordance with the fee schedule of the Brokers in effect at the time the Lease was executed. The provisions of this paragraph are intended to supersede the provisions of any earlier agreement to the contrary.
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15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this Lease shall be deemed to have assumed Lessor’s obligation hereunder. Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then such amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee’s Broker when due, Lessee’s Broker may send written notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days after said notice, Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Lessee’s Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lessor’s Broker for the limited purpose of collecting any brokerage fee owed.
15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker, agent or finder (other than the Brokers and Agents, if any) in connection with this Lease, and that no one other than said named Brokers and Agents is entitled to any commission or finder’s fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys’ fees reasonably incurred with respect thereto.
16. Estoppel Certificates.
(a) Each Party (as “Responding Party”) shall within 10 days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current ”Estoppel Certificate” form published by AIR CRE, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party.
(b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and (iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party’s Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. In addition, Lessee acknowledges that any failure on its part to provide such an Estoppel Certificate will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to execute and/or deliver a requested Estoppel Certificate in a timely fashion the monthly Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater for remainder of the Lease. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee’s failure to provide the Estoppel Certificate. Such increase in Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach with respect to the failure to provide the Estoppel Certificate nor prevent the exercise of any of the other rights and remedies granted hereunder.
(c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall within 10 days after written notice from Lessor deliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Lessee’s financial statements for the past 3 years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.
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17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor, or its partners, members, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor’s partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, or by email, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be that Party’s address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing.
23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices delivered by hand, or transmitted by facsimile transmission or by email shall be deemed delivered upon actual receipt. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day.
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23.3 Options. Notwithstanding the foregoing, in order to exercise any Options (see paragraph 39), the Notice must be sent by Certified Mail (return receipt requested), Express Mail (signature required), courier (signature required) or some other methodology that provides a receipt establishing the date the notice was received by the Lessor.
24. Waivers.
(a) No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent.
(b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.
(c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.
25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.
(a) When entering into a discussion with a real estate agent regarding a real estate transaction, a Lessor or Lessee should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Lessor and Lessee acknowledge being advised by the Brokers in this transaction, as follows:
(i) Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessor’s agent or subagent has the following affirmative obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent’s duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.
(ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In these situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Lessor. An agent acting only for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent’s duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.
(iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting directly or through one or more associate licensees, can legally be the agent of both the Lessor and the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee. (b) Other duties to the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may not, without the express permission of the respective Party, disclose to the other Party confidential information, including, but not limited to, facts relating to either Lessee’s or Lessor’s financial position, motivations, bargaining position, or other personal information that may impact rent, including Lessor’s willingness to accept a rent less than the listing rent or Lessee’s willingness to pay rent greater than the rent offered. The above duties of the agent in a real estate transaction do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional. Both Lessor and Lessee should strongly consider obtaining tax advice from a competent professional because the federal and state tax consequences of a transaction can be complex and subject to change.
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(b) Brokers have no responsibility with respect to any default or breach hereof by either Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relating to this Lease may be brought against Broker more than one year after the Start Date and that the liability (including court costs and attorneys’ fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable to any gross negligence or willful misconduct of such Broker.
(c) Lessor and Lessee agree to identify to Brokers as “Confidential” any communication or information given Brokers that is considered by such Party to be confidential.
26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. At or prior to the expiration or termination of this Lease Lessee shall deliver exclusive possession of the Premises to Lessor. For purposes of this provision and Paragraph 13.1(a), exclusive possession shall mean that Lessee shall have vacated the Premises, removed all of its personal property therefrom and that the Premises have been returned in the condition specified in this Lease. In the event that Lessee does not deliver exclusive possession to Lessor as specified above, then Lessor’s damages during any holdover period shall be computed at the amount of the Rent (as defined in Paragraph 4.1) due during the last full month before the expiration or termination of this Lease (disregarding any temporary abatement of Rent that may have been in effect), but with Base Rent being 150% of the Base Rent payable during such last full month. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.
28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located. Signatures to this Lease accomplished by means of electronic signature or similar technology shall be legal and binding.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, “Security Device”), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as “Lender”) shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.
30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Lease is subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessor’s obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be liable for the return of any security deposit paid to any prior lessor which was not paid or credited to such new owner.
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30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the Lender which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall, if requested by Lessee, use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and consultation).
32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect on Lessee’s use of the Premises. All such activities shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.
34. Signs. Lessor may place on the Premises ordinary “For Sale” signs at any time and ordinary “For Lease” signs during the last 6 months of the term hereof. Except for ordinary “for sublease” signs, Lessee shall not place any sign upon the Premises without Lessor’s prior written consent. All signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor’s failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s election to have such event constitute the termination of such interest.
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36. Consents. All requests for consent shall be in writing. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’, attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor’s consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request.
37. Guarantor.
37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most recently published by AIR CRE.
37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the authority of the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written confirmation that the guaranty is still in effect.
38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee’s part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.
39. Options. If Lessee is granted any Option, as defined below, then the following provisions shall apply.
39.1 Definition. “Option” shall mean: (a) the right to extend or reduce the term of or renew this Lease or to extend or reduce the term of or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase, the right of first offer to purchase or the right of first refusal to purchase the Premises or other property of Lessor.
39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises and, if requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or subletting.
39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option.
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(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease.
40. Multiple Buildings. If the Premises are a part of a group of buildings controlled by Lessor, Lessee agrees that it will abide by and conform to all reasonable rules and regulations which Lessor may make from time to time for the management, safety, and care of said properties, including the care and cleanliness of the grounds and including the parking, loading and unloading of vehicles, and to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessee also agrees to pay its fair share of common expenses incurred in connection with such rules and regulations.
41. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid “under protest” within 6 months shall be deemed to have waived its right to protest such payment.
44. Authority; Multiple Parties; Execution.
(a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority.
(b) If this Lease is executed by more than one person or entity as “Lessee”, each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named Lessees had executed such document.
(c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
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45. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.
46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially change Lessee’s obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises.
48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS LEASE.
49. Arbitration of Disputes. An Addendum requiring the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease ☐ is ☐ is not attached to this Lease.
50. Accessibility; Americans with Disabilities Act.
(a) The Premises:
þ have not undergone an inspection by a Certified Access Specialist (CASp). Note: A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.
☐ have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises met all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledges that it received a copy of the inspection report at least 48 hours prior to executing this Lease and agrees to keep such report confidential.
☐ have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledges that it received a copy of the inspection report at least 48 hours prior to executing this Lease and agrees to keep such report confidential except as necessary to complete repairs and corrections of violations of construction related accessibility standards.
In the event that the Premises have been issued an inspection report by a CASp the Lessor shall provide a copy of the disability access inspection certificate to Lessee within 7 days of the execution of this Lease.
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(b) Since compliance with the Americans with Disabilities Act (ADA) and other state and local accessibility statutes are dependent upon Lessee’s specific use of the Premises, Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the event that Lessee’s use of the Premises requires modifications or additions to the Premises in order to be in compliance with ADA or other accessibility statutes, Lessee agrees to make any such necessary modifications and/or additions at Lessee’s expense.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY AIR CRE OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.
WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED.
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The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.
| Executed at: ___________ | Executed at: ___________ | |
| On: Aug 7, 2023 | On: Aug 7, 2023 |
| By LESSOR: | By LESSEE: | |||
| John E. Nettleton
and Shawna R. Nettleton, Trustees of Nettleton Trust u/d/t dated October 17, 1990 and further amended September 13, 2021 |
Autonomous Solutions, Inc. (a Wyoming Corporation) | |||
| By: | /s/ John E. Nettleton | By: | /s/ Shahan Ohanessian | |
| Name Printed: John E. Nettleton | Name Printed: Shahan Ohanessian | |||
| Title: _______ | Title: CEO | |||
| Phone: ___________ | Phone: (818) 400-0338 | |||
| Fax: _____ | Fax: _____ | |||
| Email: ________ | Email: shahan@venhub.com | |||
| By: | /s/ Shawna R. Nettleton | By: | ||
| Name Printed: Shawna R. Nettleton | Name Printed: _________ | |||
| Title: _______ | Title: _______ | |||
| Phone: ___________ | Phone: ___________ | |||
| Fax: _____ | Fax: _____ | |||
| Email: ________ | Email: ________ | |||
| Address: _____________ | Address: _____________ | |||
| Federal ID No.: _____________ | Federal ID No.: _____________ | |||
| BROKER | ||||
| Saxum West | Email: joe@saxumwest.com | |||
| Attn: | Joe Bolognese | |||
| Title: | Managing Director | |||
| Address: | 407 N Maple Dr, Ground Floor, Beverly Hills, CA 90210 |
|||
| Phone: | (310) 595-9000 | |||
| Fax: ________ | ||||
| BROKER | ||||
| Saxum West | ||||
| Attn: | Joe Bolognese | |||
| Title: | Managing Director | |||
| Address: | 407 N Maple Dr, Ground Floor, Beverly Hills, CA 90210 |
|||
| Phone: | (310) 595-9000 | |||
| Fax: ________ | ||||
| Email: joe@saxumwest.com | ||||
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| Federal ID No.: ___________ | Federal ID No.: ___________ | |
| Broker DRE License #: 02136872 | Broker DRE License #: 02136872 | |
| Agent DRE License #: 01966025 | Agent DRE License #: 01966025 |
AIR CRE * https://www.aircre.com * 213-687-8777 * contracts@aircre.com
NOTICE: No part of these works may be reproduced in any form without permission in writing.
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ADDENDUM TO LEASE
Date: 8/7/23
By and Between
| Lessor: | John E. Nettleton and Shawna R. Nettleton, Trustees of Nettleton Trust u/d/t dated October 17, 1990 and further amended September 13, 2021 | |
| Lessee: | Autonomous Solutions, Inc. (a Wyoming Corporation) | |
| Property Address: | 518 S Fair Oaks Ave, Pasadena, CA 91105 | |
| (street address, city, state, zip) | ||
Paragraph: 51-58
In the event of any conflict between the provisions of this Addendum and the printed provisions of the Lease, this Addendum shall control.
AIR CRE * https://www.aircre.com * 213-687-8777 * contracts@aircre.com
NOTICE: No part of these works may be reproduced in any form without permission in writing.
51. Rent Adjustments
Attached
52. Schedule of Monies Due
Since this lease commences on 8/1/24, the day after Autonomous Solutions Inc.’s sublease from Asurion, LLC expires, Asurion, LLC shall pay to Lessor the unused portion of the Security Deposit of $16,074 that it collected from Autonomous Solutions Inc. at the commencement of that Sublease. Autonomous Solutions, Inc. shall owe no additional security deposit to the Lessor upon commencement of this Lease, except to the extent the Security Deposit transferred by Asurion, LLC to Landlord is less then $16,074, in which case Autonomous Solutions, Inc. must pay the amount necessary to bring the Security Deposit to $16,074. The first month’s rent for August 2024 shall be due 8/1/24.
53. Access/Security
Subject to Lessor’s security procedures, Lessee shall be permitted access to the building and premises twenty-four (24) hours per day, three hundred sixty-five (365) days per year.
54. Parking
Lessee shall have exclusive use to the entire parking lot in the rear of the building.
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55. Operating Expenses
As outlined in the above lease, this Lease shall contain an escalation clause with the Lessee paying increased rental for all real property taxes, and other operating expenses to the extent such operating expenses exceed actual operating expenses for the base year, which shall be 2024. Operating Expenses shall not include (1) depreciation on the Building (other than depreciation on personal property, equipment, window coverings on exterior windows provided by Lessor); (2) ground lease payments, mortgage principal or interest; (2) the cost of repairs due to casualty or condemnation which are reimbursed by third parties; (3) any legal fees incurred by Lessor in enforcing its rights under other leases for premises in the Building (4) Lessor’s general corporate overhead and general and administrative expenses; (4) advertising and promotional expenditures and costs of signs in or on the Building identifying the owner of the Building or any other tenant, except for any advertising costs incurred in connection with re-leasing the Premises following a Lessee default; (5) any other expenses which, in accordance with generally accepted accounting principles, consistently applied, would not normally be treated as operating expenses by lessors of comparable buildings in the area of the Building: and (6) wages and benefits of employees who are managers, directors or officers of Lessor or its agents.
56. Exterior Signage
Lessee, at Lessee’s cost, shall have the right to identify itself with signage on the exterior of the building facing Fair Oaks Avenue. Such signage shall be approved in advance by Lessor and shall conform to ordinances per the City of Pasadena. Lessee shall be responsible for removing sign at its cost, at expiration of the lease.
57. Maintenance of HVAC and Roof
Lessor, at its cost and expense (and not as an Operating Expense) shall be responsible for the maintenance and repair of the HVAC system and roof. Lessee shall not access the roof of the building.
58. Tenant Improvements
Subject to the provisions in the Lease, Lessee is renting the Premises in its “as-is” condition. Any improvements will be at Lessee’s sole cost subject to Lessor’s prior approval. All work shall be done by a licensed and bonded contractor approved by Lessor and in accordance with Pasadena City code. Said contractor shall have liability insurance and workers comp insurance.
