Veri MedTech Holdings, Inc S-1/A, filed Sep 14, 2026
Veri MedTech Holdings, Inc. (VRHI)
Registration No. 333-291560
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Amendment No. 6
to
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
________________________________
VERI MEDTECH HOLDINGS, INC. |
(Exact name of registrant as specified in its charter) |
________________________________
Delaware |
| 7374 |
| 33-2891877 |
(State or other jurisdiction of incorporation or organization) |
| (Primary Standard Industrial Classification Code Number) |
| (I.R.S. Employer Identification Number) |
________________________________
1660 International Dr., Ste. 600
Mclean, Virginia 22102
Tel.: 1-202-410-7411
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
________________________________
Corporate Creations Network
1521 Concord Pike Suite 201
Wilmington, DE 19803
(561) 694-8107
(Name, address, including zip code, and telephone number, including area code, of agent for service)
________________________________
Copies to:
Clifford J. Hunt, Esquire Law Office of Clifford J. Hunt, P.A. 8200 Seminole Boulevard Seminole, Florida 33772 (727) 471-0444 | Joseph M. Lucosky, Esquire Soyoung Lee, Esquire Lucosky Brookman LLP 101 Wood Avenue South Woodbridge, NJ 08830 (732) 395-4400 |
________________________________
Approximate date of commencement of proposed sale of the securities 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, 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, a 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 Securities Exchange Act of 1934.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | 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. ☒
The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DRAFT DATED SEPTEMBER 14, 2026
PRELIMINARY PROSPECTUS
3,750,000 Shares of Common Stock
Veri Medtech Holdings, Inc.
This is a firm commitment public offering (the “Offering”) of shares of the Common Stock, par value $0.0001 per share (“Common Stock”) of Veri Medtech Holdings, Inc. (“VERI”), a Delaware corporation. There is a limited public trading market for our Common Stock. We are offering up to 3,750,000 shares of our Common Stock. The assumed initial public offering price is $4 per share.
Our Common Stock is quoted on the OTCID Market (“OTCID”) under the ticker symbol “VRHI.” As of September 11, 2026, the last reported price of our Common Stock was $5.00 per share at market close. Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. We have applied to list our Common Stock on The NASDAQ Capital Market under the symbol “VRHI”. If shares of our Common Stock are not approved for listing on the NASDAQ Capital Market, we will not consummate this offering. However, if the NASDAQ Capital Market application is approved, the Company will also explore the opportunity to dual list on NASDAQ Texas in support of the Company’s operating plans. No assurance can be given that our application to NASDAQ will be approved.
We are a “smaller reporting company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and have elected to comply with certain reduced public company reporting requirements. See “Prospectus Summary - Smaller Reporting Company.” The Company has not been a shell company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, at any time since its formation. The Company has maintained active business operations throughout its existence.
We are an “emerging growth company” under the federal securities laws and may elect to comply with certain reduced public company reporting requirements for future filings. See “Prospectus Summary - Emerging Growth Company.”
Following the completion of the Offering, Company executives will hold more than 50% of the total voting power of the Company and therefore, the Company will be deemed a “controlled company” under applicable NASDAQ rules. However, the Company does not intend to rely on the corporate governance exemptions typically afforded to “controlled companies” following the Offering under applicable SEC and NASDAQ rules, including exemptions with respect to a majority of independent directors on the board, an independent compensation committee and the nomination of directors by independent directors or by a committee consisting of independent directors. Instead, the Company intends to voluntarily comply fully with these corporate governance requirements as prescribed by NASDAQ rules.
We have issued Series A Preferred Stock representing 80% of the voting power of the Company. The Series A Preferred Stock will represent 80% of the votes entitled to be voted regardless of the
number of shares of Series A Preferred Stock outstanding and as long as at least one share of Series A Preferred stock is outstanding. Our President and Chief Executive Officer together currently hold all of the 100 Shares of Series A Preferred Stock issued and outstanding. Subject to normal transfer restrictions regarding unregistered securities, there are no other transfer restrictions or limitations on the Series A Preferred Stock and there are no restrictions on the transferability of the voting rights of any Share of Series A Preferred Stock. We are a holding company and conduct all our operations through our subsidiaries. The Common Stock offered in this offering are shares of the holding company. Investors of our Common Stock should be aware that the Common Stock do not represent or constitute equity interests in our subsidiaries.