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RENT ADJUSTMENT(S)
(ORIGINAL TERM)
STANDARD LEASE ADDENDUM
Dated: 8/7/23
By and Between
| Lessor: | John E. Nettleton and Shawna R. Nettleton, Trustees of Nettleton Trust u/d/t dated October 17, 1990 and further amended September 13, 2021 | |
| Lessee: | Autonomous Solutions, Inc. (a Wyoming Corporation) | |
| Property Address: | 518 S Fair Oaks Ave, Pasadena, CA 91105 | |
| (street address, city, state, zip) | ||
Paragraph: 51
The monthly Base Rent during the Original Term of the Lease shall be increased by using the method(s) selected below (check method(s) to be used and fill in appropriately):
☐ I. Consumer Price Index.
a. The monthly Base Rent shall be increased on ____________ and every ____________ months thereafter during the Original Term (“CPI Increase Date(s)”) commensurate with the increase in the CPI (as herein defined) determined as follows: the monthly Base Rent scheduled for the first month of the Original Term shall be multiplied by a fraction the denominator of which is the Base CPI (as herein defined), and the numerator of which is the Comparison CPI (as herein defined). The amount so calculated shall constitute the new Base Rent until the next CPI Increase Date, but in no event shall any such new Base Rent be less than the Base Rent for the month immediately preceding the applicable CPI Increase Date.
b. The term “CPI” shall mean the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for (select one): ☐ CPI W (Urban Wage Earners and Clerical Workers) or ☐ CPI U (All Urban Consumers), for (fill in Urban Area): ____________ or ☐ the area in which the Premises is located, All Items (1982-1984 = 100). The term “Comparison CPI” shall mean the CPI of the calendar month which is 2 full months prior to the applicable Original Term CPI Increase Date. The term “Base CPI” shall mean the CPI of the calendar month which is 2 full months prior to the Commencement Date of the Original Term.
c. If the compilation and/or publication of the CPI is transferred to another governmental department, bureau or agency or is discontinued, then instead the index most nearly the same as the CPI shall be used to calculate the Base Rent increases hereunder. If the Parties cannot agree on such alternative index, then the matter shall be submitted for decision to the American Arbitration Association in accordance with the then rules of said association and the decision of the arbitrators shall be binding upon the parties, with the cost of such arbitration being paid equally by the Parties.
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☐ II. Fixed Percentage. The monthly Base Rent shall be increased on ____________ and every ____________ months thereafter during the Original Term (“Percentage Increase Date(s)”) by ____________ percent (____________%) of the monthly Base Rent scheduled to be paid for the month immediately preceding the applicable Percentage Increase Date.
þ III. Fixed Rental Adjustment(s) (“FRA”).
The monthly Base Rent shall be increased to the following amounts on the dates set forth below:
| On (fill in FRA Adjustment Date(s)): | The new Base Rent shall be: | |
| 8/1/25 | $17,386 | |
| 8/1/26 | $18,081 | |
| _____ | _____ | |
| _____ | _____ | |
| _____ | _____ | |
| _____ | _____ | |
| _____ | _____ | |
| _____ | _____ | |
| _____ | _____ | |
| _____ | _____ |
BROKER’S FEE: For each adjustment in Base Rent specified above, the Brokers shall be paid a Brokerage Fee in accordance with paragraph 15 of the Lease or if applicable, paragraph 9 of the Sublease.
AIR CRE * https://www.aircre.com * 213-687-8777 * contracts@aircre.com
NOTICE: No part of these works may be reproduced in any form without permission in writing.
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Exhibit 10.2
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE – NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. Basic Provisions (“Basic Provisions”).
1.1 Parties: This lease (“Lease”), dated for reference purposes only, April 4, 2025, is made by and between Clifford Douglas, Trustee of the Clifford Douglas Trust (“Lessor”) and VenHub Global Inc, A Delaware Corporation (“Lessee”), (collectively the “Parties,” or individually a “Party”).
1.2 Premises: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, and commonly known as 5360 Procyon St. (APN: 162-29-301-034) located in the County of Clark, City of Las Vegas, State of Nevada, and Zip Code 89118, generally described as an approximately 7,277 square foot industrial office/warehouse building situated on an approximate 0.29 acre parcel (see Exhibit A & B) (“Premises”). (See also Paragraph 2)
1.3 Term: Two (2) year(s) (“Original Term”) commencing April 15, 2025 (“Commencement Date”’) and ending April 30, 2027 (“Expiration Date”). (See also Paragraph 3)
1.4 Early Possession: If the Premises are available Lessee may have non-exclusive possession of the Premises commencing April 12, 2025 upon all of the following: (i) mutual Lease execution; (ii) Lessor’s receipt of Monies Paid Upon Execution; and (iii) Lessor’s approval of Lessee’s certificate of insurance per Paragraph 8 and Big Finn has left the property (“Early Possession Date”) (See also Paragraphs 3.2 and 3.3).
1.5 Base Rent: $12,370.80 per month (“Base Rent”), payable on the First (1st) day of each month commencing April 15, 2025. (See also Paragraph 4)
☒ If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. See Paragraph 51.
| 1.6 | Base Rent and Other Monies Paid Upon Execution: |
| (a) | Base Rent: $18,556.35 for the period April 15 – May 31, 2025. |
| (b) | Security Deposit: $40,000 (“Security Deposit”). (See also Paragraph 5) |
| (c) | Association Fees: $0.00 for the period N/A. |
| (d) | Other: $3,165.50 for NNN Expenses for the period April 15 – May 31, 2025 |
| (e) | Total Due Upon Execution of this Lease: $61,721.85 |
| 1.7 | Agreed Use: General Office/Administrative, Storage and Assembly associated with a robotic company. (See also Paragraph 6) |
| 1.8 | Insuring Party: Lessor is the “Insuring Party” unless otherwise stated herein. (See also Paragraph 8) |
| 1.9 | Real Estate Brokers: (See also Paragraph 15) |
(a) Representation: The following real estate brokers (collectively, the “Brokers”) and brokerage relationships exist in this transaction (check applicable boxes):
☒ RealComm Advisors | Elizabeth Moore-Barton represents Lessor exclusively (“Lessor’s Broker”);
☒ RealComm Advisors | Paul Hoyt represents Lessee exclusively (“Lessee’s Broker”);
☐ N/A represents both Lessor and Lessee (“Dual Agency”).
(b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Brokers the brokerage fee agreed to in their separate written agreement.
1.10 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by William and Cindy Clune (“Guarantor”). (See also Paragraph 37)
| ___________ | ___________ | |
| ___________ | ___________ | |
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1.11 Addenda and Exhibits. Attached hereto are the following all of which constitute a part of this Lease:
☐ Addendum consisting of Paragraphs through
☒ Exhibit A – Site Plan
☒ Exhibit B – Floor Plan
☐ Exhibit C – Rules and Regulations
☒ other (specify): Guaranty of Lease
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. While the approximate square footage of the Premises may have been used in the marketing of the Premises for purposes of comparison, the Base Rent stated herein is NOT tied to square footage and is not subject to adjustment should the actual size be determined to be different. Note: Lessee is advised to verify the actual size prior to executing this Lease.
2.2 Condition. Lessor shall deliver the Premises to Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date, whichever first occurs (“Start Date”), and, so long as the required service contracts described in Paragraph 7.1(b) below are obtained by Lessee within thirty days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, if any, and all other such elements in the Premises, other than those constructed by Lessee, shall be in good operating condition on said date and that the structural elements of the roof, bearing walls and foundation of any buildings on the Premises (the “Building”) shall be free of material defects. If a non-compliance with said warranty exists as of the Start Date, or if one of such systems or elements should malfunction or fail within the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to such matter, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify same at Lessor’s expense. The warranty period shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 90 days as to the remaining systems and other elements of the Building. If Lessee does not give Lessor written notice of any non-compliance with the appropriate warranty period, correction of any such non-compliance, malfunction, or failure shall be the obligation of Lessee at Lessee’s sole cost and expense. Lessor also warrants, that unless otherwise specified in writing, Lessor is unaware of (i) any recorded Notices of Default affecting the Premise; (ii) any delinquent amounts due under any loan secured by the Premises; and (iii) any bankruptcy proceeding affecting the Premises.
2.3 Acknowledgements. Lessee acknowledges that: (a) it has been given an opportunity to inspect and measure the Premises, (b) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the size and condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Lessee’s intended use; (c) Lessee has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Premises; (d) it is not relying on any representations as to the size of the Premises made by the Brokers or Lessor, (e) the square footage of the Premises was not material to Lessee’s decisions to lease the Premises and pay the Rent stated herein, and (f) neither Lessor, Lessor’s agents, nor any Broker has made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (a) Broker has made no representations, promises, or warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the Premises; and (b) it is Lessor’s sole responsibility to investigate the financial capability and/or suitability of all proposed tenants.
2.4 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary corrective work.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. Any provision herein granting Lessee Early Possession of the Premises is subject to and conditioned upon the Premises being available for such possession prior to the Commencement Date. Any grant of Early Possession only conveys a non-exclusive right to occupy the Premises. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early possession. All other terms of this Lease (including, but not limited to, the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such period. Any such Early Possession shall not affect the Expiration Date.
3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession as agreed, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform its other obligations until Lessor delivers possession of the Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession is not delivered within 60 days after the Commencement Date, as the same may be extended under the terms of any Work Letter executed by the Parties, Lessee may, at its option, by notice in writing within 10 days after the end of such 60-day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 10-day period, Lessee’s right to cancel shall terminate. If possession of the Premises in not delivered within 120 days after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing.
| ___________ | ___________ | |
| ___________ | ___________ | |
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3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur, but Lessor may elect to withhold possession until such conditions are satisfied.
4. Rent.
4.1. Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent (“Rent”).
4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. All monetary amounts shall be rounded to the nearest whole dollar. In the event that any invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth in this Lease. Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor’s rights to the balance of such Rent, regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any Late Charge and Lessor, at its option, may require all future Rent be paid by cashier’s check. Payments will be applied first to accrued late charges and attorney’s fees, second to accrued interest, then to Base Rent, Insurance and Real Property Taxes, and any remaining amount to any other outstanding charges or costs.
4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to Lessor each month an amount equal to any owner’s association or condominium fees levied or assessed against the Premises, if any. Said monies shall be paid at the same time and in the same manner as the Base Rent. As of April 2025, Premises is not part of any fee charging owner’s association and there are no known to Lessor plans for establishing any association at this time. If any association is ever established, the dues would be incorporated into the NNN Expenses.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee’s faithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply, or retain all or any portion of said Security Deposit for the payment of any amount due Lessor, for Rents which will be due in the future, and/or to reimburse or compensate Lessor for any liability, expense, loss, or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of said Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor’s reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial condition of Lessee is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on said change in financial condition. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 90 days after the expiration or termination of this Lease, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. Lessor shall upon written request provide Lessee with an accounting showing how that portion of the Security Deposit that was not returned was applied. No part of the Security Deposit shall be considered to be held in trust, to bear interest, or to be prepayment for any monies to be paid by Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste, or a nuisance, or that disturbs occupants of or causes damage to neighboring properties. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical systems therein, is not significantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give written notification of same, which notice shall include an explanation of Lessor’s objections to the change in use.
| ___________ | ___________ | |
| ___________ | ___________ | |
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6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment, or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by- products, or fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration, or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, so long as such use is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises, and/or the environment against damage, contamination, injury, and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/or increasing the Security Deposit.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under, or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim, or other documentation which it has concerning the presence of such Hazardous Substance.
(c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee’s expense, comply with all Applicable Requirements and take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security, and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any third party.
(d) Lessee Indemnification. Lessee shall indemnify, defend, and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys’ and consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from adjacent properties not caused or contributed to by Lessee). Lessee’s obligations shall include, but not be limited to, the effects of any contamination or injury to person, property, or the environment created or suffered by Lessee, and the cost of investigation, removal, remediation, restoration, and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation, or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement.
(e) Lessor Indemnification. Except as otherwise provided in paragraph 8.7, Lessor and its successors and assigns shall indemnify, defend, reimburse, and hold Lessee, its employees, and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which existed as a result of Hazardous Substances on the Premises which existed on the Premises prior to Lessee’s occupancy or which are caused by the gross negligence or willful misconduct of Lessor, its agents, or employees. Lessor’s obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration, and/or abatement, and shall survive the expiration or termination of this Lease.
(f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to Lessee’s occupancy, unless such remediation measure is required as a result of Lessee’s use (including “Alterations”, as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor, including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.
(g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessee’s commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days following such commitment. In such event, this Lease shall continue in full force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided, this Lease shall terminate as of the date specified in Lessor’s notice of termination.
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6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessee’s sole expense, fully, diligently, and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants which relate in any manner to the Premises, without regard to whether said Applicable Requirements are now in effect or become effective after the Start Date. Lessee shall, within 10 days after receipt of Lessor’s written request, provide Lessor with copies of all permits and other documents, and other information evidencing Lessee’s compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint, or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements. Likewise, Lessee shall immediately give written notice to Lessor of (i) any water damage to the Premises and any suspected seepage, pooling, dampness, or other condition conducive to the production of mold; or (ii) any mustiness or other odors that might indicate the presence of mold in the Premises. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of a written request therefor. In addition, Lessee shall provide Lessor with copies of its business license, certificate of occupancy, and/or any similar document within 10 days of the receipt of a written request therefor.
6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and consultants authorized by Lessor shall have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable notice, for the purpose of inspecting and/or testing the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a Hazardous Substance Condition (see paragraph 9.1) is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspections, so long as such inspection is reasonably related to the violation or contamination. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of a written request therefor. Lessee acknowledges that any failure on its part to allow such inspection or testing will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to allow such inspections and/or testing in a timely fashion the Base Rent shall be automatically increased, without requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater for the remainder of the Lease. The Parties agree that such increase in Base Rent represents a fair and reasonable compensation for the additional risk/cost that Lessor will incur by reason of Lessee’s failure to allow such inspection and/or testing. Such increase in Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such failure nor prevent the exercise of any of the other rights and remedies granted hereunder.
7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee’s Obligations.
(a) In General. Subject to the provisions of Paragraph 2.2 (Compliance), 6.3 (Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises, Utility Installations (intended for Lessee’s exclusive use, no matter where located), and Alterations in good order, condition, and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior use, the elements, or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks, and parkways located in, on, or adjacent to the Premises. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Lessee’s obligations shall include restorations, replacements, or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition, and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition (including e.g., graffiti and trash removal) consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when necessary, the exterior repainting of the Building.
(b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof covering and drains, and (vi) clarifiers. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain any or all of such service contracts, and Lessee shall reimburse Lessor, upon demand, for the cost thereof.
(c) Failure to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph 7.1, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee’s behalf, and put the Premises in good order, condition, and repair, and Lessee shall promptly pay to Lessor a sum equal to 110% of the cost thereof.
(d) Replacement. Subject to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessee’s failure to exercise and perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (i.e. 1/144th of the cost per month). Lessee shall pay Interest at the rate of ten percent (10%) per annum on the unamortized balance but may prepay its obligation at any time.
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7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term “Utility Installations” refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be removed without doing material damage to the Premises. The term “Alterations” shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or Utility Installations” are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).
(b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor’s prior written consent. Lessee may, however, make non-structural Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating, or removing the roof or any existing walls, will not affect the electrical, plumbing, HVAC, and/or life safety systems, do not trigger the requirement for additional modifications and/or improvements to the Premises resulting from Applicable Requirements, such as compliance with Title 24, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to 3 month’s Base Rent in the aggregate or a sum equal to one month’s Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee’s: (I) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs in excess of one month’s Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation and/or upon Lessee’s posting an additional Security Deposit with Lessor.
(c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic’s or materialmen’s lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any work in, or above the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor, and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim, or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises.
(b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 days and not later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent.
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(c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts, and surfaces thereof broom clean and free of debris, and in good operating order, condition, and state of repair, ordinary wear and tear excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing, if Lessee occupies the Premises for 12 months or less, then Lessee shall surrender the Premises in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance, or removal of Trade Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Less shall remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Premises) to the level specified in Applicable Requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Payment For Insurance. Lessee shall pay for all insurance required under Paragraph 8 except to the extent of the cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per occurrence. Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Lessee to Lessor within 10 days following receipt of an invoice.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability Policy of Insurance protecting Lessee and Lessor against claims for bodily injury, personal injury, and property damage based upon or arising out of the ownership, use, occupancy, or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000. Lessee shall add Lessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization’s “Additional Insured-Managers or Lessors of Premises Endorsement”. The Policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an ‘insured contract’ for the performance of Lessee’s indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall provide an endorsement on its liability(ies) which provide that its insurance shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.
8.3 Property Insurance – Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lenders, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal property shall be insured by Lessee not by Lessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction, or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $5,000 per occurrence, and Lessee shall be liable for such deductible amount in the event of an Insured Loss.
(b) Rental Value. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180 days (“Rental Value Insurance”). Said insurance shall provide that in the event the Lease is terminated by reason of an insured loss, the period of indemnity for such coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for one full year’s loss of Rent from the date of any such loss. Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee, for the next 12-month period. Lessee shall be liable for any deductible amount in the event of such loss.
(c) Adjacent Premises. If the Premises are part of a larger building, or of a group of buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such building or buildings if said increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.
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8.4 Lessee’s Property/Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations.
(b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils.
(c) Worker’s Compensation Insurance. Lessee shall obtain and maintain Worker’s Compensation Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a ‘Waiver of Subrogation’ endorsement. Lessee shall provide Lessor with a copy of such endorsement along with the certificate of insurance or copy of the policy required by paragraph 8.5.
(d) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee’s property, business operations, or obligations under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a “General Policyholders Rating” of at least A-, VII, as set forth in the most current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessor. Lessee shall, at least 10 days prior to the expiration of such policies, furnish Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby.
8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee shall indemnify, protect, defend, and hold harmless the Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising out of, involving, or in connection with, a Breach of the Lease by Lessee and/or the use and/or occupancy of the Premises and/or Project by Lessee and/or Lessee’s employees, contractors, or invitees. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified.
8.8 Exemption of Lessor and its Agents from Liability. Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither Lessor nor its agents shall not be liable under any circumstances for: (i) for injury or damage to the person or goods, wares, merchandise, or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold, or from the breakage, leakage, obstruction, or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building of which the Premises are a part, or from other sources or places, (ii) any damages arising from any act or neglect of any other tenant or Lessor or from the failure of Lessor or its agent to enforce the provisions of any other lease in the Project, or (iii) injury to Lessee’s business or from any loss of income or profit therefrom. Instead, it is intended that Lessee’s sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8.
8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain or maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which is extremely difficult to ascertain. Accordingly, for any month or portion thereof that Lessee does not maintain the required insurance and/or does not provide Lessor with the required binders or certificates evidencing the existence of the required insurance, the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by any amount equal to 10% of the then existing Base Rent or $100, whichever is greater. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee’s failure to maintain the required insurance. Such increase in Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach with respect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessee of its obligation to maintain the insurance specified in this Lease.
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9. Damage or Destruction.
9.1 Definitions.
(a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.
(b) “Premises Total Destruction” shall mean damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.
(c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.
(d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal, and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.
(e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the Premises.
9.2 Partial Damage – Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to affect such repair, the Insuring Party shall promptly contribute the shortage in proceeds (except as to the deductible which is Lessee’s responsibility) as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said 10-day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.
9.3 Partial Damage – Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee’s commitment to pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.
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9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which the cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is 10 days after Lessee’s receipt of Lessor’s written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee’s option shall be extinguished.
9.6 Abatement of Rent; Lessee’s Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediation, or restoration of such damage shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair, or restoration except as provided herein.
(b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee’s election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within said 30 days, this Lease shall continue in full force and effect. “Commence” shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.
9.7 Termination – Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.
10. Real Property Taxes.
10.1 Definition. As used herein, the term “Real Property Taxes” shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income, or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Premises, Lessor’s right to other income therefrom, and/or Lessor’s business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Building address. Real Property Taxes shall also include any tax, fee, levy, assessment, or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.
10.2 Payment of Taxes. In addition to Base Rent, Lessee shall pay to Lessor an amount equal to the Real Property Tax installment at least 20 days prior to the applicable delinquency date. If any such installment shall cover any period of time prior to or after the expiration or earlier termination of this Lease, Lessee’s share pf such installment shall be prorated. In the event that Lessee incurs a late charge on any Rent payment, Lessor may estimate the current Real Property Taxes, and require that such tax be paid in advance to Lessor by Lessee monthly in advance with the payment of the Base Rent. Such monthly payments shall be an amount equal to the amount of the estimated installment of taxes divided by the number of months remaining before the month in which said installment becomes delinquent. When the actual amount of the applicable tax bill is known, the amount of such equal monthly advance payments shall be adjusted as required to provide the funds needed to pay the applicable taxes. If the amount collected by Lessor is insufficient to pay such Real Property Taxes when due, Lessee shall pay Lessor, upon demand, such additional sum as is necessary. Advance payments may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a Breach by Lessee in the performance of its obligations under this Lease, then any such advance payments may be treated by Lessor as an additional Security Deposit.
10.3 Joint Assessment. If the Premises are not separately assessed, Lessee’s liability shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be conclusively determined by Lessor from the respective valuations assigned in the assessor’s work sheets or such other information as may be reasonably available.
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations Utility Installations, Trade Fixtures, furnishings, equipment, and all personal property of Lessee. When possible, Lessee shall cause such property to be assessed and billed separately from the real property of Lessor. If any of Lessee’s said personal property shall be assessed with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee’s property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee’s property.
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11. Utilities and Services. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal, and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered or billed. There shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever from the inadequacy, stoppage, interruption, or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair, or other cause beyond Lessor’s reasonable control or in cooperation with governmental request or directions
12. Assignment and Subletting.
12.1 Lessor’s Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage, or encumber (collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease or in the Premises without Lessor’s prior written consent.
(b) Unless Lessee is a corporation and its stock is publicly traded on a national stock exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as it was represented at the time of the execution of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. “Net Worth of Lessee” shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles.
(d) An assignment or subletting without consent shall, at Lessor’s option, be a Default curable after notice per Paragraph 13.1(d), or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent.
(e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.
(f) Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the time consent is requested.
(g) Notwithstanding the foregoing, allowing a de minimis portion of the Premises, i.e., 20 square feet or less, to be used by a third-party vendor in connection with the installation of a vending machine or payphone shall not constitute subletting.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.
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(c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors, or anyone else responsible for the performance of Lessee’s obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor’s remedies against any other person or entity responsible therefore to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor’s determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification to the Premises, if any, together with a fee of $500 as consideration for Lessor’s considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 36)
(f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition, and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing.
(g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (See Paragraph 39.2)
12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessee’s obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee’s then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.
(c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor’s prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.
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13. Defaultt; Breach; Remedies.
13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions, or rules under this Lease. A “Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:
(a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR’S RIGHTS, INCLUDING LESSOR’S RIGHT TO RECOVER POSSESSION OF THE PREMISES.
(c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, act or acts constituting public or private nuisance, and/or an illegal activity on the Premises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee. In the event that Lessee commits waste, a nuisance, or an illegal activity a second time then, the Lessor may elect to treat such conduct as a non-curable Breach rather than a Default.
(d) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial statements, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42, (viii) material safety data sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days following written notice to Lessee.
(e) A Default by Lessee as to the terms, covenants, conditions, or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof, other than those described in subparagraphs 13.1(a), (b), (c), or (d), above, where such Default continues for a period of 30 days after written notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion.
(f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. §101 or any, successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution, or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.
(g) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false.
(h) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a Guarantor’s breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease.
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13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within 10 days after written notice (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee’s behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits, or approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by Lessor in such performance upon receipt of invoice therefor. In the event of a Breach, Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate, and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor to mitigate damages caused by Lessee’s Breach of this Lease shall not waive Lessor’s right to recover damages to which Lessor is otherwise entitled. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s interests, shall not constitute a termination of the Lessee’s right to possession.
(c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee’s right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee’s occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, the cost of tenant improvement for Lessee paid for or performed by Lessor, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement, or consideration for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as “Inducement Provisions,” shall be deemed conditioned upon Lessee’s full and faithful performance of all of the terms, covenants, and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement, or consideration theretofore abated, given, or paid by Lessor under such an inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within 5 days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to 10% of each such overdue amount or $100, whichever is greater. The Parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s option, become due and payable quarterly in advance.
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13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from the 31st day after it was due. The interest (“Interest”) charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor’s obligation is such that more than 30 days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion.
(b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee’s expense and offset from Rent the actual and reasonable cost to perform such cure, provided, however, that such offset shall not exceed an amount equal to the greater of one month’s Base Rent or the Security Deposit, reserving Lessee’s right to seek reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost of said cure and supply said documentation to Lessor.
14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the Building, or more than 25% of that portion of the Premises not occupied by any building, is taken by Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation for Lessee’s relocation expenses, loss of business goodwill, and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.
15. Brokers’ Fee.
15.1 Additional
Commission. In addition to the payments owed pursuant to Paragraph 1.9 above, Lessor agrees that: (a) if Lessee
exercises any Option, (b) if Lessee acquires any rights to the Premises or other premises owned by Lessor and located within the
same Project, if any, within which the Premises is located, (c) if Lessee remains in possession of the Premises, with the consent of
Lessor, after the expiration of this Lease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation
clause herein, then, Lessor shall pay Brokers a fee in accordance with the schedule of said Brokers in effect at the time of the
execution of this Lease.
15.2 Assumption
of Obligations. Any buyer or transferee of Lessor’s interest in this Lease shall be deemed to have
assumed Lessor’s obligation hereunder. Brokers shall be a third party beneficiary of the provisions of Paragraphs
1.9,15, 22 and 31. If Lessor fails to pay to a Broker any amounts due as and for commissions pertaining to this Lease when due, then
such amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee’s Broker when due,
Lessee’s Broker may send written notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts
within 10 days after said notice, Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addition,
Lessee’s Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between
Lessor and Lessor’s Broker.
15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker, or finder (other than the Brokers, if any) in connection with this Lease, and that no one other than said named Brokers is entitled to any commission or finder’s fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend, and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder, or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys’ fees reasonably incurred with respect thereto.
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16. Estoppel Certificates.
(a) Each Party (as “Responding Party”) shall within 10 days after written notice from the other Party (the “Requesting Party”) execute, acknowledge, and deliver to the Requesting Party a statement in writing in form similar to the then most current “Estoppel Certificate” form published by the AIR Commercial Real Estate Association, plus such additional information, confirmation, and/or statements as may be reasonably requested by the Requesting Party.
(b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and (iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party’s Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. In addition, Lessee acknowledges that any failure on its part to provide such an Estoppel Certificate will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to execute and/or deliver a requested Estoppel Certificate in a timely fashion the monthly Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% the then existing Base Rent or $100, whichever is greater for remainder of the Lease. The Parties agree that such increase in Base Rent represents fair a reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee’s failure to provide the Estoppel Certificate. Such increase in Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach with respect to the failure to provide the Estoppel Certificate nor prevent the exercise of any of the other rights and remedies granted hereunder.