On September 2, 2026, we effected a 1-for-2.5 reverse stock split pursuant to which every 2.5 shares of our issued and outstanding common stock were reclassified as one share of common stock (the “Reverse Stock Split”). Unless otherwise indicated, all share and per share information in this prospectus is adjusted to reflect the effect of the Reverse Stock Split.
IN REVIEWING THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED IN THE SECTION TITLED “RISK FACTORS” BEGINNING ON PAGE 12 OF THIS PROSPECTUS. INVESTORS SHOULD ONLY CONSIDER AN INVESTMENT IN THESE SECURITIES IF THEY CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
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.
ii
|
| Per Share |
|
| Total |
| ||
Public offering price |
| $ |
|
|
| $ |
|
|
Underwriting discounts (1) |
| $ |
|
|
| $ |
|
|
Proceeds to us before offering expenses (2) |
| $ |
|
|
| $ |
|
|
(1) | In addition to the 7% underwriting discounts and commissions, we have agreed to reimburse the underwriter for certain expenses, including a corporate finance fee equal to 2% of the gross proceeds we receive in this offering. See “Underwriting” on page 79 of this prospectus for a description of these arrangements. |
(2) | The Underwriter’s Warrants will represent the right to purchase 5% of the aggregate number of shares of Common Stock sold in this offering, or 187,500 shares of Common stock excluding the overallotment option, at an exercise price equal to 120% of the offering price per share which is equivalent to $4.80 exercise price. Upon closing, we have also agreed to reimburse up to $150,000 accountable fee relating to the underwriter’s expenses relating to the offering, including for road show, diligence, and legal expenses. |
We have granted the underwriter a 45-day option to purchase up to 562,500 additional shares of our Common Stock at the initial public offering price less applicable underwriting discounts. The amount of offering proceeds to us presented in the table above does not give effect to any exercise of this over-allotment option. See “Underwriting” on page 80 of this prospectus for a description of these arrangements.
The underwriter expects to deliver our shares to purchasers in this offering on or about ___ , 2026, subject to satisfaction of customary closing conditions.
Lead Bookrunning Manager
N E T W O R K 1 F I N A N C I A L
S E C U R I T I E S, I N C
The date of this prospectus is ___, 2026
iii
TABLE OF CONTENTS
|
| Page |
|
| 2 |
| |
| 3 |
| |
| 10 |
| |
| 40 |
| |
| 41 |
| |
| 42 |
| |
| 43 |
| |
| 44 |
| |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
| 45 |
|
| 56 |
| |
| 65 |
| |
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
| 68 |
|
| 70 |
| |
| 77 |
| |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
| 79 |
|
| 81 |
| |
| 82 |
| |
| 87 |
| |
| 90 |
| |
| 90 |
| |
| 90 |
| |
| F-1 |
|
iv
You should rely only on information contained in this prospectus. We have not, and the underwriter has not, authorized anyone to provide you with additional information or information different from that contained in this prospectus. Neither the delivery of this prospectus nor the sale of our securities means that the information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under which the offer or solicitation is unlawful or in any state or other jurisdiction where the offer is not permitted.
The information in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
No person is authorized in connection with this prospectus to give any information or to make any representations about us, the securities offered hereby or any matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us.
Neither we nor the underwriter have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourself about, and to observe any restrictions relating to, this offering and the distribution of this prospectus.
All dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriter and with respect to their unsold allotments or subscriptions.
1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus contain “forward-looking statements.” Forward-looking statements are made based on our management’s expectations and beliefs concerning future events impacting our company and are subject to uncertainties and factors relating to our operations and economic environment, all of which are difficult to predict and many of which are beyond our control. You can identify these statements from our use of the words “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target,” “plan,” “may” and similar expressions. These forward-looking statements may include, among other things:
| · | statements relating to projected growth and management’s long-term performance goals; |
| · | statements relating to the anticipated effects on results of operations or our financial condition from expected developments or events; |
| · | statements relating to our business and growth strategies; and |
| · | any other statements which are not historical facts. |
Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from our expectations of future results, performance or achievements expressed or implied by these forward-looking statements. These forward-looking statements may not be realized due to a variety of factors, including without limitation:
| · | our current and anticipated cash needs and our need for additional financing; |
| · | federal, state and foreign regulatory requirements; |
| · | our ability to develop and commercialize our products and services; |
| · | our ability to enter into agreements to implement our business strategy; |
| · | our ability to maintain exclusive rights with respect to our licensed technology; |
| · | our ability to protect our intellectual property; |
| · | our ability to obtain and maintain an adequate level of insurance; |
| · | the effects of competition in our market areas; |
| · | our reliance on certain key personnel; |
| · | further sales or other dilution of our equity, which may adversely affect the market price of our Common Stock; and |
| · | other factors and risks described under “Risk Factors” beginning on page 11 of this prospectus. |
You should not place undue reliance on any forward-looking statement. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events.