(c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall within 10 days after written notice from Lessor deliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, including, but not limited to, Lessee’s financial statements for the past 3 years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.
17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor or its partners, members, directors, officers, or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor’s partners, members, directors, officers, or shareholders, or any of their personal assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character, and financial responsibility of the other Party to this Lease and as to the use, nature, quality, and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified, or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by email so long as they are also sent via USPS or other carriers with tracking services, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be that Party’s address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing.
23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices delivered by hand or transmitted by facsimile transmission or by email shall be deemed delivered upon actual receipt. If notice is received on a Saturday, Sunday, or legal holiday, it shall be deemed received on the next business day.
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24. Waivers.
(a) No waiver by Lessor of the Default or Breach of any term, covenant, or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant, or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant, or condition hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent.
(b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.
(c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.
25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.
(a) When entering into a discussion with a real estate agent regarding a real estate transaction, a Lessor or Lessee should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Lessor and Lessee acknowledge being advised by the Brokers in this transaction, as follows:
(i) Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessor’s agent or subagent has the following affirmative obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee and the Lessor: a. Diligent exercise of reasonable skills and care in performance of the agent’s duties. b. A duty of honest and fair dealing and faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.
(ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In these situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Lessor. An agent acting only for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary duty utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the Lessor: a. Diligent exercise of reasonable skill and care in performance of the agent’s duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.
(iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Lessor and the Lessee in a transaction, only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity, honesty, and loyalty in the dealings with either Lessor or Lessee. b. Other duties to the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In representing both Lessor and Lessee the agent may not without the express permission of the respective Party, disclose to the other Party that the Lessor will accept rent in an amount less than that indicated in the listing or that the Lessee is willing to pay a higher rent than that offered. The above duties of the agent in a real estate transaction do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor and Lessee carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.
(b) Brokers have no responsibility with respect to any default or breach hereof by either Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relating to this Lease may be brought against Broker more than one year after the Start Date and that the liability (including court costs and attorneys’ fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant’ to this Lease; provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable to any gross negligence or willful misconduct of such Broker.
(c) Lessor and Lessee agree to identify to Brokers as “Confidential” any communication or information given Brokers that is considered by such Party to be confidential.
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26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Holdover Base Rent shall be calculated on monthly basis. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.
28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.
30. Subordination; Attainment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, “Security Device”), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as “Lender”) shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.
30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Lease is subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessor’s obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be liable for the return of any security deposit paid to any prior lessor which was not paid or credited to such new owner.
30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the Lender which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s option, directly contact Lessor’s lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing, or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment, and/or Non-Disturbance Agreement provided for herein.
31. Attorney Fees. No Party, Broker, or Guarantor shall be ordered or required to pay any fees of any attorney pertaining to this Lease.
Attorneys’
Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort,
contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding action, or appeal
thereon, shall be entitled to reasonable attorneys’ fees. Such fee may be awarded in the same suit or recovered in separate suit,
whether or not such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include,
without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgement, or the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award shall
not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably
incurred. In addition, Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the preparation and service
of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and consultation.
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32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times for the purpose of showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements, or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using, and maintaining of utilities, services, pipes, and conduits through the Premises and/or other premises as long as there is no material adverse effect to Lessee’s use of the Premises. All such activities shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.
34. Signs. Lessor may at any time place on the Premises ordinary “For Sale” signs at any time and ordinary “For Lease” signs during the last 6 months of the term hereof. Except for ordinary “for sublease” signs, Lessee shall not place any sign upon the Premises without Lessor’s prior written consent. All signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor’s failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s election to have such event constitute the termination of such interest.
36. Consents. All requests for consent shall be in writing. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’, attorneys’, engineers’, and other consultants’ fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act, assignment, or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor’s consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request.
37. Guarantor.
37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most recently published by the AIR Commercial Real Estate Association, and each such Guarantor shall have the same obligations as Lessee under this Lease.
37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the authority of the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (b) current financial statements, (c) a Tenancy Statement, or (d) written confirmation that the guaranty is still in effect.
38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions, and provisions on Lessee’s part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.
39. Options.
39.1 Definition. “Option” shall mean: (a) the right to extend the term of or renew this Lease or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase, the right of first offer to purchase, or the right of first refusal to purchase the Premises or other property of Lessor.
39.2 Options Personal To Original Lessee. Each Option granted to Lessee in this Lease is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises and, if requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or subletting.
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39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option.
(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease.
40. Multiple Buildings. If the Premises are a part of a group of buildings controlled by Lessor, Lessee agrees that it will abide by and conform to all reasonable rules and regulations which Lessor may make from time to time for the management, safety, and care of said properties, including the care and cleanliness of the grounds and including the parking, loading, and unloading of vehicles, and to cause its employees, suppliers, shippers, customers, contractors, and incites to so abide and conform. Lessee will pay its fair share of common expenses incurred in connection therewith.
41. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights, and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps, and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map, or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid “under protest” with 6 months shall be deemed to have waived its right to protest such payment.
44. Authority; Multiple Parties; Execution.
(a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority.
(b) If this Lease is executed by more than one person or entity as “Lessee”, each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named Lessees had executed such document.
(c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
45. Conflict. Any conflict between the printed provisions of this Lease and typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.
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46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially change Lessee’s obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises.
48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.
49. Arbitration of Disputes. An Addendum requiring the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease is ☐ is not ☒ attached to this Lease.
50. Accessibility; Americans with Disabilities Act.
(a) The Premises:
☒ Have not undergone an inspection by a Certified Access Specialist (CASp). Note a Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct any violations of construction related accessibility standards within the premises. ☐ Have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises met all applicable construction- related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledges that it received a copy of the inspection report at least 48 hours prior to executing this Lease and agrees to keep such report confidential.
☐ Have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledges that it received a copy of the inspection report at least 48 hours prior to executing this Lease and agrees to keep such report confidential except as necessary to complete repairs and corrections of violations of construction related accessibility standards.
(b) Since compliance with the Americans with Disabilities Act (ADA) and other state and local accessibility statutes are dependent upon Lessee’s specific use of the Premises, Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or similar legislation. In the event that Lessee’s use of the Premises requires modifications or additions to the Premises in order to be in compliance with ADA or other accessibility statutes, Lessee agrees to make any such necessary modifications and/or additions at Lessee’s expense.
51. Governing Terms. The Parties agree that in the event of any inconsistencies or conflicts of the terms in Paragraphs 1 through 50 hereinabove with the terms in Paragraphs 52 through 62 hereinbelow, the terms in Paragraphs 52 through 62 hereinbelow shall control and govern all such inconsistencies and conflicts.
52. Base Rent Schedule. Per Paragraph 1.5 – The Base Rent shall start at $1.70/SF/month NNN and shall increase annually on May 1, 2026 and on May 1 of each year thereafter per Cost of Living Adjustment/Consumer Price Index (COLA/CPI) rental adjustments, calculated in the same proportion as the Consumer Price Index (published by the United States Department of Labor, West Area, All Urban Consumers), shall have changed between three months before the Lease Commencement Date and three months before the date of each cost of living adjustment, but not to any rate lower than the rate for the first year of this Lease. If for any reason said Consumer Price Index is at any time no longer available, Lessor may select and use in place of said Consumer Price Index another price index or similar publication or study relevant to quantifying changes in consumer prices for an area including all urban consumers in Las Vegas, Nevada.
| ___________ | ___________ | |
| ___________ | ___________ | |
| Initials | Page 21 of 27 | Initials |
53. Estimated NNN Expenses. Lessor has estimated the NNN Expenses (including Real Property taxes, Lessor’s insurance premiums, HVAC quarterly maintenance, Fire system monitoring and inspection, Landscaping, Roof maintenance, Sewer/water reclamation fees, Asphalt sealing, and Management fees for the calendar year 2025 at approx. $0.29/SF/month, which equates to $2,110.33 per month (“NNN Expenses”). The Estimated NNN Expenses are paid in addition to the Base Rent and are paid on a monthly basis throughout the Lease Term on the same date as the Base Rent is due. Any presently other or unknown additional expenses Lessee is required to pay under this Lease may be added to the NNN Expenses. Lessor may adjust and correct the Estimated NNN Expenses to the actual expenses at any time during the Lease Term or thirty (30) days thereafter. In addition, Lessee shall be responsible for all direct expenses (“Direct Expenses”) related to electricity, gas, phone, data, cable, internet access, janitorial, trash, water, and any other separately metered utilities or services, as may be required by Lessee. These Direct Expenses are to be contracted for and paid directly by the Lessee.
54. Lessee’s Obligations. Paragraph 7.1 - Lessor shall procure and maintain a ventilating and air conditioning system preventative maintenance contract per Paragraph 7.1 (b) at Lessee’s expense which will be billed to Lessee as part of the Common Area Operating Expenses. Lessee, however, shall remain responsible for repairs as noted under Paragraph 7.1 (a), outside the warranty period.
55. Agreed Use. Paragraph 1.7 - General Office/Administrative, Storage and Assembly associated with a robotic company.
56. Delivery of Premises. Lessor shall deliver the Premises in broom swept AS-IS, where is condition. Lessee acknowledges that neither Lessor nor any agent of Lessor has made any representations as to the condition of the Premises or the suitability of the Premises for Lessee’s intended use. Lessee represents and warrants that Lessee has made its own inspection and inquiry regarding the condition of the Premises and is not relying on any representations of Lessor or any Broker with respect thereto.
57. Access. Lessee shall be granted twenty-four (24) hour, seven (7) day per week, fifty-two (52) week per year access to the Premises.
58. Signage. All costs associated with the design, purchase, installation, maintenance, and removal of all signage will be Lessee’s sole responsibility and expense and must be in accordance with Clark County code. Lessee shall submit its sign criteria and design prior to installation for Lessor’s written approval, which shall not be unreasonably withheld or delayed. No banners or signage beyond that of the permissible building signage shall be permitted at any time.
59. Certificate of Insurance. Lessee shall provide, upon execution of this Lease and prior to occupying the Building, a certificate of insurance as stated in Paragraph 8.2 (a) naming the Lessor as Additional Insured and Certificate Holder.
60. Not an Offer. Preparation of this Lease by Lessor or Lessor’s Broker and submission of same to Lessee shall not be deemed an offer to Lessee to lease. This Lease shall become effective and binding upon the Parties hereto only upon mutual execution by both Parties. Lessee shall be aware that Lessor’s customary practice is not to reserve the Premises, which is the subject of this Lease until such time as this Lease has been fully executed by both Parties. As a result, Lessor may have made or subsequently may make other proposals on the space, which is the subject of this Lease.
61. Tenant Improvements (TI’s). Lessee may with Lessor’s prior written approval described below complete the following TI’s at Lessee’s sole cost and expense:
a. Paint the entire interior office and warehouse space, with high quality paint color to be approved by Lessor.
Lessee must provide construction plans or detailed descriptions acceptable to Lessor and have prior written approval of the plans or descriptions from Lessor before commencing TI’s. All TI’s must be done by licensed contractors according to the current building codes, and Lessee or its contractor(s) shall secure any required permits and deliver copies of said permits and all inspection reports to Lessor within 7 days of Lessee acquiring said permits and reports.
62. Option to Extend Original Term two (2) years. Lessee shall have two (2) options to extend the Original Term two (2) years if and only if Lessee is fully current on all Lease terms at the times Lessee gives Lessor said written notice and at the end of the Lease term being extended and gives Lessor written notice of exercising the option at least six (6) months prior to the end of the Original Term of this Lease stated above. Rent in the first year of the Option Term (third year of this Lease as extended by the Option) shall be the higher of two rent rates calculated (1) by applying the COLA/CPI process referred to above continuously and (2) the market rent rates being asked by landlords for new leases of comparable properties within the same rental market area, but not less than the rent rate for premises in the last year of the Original Term. Rental rates in the 5th years of the extended Lease shall be calculated per COLA/CPI changes from the 4th year of the extended Lease as was done in the Original Term of this Lease. Data for calculating the COLA/CPI changes in rent rates shall be as of three months before each rent rate change is scheduled to become effective.
| ___________ | ___________ | |
| ___________ | ___________ | |
| Initials | Page 22 of 27 | Initials |
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED.
The Parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.
| Time: | Time: | |||
| Date: | Date: |
| By: | LESSOR | By: | LESSEE
| |
| Clifford Douglas, Trustee of the Clifford Douglas Trust | VenHub Global, Inc a Delaware Corporation | |||
| By: | Name Printed: Clifford Douglas | By: | ||
| Title: | Trustee | Name Printed: | Shahan Ohanessian | |
| Delivery Address: | 18511 Via De Las Flores Rancho Santa Fe, CA 92067 | Title: | CEO and Co-Founder 5 | |
| Mailing Address: | P.O. Box 2729 Rancho Santa Fe, CA 92067 | Address: | 18 E. Fair Oaks Ave.Pasadena, CA 91105 | |
| Telephone: | (858) 756-0409 | Telephone: | (888 ) 585-4999 | |
| Email: | DouglasTrusts@gmail.com | Email: |
| ___________ | ___________ | |
| ___________ | ___________ | |
| Initials | Page 23 of 27 | Initials |
Exhibit A
Site Plan
| ___________ | ___________ | |
| ___________ | ___________ | |
| Initials | Page 24 of 27 | Initials |
Exhibit B
Floor Plan
(For Depiction Purposes Only – Not to Scale)
| ___________ | ___________ | |
| ___________ | ___________ | |
| Initials | Page 25 of 27 | Initials |
GUARANTY OF LEASE
This Guaranty of Lease (the “Guaranty”) is attached to and made part of that certain real estate Lease (the “Lease”) dated April 4, 2025, by and between CLIFFORD DOUGLAS, TRUSTEE OF THE CLIFFORD DOUGLAS TRUST (“Lessor”) and VenHub Global Inc. a Delaware Corporation (“Lessee”), covering the Premises commonly known as 5360 Procyon St., Las Vegas, NV 89118 (“Premises”). The terms used in this Guaranty shall have the same definitions as set forth in the Lease. In order to induce Lessor to enter into the Lease with, William and Cindy Clune (“Guarantor”) has agreed to execute and deliver this Guaranty to Lessor. Guarantor acknowledges that Lessor would not enter into the Lease if Guarantor did not execute and deliver this Guaranty to Lessor.
1. Guaranty. In consideration of the execution of the Lease by Lessor and as a material inducement to Lessor to execute the Lease, Guarantor hereby irrevocably and unconditionally guarantees the full, timely, and complete (a) payment of all rent and other sums payable by Lessee to Lessor under the Lease and any amendments or modifications thereto by agreement or course of conduct, and (b) performance of all covenants, representation, and warranties made by Lessee and all obligations to be performed by Lessee pursuant to the Lease and any amendments or modifications thereto by agreement or course of conduct. The payment of those amounts and performance of those obligations shall be conducted in accordance with all terms, covenants, and conditions set forth in the Lease, without deduction, offset, or excuse of any nature and without regard to the enforceability or validity of the lease or any part thereof or any disability of Lessee. If this Guaranty Of Lease is executed by more than one person or entity as Guarantor, each such person or entity shall be jointly and severally liable hereunder.
2. Lessor’s Rights. Lessor may perform any of the following acts at any time during the Lease Term without notice to or assent of Guarantor and without in any way releasing, affecting, or impairing Guarantor’s obligations or liabilities under this Guaranty: (a) alter, modify, or amend the Lease by agreement or course of conduct, (b) grant extensions or renewals of the Lease, (c) assign or otherwise transfer its interest in the Lease, the Property, or this Guaranty, (d) consent to any transfer or assignment of Lessee’s or any future Lessee’s interest under the Lease, (e) release Guarantor or amend or modify this Guaranty with respect to Guarantor without releasing or discharging any other Guarantor from any of such Guarantor’s obligations or liabilities under this Guaranty, (f) take and hold security for the payment of this Guaranty and exchange, enforce, waive, and release any such security, (g) apply such security and direct the order or manner of sale thereof as Lessor, in its sole discretion, deems appropriate, and (h) foreclose upon any such security by judicial or non-judicial sale without affecting or impairing in any way the liability of Guarantor under this Guaranty except to the extent the indebtedness has been paid.
3. Lessee’s Default. This Guaranty is a guaranty of payment and performance and not of collection. Upon any breach or default by Lessee under the Lease, Lessor may proceed immediately against Lessee and/or Guarantor to enforce any of Lessor’s rights or remedies against Lessee or Guarantor pursuant to this Guaranty, the lease or at law or in equity without notice to or demand upon either Lessee or Guarantor. This Guaranty shall not be released, modified, or affected by any failure or delay by Lessor to enforce any of its rights or remedies under the Lease or this Guaranty or at law or in equity.
4. Guarantor’s Waivers. Guarantor hereby waives (a) any right to require Lessor to enforce its rights or remedies against Lessee under the lease or otherwise or against any other Guarantor, (b) any right to require Lessor to proceed against any security held from Lessee or any other party, (c) any right of subrogation, and (d) any defense arising out of the absence, impairment, or loss of any right of reimbursement or subrogation or other right of remedy of Guarantor against Lessor or any such security, whether resulting from an election by Lessor or otherwise. Any part payment by Lessee or other circumstance which operates to toll any statute of limitations as to Lessee shall operate to toll the statute of limitations as to Guarantor.
5. Separate and Distinct Obligations. Guarantor acknowledges and agrees that Guarantor’s obligations to Lessor under this Guaranty are separate and distinct from Lessee’s obligations to Lessor under the Lease. The occurrence of any of the following events shall not have any effect whatsoever on Guarantor’s obligations to Lessor hereunder, each of which obligations shall continue in full force or effect as though such event had not occurred: (a) the commencement by Lessee or a voluntary case under the federal bankruptcy laws as now constituted or hereafter amended or replaced or any other applicable federal or state bankruptcy, insolvency, or other similar law (collectively, the “Bankruptcy Laws”), (b) the consent by Lessee to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or similar official of Lessee or for any substantial part of its property, (c) any assignment by Lessee for the benefit of creditors, (d) the failure of Lessee generally to pay its debts as such debts become due, (e) the taking of corporate action by Lessee in the furtherance of any of the foregoing, or (f) the entry of a decree or order for relief by a court having jurisdiction in respect of Lessee in any involuntary case under the Bankruptcy Laws or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official of Lessee or for any substantial part of its property or ordering the winding up or liquidation of any of its affairs and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days. The liability of Guarantors under this Guaranty is not, and shall not be, affected or impaired by any payment made to Lessor under or related to the Lease for which Lessor is required to reimburse Lessee pursuant to any court order or in settlement of any dispute, controversy, or litigation in any bankruptcy, reorganization, arrangement, moratorium, or other federal or state debtor relief proceeding. If, during any such proceeding, the lease is assumed by Lessee or any trustee or thereafter assigned by Lessee or any trustee to a third party, this Guaranty shall remain in full force and effect with respect to the full performance of Lessee, any such trustee, or any such third party’s obligations under the Lease. If the Lease is terminated or rejected during any such proceeding or if any of the events described in Subparagraphs (a) through (f) of this Paragraph 5 occur, as between Lessor and Guarantor, Lessor shall have the right to accelerate all of Lessee’s obligations under the Lease and Guarantor’s obligations under this Guaranty. In such event, all such obligations shall become immediately due and payable by Guarantor to Lessor. Guarantor waives any defense arising by reason of any disability or other defense of Lessee or by reason of the cessation from any cause whatsoever of the liability of Lessee.
| ___________ | ___________ | |
| ___________ | ___________ | |
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6. Subordination. All existing and future advances by Guarantor to Lessee and all existing and future debts of Lessee to Guarantor shall be subordinated to all obligations owed to Lessor under the Lease and this Guaranty.
7. Successors and Assigns. This Guaranty binds Guarantor’s successors and assigns.
8. Encumbrances. If Lessor’s Interest in the Property or the Lease or the rents, issues, or profits therefrom are subject to any deed of trust, mortgage, or assignment for security, Guarantors acquisition of Lessor’s interest in the Property or the lease shall not affect Guarantor’s obligations under this Guaranty. In such event, this Guaranty shall nevertheless continue in full force and effect for the benefit of any mortgagee, beneficiary, trustee or assignee or any purchaser at any sale by judicial foreclosure or under any private power of sale and their successors and assigns. Any married Guarantor expressly agrees that Lessor has recourse against any Guarantor’s separate or community property for all of such Guarantor’s obligations hereunder.
9. Guarantor’s Duty. Guarantor assumes the responsibility to remain informed of the financial condition of Lessee and of all other circumstances bearing upon the risk of Lessee’s default which reasonable inquiry would reveal and agree that Lessor shall have no duty to advise Guarantor of information known to it regarding such condition or any such circumstance.
10. Lessor’s Reliance. Lessor shall not be required to inquire into the powers of Lessee or the officers, employees, partners, or agents acting or purporting to act on its behalf and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.
11. Incorporation of Certain Lease Provisions. Guarantor hereby represents and warrants to Lessor that Guarantor has received a copy of the Lease, has read, or had the opportunity to read the Lease and understands the terms of the lease. The provisions in the Lease relating to the execution of additional documents, legal proceedings by Lessor against Lessee, severability of the provisions of the Lease, interpretation of the Lease, notices, waivers, the applicable laws which govern the interpretation of the Lease and the authority of the Lessee to execute the Lease are incorporated herein in their entirety by this reference and made a part hereof. Any reference in those provisions to “Lessee” shall mean Guarantor and any reference in those provisions to the “Lease” shall mean this Guaranty except that (a) any notice which Guarantor desires or is required to provide to Lessor shall be effective only if signed by Guarantor, and (b) any notice which Lessor desires or is required to provide to Guarantor shall be sent to Guarantor at Guarantor’s address indicated below or, if no address is indicated below, at the address for notices to be sent to Lessee under the Lease.
Agreed and Accepted by Guarantor:
| Dated: | Guarantor’s Street Address .____________________________ | ||
| Signed: | Guarantor’s City, State & Zip Code ______________________ | ||
| William Clune | |||
| Guarantor’s SSN _______________________________ | |||
| Dated: | Guarantor’s Street Address. ______________________ | ||
| Signed: | Guarantor’s City, State & Zip Code ______________________ | ||
| indy Clune | |||
| Guarantor’s SSN _______________________________ |
This Guaranty must be notarized:
State of Nevada )
) ss.
)
This instrument was acknowledged by me on ______________________, 2025 by ______________________.
| Signature of notarial officer | My commission expires |
| ___________ | ___________ | |
| ___________ | ___________ | |
| Initials | Page 27 of 27 | Initials |
Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is entered into as of August 25, 2025 (the “Effective Date”), by and between VenHub Global, Inc., a Delaware corporation (the “Company”), and Shahan Ohanessian (“Executive”).
1. Appointment, Title, and Duties
The Company hereby employs Executive to serve as Chief Executive Officer. Executive shall report to the Board of Directors and shall have the duties, responsibilities, and authority customary for such position in a publicly traded company. Executive shall also report directly to the Chairman of the Board on matters concerning the integrity of the business. The Board may assign additional duties with Executive’s consent, including service with affiliates. Executive shall not be directed to report to any person or group other than the Chairman of the Board of Directors.
2. Term of Agreement and Effective Date
The effective date of this Agreement shall be such date as the Form S-1 as originally filed with the Securities and Exchange Commission (the “SEC”) on July 15, 2025, is deemed effective by the SEC (the “Effective Date”). The initial term of this Agreement shall be thirty-six (36) months from the Effective Date and shall expire on such date. Upon mutual written consent, the term may be extended for an additional thirty-six (36) months.
3. Acceptance of Position
Executive accepts the appointment and agrees to devote substantially all of his business time and efforts to the Company. Executive may serve on the boards of other for-profit or nonprofit entities without Board approval, provided such roles do not interfere with his duties. Compensation derived from such service shall be the sole property of Executive.
4. Compensation and Benefits
a. Base Salary
Executive shall receive a base salary of $1,000,000 per annum, payable in accordance with the Company’s regular payroll schedule. The base salary shall increase automatically by ten percent (10%) annually. Any increase shall automatically amend this Agreement to reflect the new minimum base salary.
b. Annual Equity Grant
Executive shall receive 1,000,000 fully vested shares of common stock annually.
c. Annual Bonus
Executive shall be entitled to an annual cash bonus of $1,850,000, which shall accrue as an obligation of the Company but shall be payable only upon a determination by the Board of Directors that the Company has sufficient surplus cash to make such payment without materially impairing the Company’s liquidity or operations. The Company may, at its discretion, satisfy all or a portion of the annual cash bonus in equity awards valued at fair market value.
Executive agrees that the Company may defer payment of any accrued annual cash bonus if the Board of Directors determines that payment would materially impair the Company’s liquidity. Any deferred amounts shall remain accrued obligations of the Company until paid. Deferred bonuses shall not accrue interest, and payment shall be made one the Company has sufficient surplus cash, as determined by the Board.
d. Geographic Expansion Bonus
Executive shall receive:
| ● | 1,000,000 shares for each U.S. state in which the Company opens or operates stores, awarded annually. |
| ● | 2,000,000 shares for each country in which the Company opens or operates stores, awarded annually. |
For avoidance of doubt, these share awards are contingent upon the occurrence of the expansion milestones described above and are not guaranteed obligations of the Company absent such milestones. The Company acknowledges that these issuances may result in material dilution to existing shareholders, and such risk will be disclosed in the Company’s public filings.
e. Performance Milestone Equity Awards
Executive shall receive:
| ● | 1,000,000 shares upon every thirty (30) Smart Stores launched or sold. |
| ● | 2,000,000 shares upon listing of the Company’s common stock on a national securities exchange. |
For avoidance of doubt, these share awards are contingent upon the achievement of the milestones described above and are not guaranteed obligations of the Company absent such milestones. The Company acknowledges that these issuances may result in material dilution to existing shareholders, and such risk will be disclosed in the Company’s public filings.
| f. | Expense Allowances |
Executive shall receive:
| ● | $7,500 per month for home office and automobile expenses. |
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| ● | $500 per month for phone and connectivity expenses. |
| ● | All reasonable travel expenses, including but not limited to security expenses for all international flights. |
5. Defined Terms
Capitalized terms including “Cause,” “Good Reason,” “Change in Control,” “Disabled,” “Affiliate,” “Related Person,” and “Beneficial Owner” shall have the meanings as defined in Exhibit A to this Agreement, which is incorporated by reference and enforceable.