Certain Terms Used in this Prospectus
All references in this prospectus to:
| · | “Veri Medtech Holdings, Inc.,” “VERI,” “Veri Medtech Holdings,” the “Company,” “us,” “we,” “our,” or “ours” or like terms when used in the present tense or prospectively refer to Veri Medtech Holdings, Inc. and its subsidiaries, including our wholly-owned subsidiaries, Veriheal Inc., a Wyoming corporation, DosePop Inc. (f/k/a “Verinew”), a Delaware corporation and Alternative Medical Clinic LLC, a Delaware limited liability company. Veri Medtech Holdings, Inc. is the issuer in this offering. |
OTHER INFORMATION
Our website address is www.VeriMedtech.com. We expect to make our periodic reports and other information filed with or furnished to the Securities Exchange Commission (“SEC”), available free of charge through a link on our website as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into, and does not constitute a part of, this prospectus.
2
3
We provide services through our platform in the following states: | ||||
|
|
|
|
|
| · | Alaska | · | Massachusetts |
| · | Arizona | · | Michigan |
| · | Arkansas | · | Minnesota |
| · | California | · | Mississippi |
| · | Colorado | · | Missouri |
| · | Connecticut | · | Montana |
| · | Delaware | · | Nevada |
| · | District of Columbia | · | New Jersey |
| · | Florida | · | New York |
| · | Georgia | · | North Carolina |
| · | Hawaii | · | North Dakota |
| · | Illinois | · | Ohio |
| · | Iowa | · | Oklahoma |
| · | Kansas | · | Pennsylvania |
| · | Kentucky | · | Texas |
| · | Louisiana | · | Vermont |
| · | Maine | · | Virginia |
| · | Maryland | · | Washington |
|
|
| · | West Virginia |
|
|
|
|
|
Our websites are located at www.veriheal.com, www.Dosepop.com and VeriMedtech.com. Information on our website is not part of this prospectus or the offering.
Our principal executive offices are located at 1660 International Dr., Suite 600, McLean, VA 22102, and our telephone number is 1-202-410-7411.
We also operate at the following locations: | ||||
|
|
|
|
|
| · | 1700 East 17th Avenue, Denver, CO, 80218 | ||
| · | 3500 E Fletcher Ave., suite 509, Tampa, FL 33613 | ||
|
|
|
|
|
We recently introduced a personalized consultation service on our platform that provides 15 and 25 minute one-on-one online sessions with patients and physicians or certified experts. These consults meet the desires of patients seeking information and more education about how they can best incorporate medical cannabis in their lives to an optimal benefit. The consultations are often centered around terpene and cannabinoid products. Additionally, like a nutritionist or a dietician, the Company’s coaches provide a personalized action plan for patients and answer any queries. The consultations are priced according to the time spent with the specialist and can be booked at any point in time as they are not tied to any medical cannabis certification.
Revenue
We generate revenue primarily from our medical marijuana card services and charge a fee ranging from approximately $100 to $200 for each card and annual renewals. We have generated revenue of approximately $11 million and $17 million from our medical marijuana cards services during the years ended December 31, 2025, and 2024, respectively. We reported a net loss of approximately $2,320,000 and $409,000 for the years ended December 31, 2025 and 2024, respectively. We have generated revenue of approximately $2,043,000 and $2,844,000 from our medical marijuana cards services during the three months ended June 30, 2026 and 2025, respectively, and approximately $4,480,000 and $6,115,000 from our operations during the six months ended June 30, 2026 and 2025, respectively. We reported a net loss of approximately $296,000 and $669,000 for the three months ended June 30, 2026 and 2025, respectively, and approximately $496,000 and $743,000 for the six months ended June 30, 2026 and 2025, respectively.