6. Termination and Severance
a. Termination Without Cause or With Good Reason
If Executive is terminated without Cause or resigns with Good Reason, Executive shall receive:
| ● | A lump-sum severance equal to the greater of (i) twenty-four (24) months of total compensation, or (ii) the remaining contract value. |
| ● | 1,000,000 shares of common stock. |
| ● | Continuation of Company-paid health and dental benefits through the term or equivalent cash. |
| ● | A 12-month paid advisory role at $25,000 per month. |
b. Change in Control
If Executive is terminated within twenty-four (24) months of a Change in Control, Executive shall receive:
| ● | Immediate vesting of 200% of all unvested equity. |
| ● | A lump-sum payment equal to the greater of (i) twenty-four (24) months of total compensation, or (ii) the balance of the contract. |
| ● | A $25,000,000 sale bonus. |
| ● | A severance multiplier of 3x the highest annual bonus received in the previous three years. |
c. Death or Disability
In the event of Executive’s death or disability:
| ● | Immediate acceleration of all unvested equity. |
| ● | A cash payment equal to 2x base salary, paid to Executive or the estate. |
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d. COBRA and Benefits
All post-termination COBRA health coverage will be paid by the Company, or the Company will issue a cash equivalent if unavailable.
e. Timing of Payments
All payments under this section shall be made within 30 days of termination or Change in Control.
f. Excise Tax Gross-Up
In the event of any excise tax under Section 4999 of the Internal Revenue Code, Executive shall receive a gross-up payment sufficient to make Executive whole. Determination shall be made by the Company’s independent auditors. Any overpayments or underpayments shall be corrected with interest.
7. Non-Competition and Non-Solicitation
Executive agrees not to compete with the Company for:
| ● | 12 months if terminated without Cause or with Good Reason. |
| ● | 18 months if terminated for Cause or resignation without Good Reason. |
Executive shall not solicit or transact with Company clients, partners, or employees during this period. Passive investment in publicly traded competitors is permitted.
8. Indemnification
The Company shall indemnify Executive to the fullest extent permitted by law. The Company shall maintain Directors & Officers insurance naming Executive as an insured and advance legal defense expenses where applicable.
9. Legal Fees and Enforcement
In any legal action related to this Agreement, the prevailing party shall be entitled to recover its attorneys’ fees and costs.
10. Notices
All notices under this Agreement shall be in writing and delivered by certified mail or overnight courier to the addresses listed below or as otherwise updated in writing.
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11. Construction and Interpretation
If any term is found unenforceable, the remainder shall remain in full force. This Agreement shall comply with all laws, including Sarbanes-Oxley.
12. Headings
Section titles are for reference only and do not affect interpretation.
13. Governing Law
This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada, and any disputes shall be resolved exclusively in Nevada courts. The parties waive the right to trial by jury.
14. Entire Agreement
This Agreement constitutes the entire understanding between the parties and supersedes all prior discussions and agreements, oral or written.
15. Additional Provisions
a. Board Seat Guarantee – Executive shall maintain a voting seat on the Board during the term.
b. No Dilution Clause – Executive shall not be diluted below agreed equity thresholds without compensation.
c. IP Ownership – Executive retains all intellectual property created prior to this Agreement.
d. Termination Approval – Executive may not be terminated without Cause unless approved by a supermajority (75%) of the Board.
e. Clawback Policy – Executive is subject to Company clawback rules consistent with SEC and Nasdaq regulations.
f. Successor Clause – This Agreement shall be binding on all successors and assigns.
g. 409A Compliance – This Agreement shall be interpreted in accordance with Section 409A of the Internal Revenue Code.
[The remainder of this page is intentionally left blank. Signature pages follow.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date hereto.
| VENHUB GLOBAL, INC. | ||
| By: | /s/ Shoushana Ohanessian | |
| Name: | Shoushana Ohanessian | |
| Title: | President | |
| Date: | August 25, 2025 | |
| EXECUTIVE | ||
| By: | /s/ Shahan Ohanessian | |
| Name: | Shahan Ohanessian | |
| Title: | Chief Executive Officer | |
| Date: | August 25, 2025 | |
Exhibit 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is entered into as of August 25, 2025, by and between VenHub Global, Inc., a Delaware corporation (the “Company”), and Shoushana Ohanessian (“Executive”).
1. Appointment, Title, and Duties
The Company hereby employs Executive to serve as President. Executive shall report to the Chief Executive Officer and the Board of Directors and shall have the duties, responsibilities, and authority customary for such position in a publicly traded company. The Board may assign additional duties with Executive’s consent, including service with affiliates.
2. Term of Agreement and Effective Date
The effective date of this Agreement shall be such date as the Form S-1 as originally filed with the Securities and Exchange Commission (the “SEC”) on July 15, 2025, is deemed effective by the SEC (the “Effective Date”). The initial term of this Agreement shall be thirty-six (36) months from the Effective Date and shall expire on such date. Upon mutual written consent, the term may be extended for an additional thirty-six (36) months.
3. Acceptance of Position
Executive accepts the appointment and agrees to devote substantially all of her business time and efforts to the Company. Executive may serve on the boards of other for-profit or nonprofit entities with prior written approval by the Board, provided such roles do not interfere with her duties.
4. Compensation and Benefits
a. Base Salary
Executive shall receive a base salary of $750,000 per annum, payable in accordance with the Company’s regular payroll schedule. The base salary shall increase automatically by ten percent (10%) annually. Any increase shall automatically amend this Agreement to reflect the new minimum base salary.
b. Annual Equity Grant
Executive shall receive 750,000 fully vested shares of common stock annually.
c. Annual Bonus
Executive shall be entitled to an annual cash bonus of $1,387,500, which shall accrue as an obligation of the Company but shall be payable only upon a determination by the Board of Directors that the Company has sufficient surplus cash to make such payment without materially impairing the Company’s liquidity or operations. The Company may, at its discretion, satisfy all or a portion of the annual cash bonus in equity awards valued at fair market value.
Executive agrees that the Company may defer payment of any accrued annual cash bonus if the Board of Directors determines that payment would materially impair the Company’s liquidity. Any deferred amounts shall remain accrued obligations of the Company until paid. Deferred bonuses shall not accrue interest, and payment shall be made one the Company has sufficient surplus cash, as determined by the Board.
d. Geographic Expansion Bonus
Executive shall receive:
| ● | 750,000 shares for each U.S. state in which the Company opens or operates stores, awarded annually. |
| ● | 1,500,000 shares for each country in which the Company opens or operates stores, awarded annually. |
For avoidance of doubt, these share awards are contingent upon the occurrence of the expansion milestones described above and are not guaranteed obligations of the Company absent such milestones. The Company acknowledges that these issuances may result in material dilution to existing shareholders, and such risk will be disclosed in the Company’s public filings.
e. Performance Milestone Equity Awards
Executive shall receive:
| ● | 750,000 shares upon every thirty (30) Smart Stores launched or sold. | |
| ● | 1,500,000 shares upon listing of the Company’s common stock on a national securities exchange. |
For avoidance of doubt, these share awards are contingent upon the achievement of the milestones described above and are not guaranteed obligations of the Company absent such milestones. The Company acknowledges that these issuances may result in material dilution to existing shareholders, and such risk will be disclosed in the Company’s public filings.
f. Expense Allowances
Executive shall receive:
| ● | $5,000 per month for home office and automobile expenses. | |
| ● | $375 per month for phone and connectivity expenses. | |
| ● | All reasonable travel expenses, including but not limited to security expenses for all international flights. |
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5. Defined Terms
Capitalized terms including “Cause,” “Good Reason,” “Change in Control,” “Disabled,” “Affiliate,” “Related Person,” and “Beneficial Owner” shall have the meanings as defined in Exhibit A to this Agreement, which is incorporated by reference and enforceable.
6. Termination and Severance
a. Termination Without Cause or With Good Reason
If Executive is terminated without Cause or resigns with Good Reason, Executive shall receive:
| ● | A lump-sum severance equal to the greater of (i) twenty-four (24) months of total compensation, or (ii) the remaining contract value. |
| ● | 750,000 shares of common stock. |
| ● | Continuation of Company-paid health and dental benefits through the term or equivalent cash. |
| ● | A 12-month paid advisory role at $18,750 per month. |
b. Change in Control
If Executive is terminated within twenty-four (24) months of a Change in Control, Executive shall receive:
| ● | Immediate vesting of 200% of all unvested equity. |
| ● | A lump-sum payment equal to the greater of (i) twenty-four (24) months of total compensation, or (ii) the balance of the contract. |
| ● | A $18,750,000 sale bonus. |
| ● | A severance multiplier of 3x the highest annual bonus received in the previous three years. |
c. Death or Disability
In the event of Executive’s death or disability:
| ● | Immediate acceleration of all unvested equity. |
| ● | A cash payment equal to 2x base salary, paid to Executive or the estate. |
d. COBRA and Benefits
All post-termination COBRA health coverage will be paid by the Company, or the Company will issue a cash equivalent if unavailable.
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e. Timing of Payments
All payments under this section shall be made within 30 days of termination or Change in Control.
f. Excise Tax Gross-Up
In the event of any excise tax under Section 4999 of the Internal Revenue Code, Executive shall receive a gross-up payment sufficient to make Executive whole. Determination shall be made by the Company’s independent auditors. Any overpayments or underpayments shall be corrected with interest.
7. Non-Competition and Non-Solicitation
Executive agrees not to compete with the Company for:
| ● | 12 months if terminated without Cause or with Good Reason. |
| ● | 18 months if terminated for Cause or resignation without Good Reason. |
Executive shall not solicit or transact with Company clients, partners, or employees during this period. Passive investment in publicly traded competitors is permitted.
8. Indemnification
The Company shall indemnify Executive to the fullest extent permitted by law. The Company shall maintain Directors & Officers insurance naming Executive as an insured and advance legal defense expenses where applicable.
9. Legal Fees and Enforcement
In any legal action related to this Agreement, the prevailing party shall be entitled to recover its attorneys’ fees and costs.
10. Notices
All notices under this Agreement shall be in writing and delivered by certified mail or overnight courier to the addresses listed below or as otherwise updated in writing.
11. Construction and Interpretation
If any term is found unenforceable, the remainder shall remain in full force. This Agreement shall comply with all laws, including Sarbanes-Oxley.
12. Headings
Section titles are for reference only and do not affect interpretation.
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13. Governing Law
This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada, and any disputes shall be resolved exclusively in Nevada courts. The parties waive the right to trial by jury.
14. Entire Agreement
This Agreement constitutes the entire understanding between the parties and supersedes all prior discussions and agreements, oral or written.
15. Additional Provisions
a. Board Seat Guarantee – Executive shall maintain a voting seat on the Board during the term.
b. No Dilution Clause – Executive shall not be diluted below agreed equity thresholds without compensation.
c. IP Ownership – Executive retains all intellectual property created prior to this Agreement.
d. Termination Approval – Executive may not be terminated without Cause unless approved by a supermajority (75%) of the Board.
e. Clawback Policy – Executive is subject to Company clawback rules consistent with SEC and Nasdaq regulations.
f. Successor Clause – This Agreement shall be binding on all successors and assigns.
g. 409A Compliance – This Agreement shall be interpreted in accordance with Section 409A of the Internal Revenue Code.
[The remainder of this page is intentionally left blank. Signature pages follow.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date hereto.
| VENHUB GLOBAL, INC. | ||
| By: | /s/ Shahan Ohanessian | |
| Name: | Shahan Ohanessian | |
| Title: | Chief Executive Officer | |
| Date: | August 25, 2025 | |
| EXECUTIVE | ||
| By: | /s/ Shoushana Ohanessian | |
| Name: | Shoushana Ohanessian | |
| Title: | President | |
| Date: | August 25, 2025 | |
Exhibit 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is dated as of October 1, 2025, and effective as of the date hereinafter provided, by and between VenHub Global, Inc., a corporation organized under the laws of the State of Delaware (the “Company”), and Matthew Hildago, (“Executive”).
WITNESETH:
WHEREAS, the Company and Executive desire to provide for the employment of the Executive as the Chief Financial Officer of the Company, to engage in such activities and to render such services under the terms and conditions hereof;
WHEREAS, the Company has authorized and approved the execution of this Agreement, and Executive desires to be employed by the Company under the terms and conditions hereinafter provided; and
WHEREAS, this Agreement constitutes the entire understanding and agreement between the Company and Executive regarding its subject matter and supersedes all prior or contemporaneous negotiations and agreements, whether oral or written, between them with respect to such subject matter.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound do hereby agree as follows:
| 1. | Effective Date, Appointment, Title and Duties. The effective date of this Agreement shall be such date as the Form S-1 as originally filed with the Securities and Exchange Commission (the “SEC”) on July 15, 2025, is deemed effective by the SEC (“Effective Date”). As of the Effective Date, the Company employs Executive to serve as its Chief Financial Officer. In such capacity, Executive shall report to the Chief Executive Officer of Directors of the Company, and shall have such duties, powers and responsibilities as are customarily assigned to a Chief Financial Officer of a publicly held corporation but shall also be responsible to the Chairman of Audit Committee of the Board of Directors on any matters related to the integrity of the financial affairs of the Company. In addition, Executive shall have such other duties and responsibilities as the Board of Directors may reasonably assign him, with his consent, including serving with the consent or at the request of the Board of Directors as an officer or on the board of directors of affiliated corporations, provided that such duties are commensurate with and customary for a senior executive officer bearing Executive’s experience, qualifications, title and position. |
| 2. | Term of Agreement. The term of the Executive’s employment under this Agreement shall commence on the Effective Date and shall terminate after a period of twelve (12) months(the “Term”), except that by mutual consent of the Executive and the Company, the Agreement may be optionally extended for an additional twelve (12) month period. |
| 3. | Acceptance of Position. |
| a. | Executive accepts the position of Chief Financial Officer and agrees that during the term of this Agreement he will faithfully perform his duties and, except as expressly approved by the Board of Directors, will devote substantially all of his business time to the business and affairs of the Company. It is acknowledged and agreed that Executive may serve as an officer and/or director of companies in which the Company owns voting or non-voting stock. In addition, it is acknowledged that Executive may, from time to time, serve as a member of the Board of Directors of other for-profit companies, but not without prior approval by the Board of Directors of the Company. In the event the Executive, prior to the execution of this Agreement, is holding a position as a member of a Board of Directors of a public company, prior approval by the Board of Directors of the Company will not be required. The Executive may, from time to time, serve as a member of the Board of Directors of other non-profit associations, community associations, and not for profit groups without the approval of the Board of Directors of the Company. Any compensation or remuneration which Executive receives in consideration of his service on the board of directors of other companies shall be the sole and exclusive property of Executive, and the Company shall have no right or entitlement at any time to any such compensation or remuneration. |
| b. | Notwithstanding any other provision of this Agreement, in the event the Board of Directors of the Company determines, in its sole discretion, that it is in the best interest of the Company to engage a more experienced Chief Executive Officer, Executive agrees to assume and accept a diminutive role as an assistant to such person. In such event, Executive shall retain all rights, compensations, and benefits as described herein, including, but not limited to, base salary, bonuses, benefits, and severance rights, at levels no less favorable than those provided under this Agreement prior to such adjustment of role. This provision is intended to provide flexibility to the Company while ensuring fair treatment of Executive and shall be implemented in a manner consistent with the Company's obligations under this Agreement and applicable law. |
| 4. | Salary and Benefits. During the term of this Agreement: |
| a. | The Company shall pay to Executive a base salary at an annual rate of not less than One Hundred Eighty Thousand Dollars ($180,000) per annum for the Term and for the optional extended twelve (12) month period of this Agreement in the event the parties jointly exercise that contractual option. The foregoing amounts are hereafter collectively referred to as the “Base Salary” and shall be paid in approximately equal monthly installments at intervals based on any reasonable Company policy which is consistently applied to all other executives of the Company. Any increase in the Base Salary above the aforementioned amounts, once granted by the Company to the Executive, shall automatically amend this Agreement to provide that thereafter Executive’s Base Salary shall not be less than the annual amount to which such Base Salary has been increased. |
| b. | During the term hereof, Executive shall be eligible to participate in all health, retirement, Company-paid insurance, sick leave, vacation, disability, expense reimbursement and other benefit programs which the Company or its subsidiaries makes available to any of its senior executives. |
| c. | Executive may be awarded an annual bonus (in cash or stock of the Company) in the sole discretion of the Board of Directors. Executive also shall be eligible to participate in any Company incentive stock, option or bonus plan offered by the Company to its senior executives, subject to the terms thereof and at the sole discretion of the Board of Directors. |
| d. | The Company will provide Executive with (i) a home office/automobile expense allowance of Two Thousand Dollars ($2,000) per month to cover such expenses incurred in the pursuit of Company business and; (ii) a phone allowance of Five Hundred ($500) per month to cover such expenses incurred in the pursuit of Company business. |
| 5. | Certain Terms Defined. For purposes of this Agreement: |
| a. | Executive shall be deemed to be “disabled” if a physical or mental condition shall occur and persist which, in the written opinion of a licensed physician selected by the Board of Directors in good faith, has rendered Executive unable to perform the duties set forth in Section 1 hereof for a period of sixty (60) days or more and, in the written opinion of such physician, the condition will continue for an indefinite period of time, rendering Executive unable to return to his duties. |
| b. | A termination of Executive’s employment by the Company shall be deemed for “Cause” if, and only if, it is based upon (i) conviction of a felony by a federal or state court of competent jurisdiction; (ii) material disloyalty to the Company such as embezzlement or misappropriation of corporate assets; or (iii) engaging in unethical or illegal behavior which is of a public nature, brings the Company into disrepute, and results in material damage to the Company. The Company shall have the right to suspend Executive with pay, for a period not exceeding 60 days to investigate allegations of conduct which, if proven, would establish a right to terminate this Agreement for Cause, or to permit a felony charge to be tried. Immediately upon the conclusion of such temporary period, unless Cause to terminate this Agreement has been established, Executive shall be restored to all duties and responsibilities as if such suspension had never occurred. |
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| c. | A resignation by Executive shall not be deemed to be voluntary and shall be deemed to be a resignation with “Good Reason” if it is based upon (i) a diminution in Executive’s title, duties, or salary; (ii) a material reduction in benefits; or (iii) a direction by the Board of Directors that Executive report to any person or group other than the Chief Executive Officer. |
| d. | “Affiliate” means with respect to any Person, a Person who, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control, with the Person specified. |
| e. | “Base Salary” means, as of any date of termination of employment, the highest base salary of Executive in the then current fiscal year or in any of the last four fiscal years immediately preceding such date of termination of employment. |
| f. | “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act. |
| g. | A “Change in Control” occurs if: |
| i. | Any Person or related group of Persons (other than Executive and his Related Persons, the Company or a Person that directly or indirectly controls, is controlled by, or is under common control with, the Company) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities; |
| ii. | The stockholders of the Company approve a merger or consolidation of the Company with any other corporation (or other entity), other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires 33 1/3% or more of the combined voting power of the Company’s then outstanding securities shall not constitute a Change in Control; |
| iii. | The stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or |
| iv. | A majority of the members of the Board of Directors of the Company cease to be Continuing Directors; |
| h. | “Code” means the Internal Revenue Code of 1986, as amended. |
| i. | “Continuing Directors” means, as of any date of determination, any member of the Board of Directors who (i) was a member of such Board of Directors on the date of this Agreement or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election. |
| j. | “Exchange Act” means the Exchange Act of 1934, as amended. |
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| k. | “Person” means any individual, control group as defined in the Exchange Act, corporation, partnership, limited liability company, trust, association or other entity. |
| l. | “Related Person” means any immediate family member (spouse, partner, parent, sibling or child, whether by birth or adoption) of the Executive and any trust, estate or foundation, the beneficiary of which is the Executive and/or an immediate family member of the Executive. |
| 6. | Certain Benefits Upon Termination. Executive’s employment shall be terminated upon the earlier of (a) the voluntary resignation of Executive with or without Good Reason; (b) Executive’s death or permanent disability; or (c) upon the termination of Executive’s employment by the Company for any reason at any time. In the event of such termination, the provisions of Section 6(a) shall apply, and in the event of a Change of Control, the provisions of Section 6(b) shall apply. |
| a. | If Executive’s employment by the Company terminates for any reason other than as a result of a termination for Cause, or a voluntary resignation by Executive without a Good Reason, then the Company shall pay Executive a lump sum severance payment in cash within 30 days of termination, equal to the greater of (i) the amount equal to twelve (12) months of the Executive’s Base Salary at the time of such termination, or (B) the amount equal to the Executive’s Base Salary for the remainder of the term as if this Agreement had not been terminated; provided that if employment terminates by reason of Executive’s death or disability, then Executive (or Executive’s estate, if applicable) shall receive a one time payment equal to the amount of Base Salary owed for the remainder of the term as if this Agreement had not been terminated. |
| b. | If the Executive’s employment is terminated by the Company for any reason within twenty four (24) months of a Change in Control of the Company other than as a result of a termination for Cause, or a voluntary resignation by Executive without a Good Reason, then the Company shall pay Executive a one time severance payment in cash equal to the greater of (A) the amount equal to eighteen (18) months Base Salary, or (B) the amount equal to the Executive’s Base Salary for the remainder of the term as if this Agreement had not been terminated; provided that if employment terminates by reason of Executive’s death or disability, then Executive (or Executive’s estate, if applicable) shall receive a one-time payment equal to the amount of Base Salary owed for the remainder of the term as if this Agreement had not been terminated. If the Executive is paid under this Section 6(b), then the Executive shall not receive payments under Section 6(a). |
| c. | If Executive’s employment by the Company terminates for any reason, except for the Company’s termination of Executive’s employment for Cause or a voluntary resignation by Executive without a Good Reason, the Company shall offer to Executive the opportunity to participate at Company expense in all medical and dental plans provided by the Company to its executive officers to the extent Executive elects for the remainder of the term of this Agreement. To the extent that the Company cannot provide, for a legal reason or any other matter, Executive with the opportunity to participate in such medical and dental plans (at Company expense) for the remainder of the term of this Agreement, then in such event the Company shall pay to Executive in cash an amount equal to the fair market value of the benefits to be provided pursuant to this Section 6(c). |
| d. | The Company shall make all payments pursuant to the foregoing subsections (a) through (c) concurrently with the date of termination of Executive’s employment or consummation of a Change in Control of the Company, as applicable. Any such termination payments payable hereunder shall be considered as part-consideration for the non-compete covenant provided by Executive in Section 7 below. |
| e. | The Company shall have no liability under this Section 6 if Executive’s employment pursuant to this Agreement is terminated by the Company for Cause or by Executive without a Good Reason. |
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| f. | Gross-Up. |
| i. | If it shall be determined that any payment, distribution or benefit received or to be received by Executive from the Company (whether payable pursuant to the terms of this Agreement or any other plan, arrangements or agreement with the Company or an Affiliate (“Payments”)) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive shall be entitled to receive an additional payment (the “Excise Tax Gross-Up Payment”) in an amount such that the net amount retained by Executive, after the calculation and deduction of any Excise Tax on the Payments and any federal, state and local income taxes and Excise Tax on the Excise Tax Gross-Up Payment provided for in this Section 6(f), shall be equal to the Payments. In determining this amount, the amount of the Excise Tax Gross-Up Payment attributable to federal income taxes shall be reduced by the maximum reduction in federal income taxes that could be obtained by the deduction of the portion of the Excise Tax Gross-Up Payment attributable to state and local income taxes. Finally, the Excise Tax Gross-Up Payment shall be reduced by income or Excise Tax withholding payment made by the Company or any Affiliate to any federal, state or local taxing authority with respect to the Excise Tax Gross-Up Payment that was not deducted from compensation payable to Executive. |
| ii. | All determinations required to be made under this Section 6(f), including whether and when an Excise Tax Gross-Up Payment is required and the amount of such Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at such determination, except as specified in Section 6(f)(i) above, shall be made by the Company’s independent auditors (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and Executive. Such determination of tax liability made by the Accounting Firm shall be subject to review by Executive’s tax advisor and, if Executive’s tax advisor does not agree with such determination reached by the Accounting Firm, then the Accounting Firm and Executive’s tax advisor shall jointly designate a nationally recognized public accounting firm, which shall make such determination. All reasonable fees and expenses of the accountants and tax advisors retained by either Executive or the Company shall be borne by the Company. Any Excise Tax Gross-Up Payment, as determined pursuant to this Section 6(f), shall be paid by the Company to Executive within five days after the receipt of such final determination in writing. Any determination by a jointly designated public accounting firm shall be binding upon the Company and Executive. |
| iii. | As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination thereunder, it is possible that Excise Tax Gross-Up Payments will not have been made by the Company in an amount that should have been made consistent with the calculations required to be made hereunder (“Underpayment”). In the event that Executive thereafter is required to make a payment of any Excise Tax, any such Underpayment calculated in accordance with and in the same manner as the Excise Tax Gross-Up Payment in Section 6(f)(i) above shall be promptly paid by the Company to or for the benefit of Executive. In the event that the Excise Tax Gross-Up Payment exceeds the amount subsequently determined to be due, such excess shall be repaid by the Executive to the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) within one hundred eighty (180) days from the date that Executive receives written notice of the final determination of such excess payment. |
| 7. | Non-competition. Executive agrees that at all times while he is employed by the Company and for a period of twelve (12) months thereafter if Executive’s employment is terminated by Executive with Good Reason or by the Company without Cause (or if Executive’s employment is terminated under the provisions of Section 6(b) of this Agreement or by the Executive without Good Reason or by the Company for Cause, then Executive’s non-competition period shall be eighteen (18) months from the date of termination), he will not, as a principal, agent, employee, employer, consultant, stockholder, investor, director or co-partner of any person, firm, corporation or business entity other than the Company, or in any individual or representative capacity whatsoever, directly or indirectly, without the express prior written consent of the Company: |
| a. | engage or participate in any business whose products or services are directly competitive with that of the Company, and which conducts or solicits business, or transacts with suppliers or customers worldwide; |
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| b. | aid or counsel any other person, firm, corporation or business entity to do any of the above; |
| c. | become employed by a firm, corporation, partnership or joint venture which competes with the business of the Company worldwide; or |
| d. | approach, solicit business from, or otherwise do business or deal with any customer of the Company in connection with any product or service competitive to any provided by the Company. |
For purposes of the definition of stockholder or investor used in this Section 7, the Executive may hold a non-control position as stockholder or investor in the securities of publicly traded companies without the prior written consent of the Company.