Marketing
We use a combination of radio and digital advertising and our websites to generate customer inquiries. We acquired MarijuanaDoctors.com for $3,000,000 in 2022, and the website now serves as a patient generation source for our customers. We also use social media such as Instagram, Facebook, TikTok, and Pinterest to build our brand and grow our patient base. | ||||
4
Target Markets
Our core target demographic is made up of middle-class Americans that earn on average $40,000 annually in household income and are over 18 years old. Some states restrict medical cannabis use to 21 years or older only. As per a recent study, a typical medical cannabis patient is between the age of 24 - 42 years old.
Employees
Each of our officers provide full-time employment hours. As of the date of this prospectus, there were 25 full-time employees that serve in the following departments: | ||||
|
|
|
|
|
| · | Management | · | Information Technology |
| · | Finance | · | Marketing |
| · | Sales | · | Human Resources |
|
|
|
|
|
We also use the services of additional advisors and consultants on an as-needed basis to perform outsourced tasks. None of our employees are represented by a union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relationship with our employees to be good.
Raw Materials
We do not use raw materials in our business.
Research and Development
We do not use research and development in our business. The main development is continually adding functionality to our platform.
Intellectual Property
We hold the following trademarks and tradenames: Veriheal, DosePop and Verinew. We also protect our intellectual property through, among other things, a combination of trade secrets, know-how, trademarks, and confidentiality agreements.
Insurance
We have liability insurance of $3 million for liabilities arising from our operations. There can be no assurance that all potential liabilities will be covered by insurance or that the insurance coverage will be adequate.
Properties
As of the date of this prospectus, we occupy the following properties:
| ||||
| · | 1660 International Dr., Suite 600, McLean, VA 22102 | Lease, 300sqft, Annual Rent of approximately $24,000, | ||
| · | 1700 East 17th Avenue, Denver, CO, 80218| Lease, 3000sqft, Annual Rent of $180,000, | ||
| · | 3500 E Fletcher Ave., Suite 509, Tampa, FL 33613, Annual Rent of approximately $22,000. | ||
|
|
|
|
|
We believe this space is sufficient to meet our needs. We do not anticipate any significant difficulties in obtaining any additional space if needed.
Environmental Compliance
Compliance with environmental laws has not had, nor do we expect such compliance will have, any material adverse effect upon our capital expenditures, net income, or competitive position. We believe that we are not subject to any material costs for compliance with any environmental laws. | ||||
5
Dependence on a Few Customers
We are not dependent on one or a few customers. We do not expect to be so in the future.
Seasonality
Our business, as well as the industry in which we operate, is not seasonal.
Emerging Growth Company
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For as long as we are an emerging growth company, unlike public companies that are not emerging growth companies under the JOBS Act, we will not be required to:
| ||
| · | provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002; |
|
|
|
| · | provide more than two years of audited financial statements and related management’s discussion and analysis of financial condition and results of operations; |
|
|
|
| · | comply with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; |
|
|
|
| · | provide certain disclosure regarding executive compensation required of larger public companies or hold stockholder advisory votes on the executive compensation required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”); or |
|
|
|
| · | obtain stockholder approval of any golden parachute payments not previously approved. |
|
|
|
We will cease to be an emerging growth company upon the earliest of: | ||
|
|
|
| · | the last day of the fiscal year in which we have $1.235 billion or more in annual revenues as referenced in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”); |
|
|
|
| · | the date on which we become a “large accelerated filer” (the fiscal year-end on which the total market value of our common equity securities held by non-affiliates is $700 million or more as of our most recently completed second fiscal quarter); |
|
|
|
| · | the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or |
|
|
|
| · | the last day of the fiscal year following the fifth anniversary of our initial public offering. |
|
|
|
In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. However, we have irrevocably opted out of the extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for other public companies. | ||
6
Smaller Reporting Company
To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (i) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (ii) scaled executive compensation disclosures; and (iii) the requirement to provide only two years of audited financial statements, instead of three years.
Controlled Company Status
We have issued Series A Preferred Stock representing 80% of the voting power of the Company. The Series A Preferred Stock will represent 80% of the votes entitled to be voted regardless of the number of shares of Series A Preferred Stock outstanding and as long as at least one share of Series A Preferred stock is outstanding. Our President and Chief Executive Officer together currently hold all of the 100 Shares of Series A Preferred Stock issued and outstanding. Subject to normal transfer restrictions regarding unregistered securities, there are no other transfer restrictions or limitations on the Series A Preferred Stock and there are no restrictions on the transferability of the voting rights of any Share of Series A Preferred Stock. Under NASDAQ’s Rules, a controlled company is a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company. We are a controlled company because our executive officers hold 6,114,672 shares of Common Stock and 100 shares of Series A Preferred Stock with 80% of the voting power in the Company which is equivalent to 32,000,016 votes under the present number of issued and outstanding shares of Common Stock (8,000,004 shares) regardless of how many shares of Series A Preferred Stock are issued and outstanding and as long as at least one share of Series A Preferred Stock is issued and outstanding. Accordingly, the total number of votes held by our executive officers is 38,114,688.