| 8. | Indemnification. The Company shall indemnify Executive and hold him harmless from and against all claims, losses, damages, expense or liabilities (including expenses of defense and settlement) based upon or in any way arising from or connected with his employment by the Company, to the maximum extent permitted by law. To the fullest extent permitted by law, the Company shall advance to Executive all expenses necessary in connection with the defense of any action or claim which is brought if indemnification cannot be determined to be available prior to the conclusion of such action or the investigation of such claim. The Company shall investigate in good faith the availability and cost of directors’ and officers’ insurance and shall include Executive as an insured in any directors’ and officers’ insurance policy it maintains. The provisions of this Section 8 shall survive any termination or expiration of this Agreement. |
| 9. | Attorney Fees and Costs. In the event that any action or proceeding is brought to enforce the terms and provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorney fees and costs. |
| 10. | Notices. All notices and other communications provided to either party hereto under this Agreement shall be in writing and delivered by certified or registered mail, postage prepaid, or by national overnight delivery service (such as Federal Express), to such party at its/his address set forth below its/his signature hereto, or at such other address as may be designated by either party in conformity with the provisions of this Section 10, with any such notices being deemed given when actually received by the recipient. |
| 11. | Construction. In construing this Agreement, if any portion of this Agreement shall be found to be invalid or unenforceable, the remaining terms and provisions of this Agreement shall be given effect to the maximum extent permitted without considering the void, invalid or unenforceable provisions. In construing this Agreement, the singular shall include the plural, the masculine shall include the feminine and neuter genders as appropriate. Without limitation to the foregoing, nothing in this Agreement is intended to violate the Sarbanes-Oxley Act of 2002, and to the extent that any provision of this Agreement would constitute such a violation, such provision shall be modified to the extent required by such Act, or, to the extent that such provision cannot be so modified and is found to be invalid or unenforceable, the remaining terms and provisions shall be given effect to the maximum extent permitted without considering the void, invalid or unenforceable provision. |
| 12. | Headings. The section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement. |
| 13. | Governing Law. This Agreement, and any statements, conduct, claims, causes of action, liabilities or other matters relating to or arising out of or in connection with this Agreement, shall be governed by, and construed in accordance with, the laws of the State of Nevada, without regard to choice of law or conflict of law principles. The federal or state courts sitting in the State of Nevada, County of Clark, shall have exclusive jurisdiction to adjudicate any disputes arising out of or in connection with this Agreement and the parties hereby waive any objection based with respect thereto. Any rights to trial by jury with respect to any claim, action or proceeding, directly or indirectly, arising out of, or relating to, this Agreement are waived by the parties. |
| 14. | Entire Agreement. This Agreement constitutes the entire agreement and supersedes all other prior agreements and undertakings, both written and oral, among Executive and the Company, with respect to the subject matter hereof. |
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IN WITNESS WHEREOF, this Agreement shall be effective as of the date specified in the first paragraph of this Agreement.
| VenHub Global, Inc.: | ||
| Signed October 1, 2025 | /s/ Shahan Ohanessian | |
| Name: | Shahan Ohanessian | |
| Title: | Chief Executive Officer | |
| EXECUTIVE: | ||
| Signed October 1, 2025 | /s/ Matt Hidalgo | |
| Name: | Matt Hildago | |
| Title: | Chief Financial Officer | |
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Exhibit 14.1
VenHub Global, Inc.
Code of Business Conduct and Ethics
Introduction
VenHub Global, Inc. (the “Company”) is committed to conducting its business with integrity, transparency, and in full compliance with all applicable laws and regulations. This Code of Business Conduct and Ethics outlines the standards of ethical behavior expected of all the Company employees, officers, and directors. Adherence to this Code is essential to maintaining the trust and confidence of our stakeholders.
Failure to comply with this Code may result in significant harm to the Company and may lead to disciplinary action, up to and including termination of employment and/or legal action, depending on the nature and severity of the violation.
| I. | Reporting Violations: Employees have an affirmative duty to report any known, suspected, or potential violations of the Company’s standards of business conduct and ethics. Reports should be made to the employee’s supervisor, the Director of Human Resources, or through the alternative escalation points detailed in the Company’s Whistleblower Policy. Employees may report anonymously and without fear of retaliation, as provided by law. |
| II. | Standards of Business Conduct: The Company expects all employees to uphold the highest standards of ethical conduct. Employees must adhere to the following principles: |
| 1. | Compliance with Laws: All employees must comply with applicable laws, rules, and regulations. |
| 2. | Integrity and Honesty: Employees must perform their duties honestly and ethically. |
| 3. | Respect for Others: Employees must respect their colleagues, customers, and others with whom they interact. |
| III. | Examples of Prohibited Conduct |
The following are examples of conduct that violates the Company’s standards:
| 1. | Theft or Misappropriation: Unauthorized removal or possession of company or customer property. |
| 2. | Falsification of Records: Intentional falsification of timekeeping, financial, or other records. |
| 3. | Substance Abuse: Working under the influence of alcohol or illegal drugs, or possessing, distributing, or using such substances in the workplace. |
| 4. | Violence and Harassment: Engaging in or threatening violence or harassment, including sexual harassment. |
| 5. | Safety Violations: Failing to comply with safety or health regulations. |
| 6. | Confidentiality Breaches: Unauthorized disclosure of business secrets or confidential information. |
| 7. | Misuse of Company Assets: Using company equipment or resources for personal use without authorization. |
| 8. | Conflict of Interest: Engaging in activities that conflict with the interests of the Company. |
| IV. | Maintaining a Safe and Productive Work Environment: The Company is committed to maintaining a workplace that is safe, inclusive, and free from harassment or discrimination. All employees are responsible for fostering a respectful and productive environment. This includes: |
| 1. | Preventing Harassment and Discrimination: All forms of harassment and discrimination based on race, gender, age, sexual orientation, religion, disability, or any other protected characteristic are strictly prohibited. |
| 2. | Violence Prevention: The Company will not tolerate violence or threats of violence in the workplace. Employees must report any concerns about violence or threats to their manager or Human Resources immediately. |
| 3. | Health and Safety: Employees must adhere to all safety protocols and report any unsafe conditions. |
| V. | Confidential Information and Intellectual Property: During employment, employees may have access to confidential and proprietary information, including but not limited to customer data, business strategies, financial information, and trade secrets. Employees must: |
| 1. | Protect Confidential Information: Use confidential information only for its intended purpose and do not disclose it to unauthorized persons. |
| 2. | Return Company Property: Upon termination, all company property and confidential information must be returned. |
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| VI. | Avoiding Conflicts of Interest: Employees must avoid any situation where personal interests could conflict with the interests of the Company. This includes: |
| 1. | Outside Employment: Employees should not engage in outside employment or activities that could interfere with their duties or compete with the Company. |
| 2. | Gifts and Entertainment: Employees must not accept gifts, favors, or entertainment exceeding nominal value ($1,000 or local equivalent) that could influence, or appear to influence, their business decisions. Any gifts above this threshold must be reported to Compliance for review. |
| VII. | Compliance with Antitrust Laws: The Company is committed to competing fairly and complying with all applicable antitrust and competition laws. Employees must not: |
| 1. | Enter into Unlawful Agreements: Avoid agreements with competitors that could restrain trade or limit competition, such as price-fixing or market allocation. |
| 2. | Misuse Market Power: Do not use the Company’s market position to unfairly exclude competitors or control prices. |
| VIII. | Prohibition of Improper Payments: The Company strictly prohibits all forms of bribery and corruption, whether direct or indirect, in any jurisdiction. Employees must not offer, promise, give, solicit, or receive any form of bribe, kickback, facilitation payment, or other improper benefit, including to or from public officials, private sector representatives, or any other parties, to gain an improper advantage or influence decisions. |
| IX. | Political Contributions and Activities: The Company does not make financial or in-kind contributions to political parties or candidates. Employees may participate in political activities in their personal capacity but must not use company resources or imply the Company’s endorsement. |
| X. | Enforcement and Accountability: All employees, officers, and directors are responsible for adhering to this Code. The Company will take prompt disciplinary action against anyone who violates these standards. This may include termination of employment and legal action if warranted. |
| XI. | Seeking Guidance and Reporting Concerns: Employees who have questions about the Code or need to report a potential violation should contact their supervisor, Human Resources, or use the anonymous reporting mechanisms outlined in the Whistleblower Policy. |
| XII. | Diversity and Inclusion: The Company values diversity and is committed to providing an inclusive environment where all individuals are treated with respect and dignity. Employees are expected to: |
| 1. | Foster Inclusion: Promote a workplace that is inclusive of diverse backgrounds, perspectives, and experiences. |
| 2. | Prevent Discrimination: Actively prevent discrimination or biased behavior against any employee or candidate based on race, color, religion, gender, sexual orientation, gender identity or expression, national origin, age, disability, or any other protected characteristic. |
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| XIII. | Data Protection and Privacy: The Company is committed to protecting the privacy of employees, customers, and partners. Employees must: |
| 1. | Safeguard Personal Data: Comply with all applicable privacy laws and company policies regarding the collection, use, and protection of personal data. |
| 2. | Report Breaches: Immediately report any suspected data breaches or security incidents to the IT department and Data Protection Officer within 24 hours of discovery, in accordance with the Company’s Incident Response Plan. |
| XIV. | Environmental Responsibility: The Company recognizes its responsibility to protect the environment. Employees should: |
| 1. | Sustainability Practices: Strive to minimize waste, reduce energy consumption, and support sustainable practices in the workplace. |
| 2. | Compliance with Environmental Laws: Ensure all business activities comply with environmental laws and regulations. |
| XV. | Use of Social Media: The use of social media by employees should reflect the Company’s values and policies. Employees must: |
| 1. | Responsible Use: Ensure that their social media activity does not disclose confidential information, harm the Company’s reputation, or violate securities laws regarding selective disclosure of material non-public information. All employees must comply with the Company’s Social Media Policy. |
| 2. | Personal Views: Clarify that any opinions expressed are personal and not representative of the Company, especially when discussing work-related topics. |
| XVI. | Training and Awareness: To reinforce the importance of this Code and ensure understanding: |
| 1. | Regular Training: The Company will provide regular training on the Code of Business Conduct and Ethics, ensuring all employees understand their responsibilities. |
| 2. | Certification: Employees will be required to acknowledge their understanding and commitment to the Code annually. |
| XVII. | Audit and Monitoring: To ensure compliance with the Code: |
| 1. | Internal Audits: The Company will conduct regular audits to monitor compliance with the Code and identify areas for improvement. |
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| 2. | Monitoring Mechanisms: The company will implement monitoring mechanisms to detect and prevent unethical or illegal activities. |
| XVIII. | Whistleblower Protections and Procedures: To protect employees who report concerns: |
| 1. | Anonymous Reporting: Ensure there is a secure, confidential, and anonymous way for employees to report violations or concerns. |
| 2. | Non-Retaliation Policy: Reinforce a strict non-retaliation policy to protect those who report violations in good faith from any form of retaliation or discrimination. |
| XIX. | Board of Directors’ Role and Oversight: To ensure accountability at the highest level: |
| 1. | Oversight Responsibilities: The Board of Directors, through its designated committees, shall oversee the implementation and effectiveness of this Code and ensure that any significant issues are addressed promptly. |
| 2. | Annual Review: The Code will be reviewed annually by the Board to ensure it remains relevant and effective. |
| XX. | Acknowledgment and Certification: To ensure all employees are aware of the Code: |
| 1. | Employee Certification: All employees must certify that they have read, understood, and will comply with the Code upon hiring and on an annual basis. |
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Exhibit 16.1
October 3, 2025
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549-7561
Commissioners:
We have read the changes in independent public accounting firm disclosure appearing in the Registration Statement on Form S-1/A of VenHub Global, Inc. dated September 30, 2025. We agree with the statements contained therein concerning our firm. We are not in a position to agree or disagree with other statements contained therein.
Very truly yours,
/s/ Rosenberg Rich Baker Berman, P.A.
Somerset, New Jersey
Exhibit 21.1
VenHub Global, Inc. Subsidiaries
| Subsidiary Name | State of Incorporation | |
| VenHub, LLC | Delaware | |
| VenHub Services, LLC | Delaware | |
| VenHub IP, LLC | Delaware | |
| VenHub Stores, LLC | Nevada |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation in this Registration Statement of our report dated March 28, 2025, except for as described in Note 1 to the consolidated financial statements, to which the date is September 4, 2025 (which includes an explanatory paragraph relating to VenHub Global, Inc.’s ability to continue as a going concern), relating to the December 31, 2024 financial statements of VenHub Global, Inc.
We also consent to the reference to us under the heading “Experts” in such Registration Statement.
Somerset, New Jersey
October 3, 2025
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation in this Registration Statement of our report dated March 28, 2025, except for as described in Note 1 to the consolidated financial statements, to which the date is September 4, 2025 (which includes an explanatory paragraph relating to VenHub Global, Inc.’s ability to continue as a going concern), relating to the December 31, 2024 financial statements of VenHub Global, Inc.
We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ Rosenberg Rich Baker Berman, P.A.
Somerset, New Jersey
September 30, 2025
Exhibit 99.1
CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR
(Pursuant to Rule 438 under the Securities Act of 1933)
I, Chantal Wessels, hereby consent to being named in the Registration Statement on Form S-1 of VenHub Global, Inc., a Nevada corporation (the “Company”), and any amendments or supplements thereto, as a person who has been nominated to become a director of the Company.
Date:10/2/2025
| /s/ Chantal Wessels |
Chantal Wessels
Exhibit 99.2
CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR
(Pursuant to Rule 438 under the Securities Act of 1933)
I, Nader Kabbani, hereby consent to being named in the Registration Statement on Form S-1 of VenHub Global, Inc., a Nevada corporation (the “Company”), and any amendments or supplements thereto, as a person who has been nominated to become a director of the Company.
Date: 10/2/2025
| /s/ Nader Kabbini |
Nader Kabbani
Exhibit 99.3
CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR
(Pursuant to Rule 438 under the Securities Act of 1933)
I, Jeffrey Rubin, hereby consent to being named in the Registration Statement on Form S-1 of VenHub Global, Inc., a Nevada corporation (the “Company”), and any amendments or supplements thereto, as a person who has been nominated to become a director of the Company.
Date: 10/2/2025
| /s/ Jeffrey Rubin |
Jeffrey Rubin