Going Concern
The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has shareholders’ deficit, accumulated deficit and working capital deficit, of approximately $2,346,000, $4,842,000 and $2,045,000 respectively, at December 31, 2025 and has a net loss in 2025 of approximately $2,320,000. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s Plan in regard to these matters is also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company reported a net loss of approximately $496,000 for the six months ended June 30, 2026. Notwithstanding this result, the Company continues to generate revenue and maintain active operations across its core business segment. Based on current forecasts and available cash as of June 30, 2026, the Company may require additional capital to fully support its planned growth initiatives and capital expenditures over the next twelve months.
Reverse Split
On September 2, 2026, we effected a 1-for-2.5 reverse stock split pursuant to which every 2.5 shares of our issued and outstanding common stock were reclassified as one share of common stock (the “Reverse Stock Split”). Unless otherwise indicated, all share and per share information in this prospectus is adjusted to reflect the effect of the Reverse Stock Split.
Corporate Information
Our corporate headquarters are located at 1660 International Dr., Ste. 600, McLean, Virginia 22102. Our telephone number is 1-202-410-7411. We maintain certain information on our website at www.VeriMedtech.com. The information on our website is not (and should not be considered) part of this prospectus and is not incorporated into this prospectus by reference.
Summary of Risk Factors
The summary below provides an overview of many of the risks we face, and a more detailed discussion of risks is set forth below in the section entitled “Risk Factors”. Consistent with the foregoing, the risks we face include, but are not limited to, the following: | ||
|
|
|
| · | Our limited operating history makes it difficult to evaluate our current business and future prospects, and our recent success may not be indicative of our future results of operations. |
|
|
|
| · | Our business and operations have experienced periods of rapid growth, and if we do not appropriately manage future growth, if any, or are unable to improve our systems and processes, our business, financial condition and results of operations will be adversely affected. |
|
|
|
| · | If we are unable to attract new clients or continue to broaden our existing clients’ use of our solutions, our business, financial condition and results of operations could be materially and adversely affected. |
7
|
|
|
| · | Growth of our business will depend on a strong brand and any failure to maintain, protect and enhance our brand would hurt our ability to retain or expand our base of clients. |
|
|
|
| · | We may not accurately predict the long-term rate of client subscription renewals or adoption of our solutions, or any resulting impact on our revenues or results of operations. |
|
|
|
| · | We leverage third-party software, content and services for use with our solutions. Performance issues, errors and defects, or failure to successfully integrate or license necessary third-party software, content or services, could cause delays, errors or failures of our solutions, increases in our expenses and reductions in our sales, which could materially and adversely affect our business, financial condition and results of operations. |
|
|
|
| · | If we are unable to effectively integrate our solutions with other systems used by our clients, or if there are performance issues with such third-party systems, our solutions will not operate effectively, and our business, financial condition and results of operations could be materially and adversely affected. |
|
|
|
| · | We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations. |
|
|
|
| · | We derive all of our revenues from clients in the healthcare technology, telemedicine and alternative medicine industry, and any downturn, consolidation or decrease in healthcare spend in these industries could materially and adversely affect our business, financial condition and results of operations. |
|
|
|
| · | A breach or other compromise of our security measures or those of third parties we rely on could result in unauthorized access to personal information about our clients’ customers and other individuals and other data or disruptions to our systems or operations, which could materially and adversely impact our reputation, business, financial condition and results of operations. |
|
|
|
| · | Our failure to comply with laws and regulations applicable to us as a telemedicine, alternative medicine healthcare technology service provider could materially and adversely affect our business, financial condition and results of operations, increase costs and impose constraints on the way we conduct our business. |
|
|
|
| · | Privacy and data security concerns, data collection and transfer restrictions, contractual obligations and U.S. and foreign laws, regulations and industry standards related to data privacy, security and protection could limit the use and adoption of our healthcare technology platforms and materially and adversely affect our business, financial condition and results of operations. |
|
|
|
| · | Our quarterly and annual results of operations are likely to fluctuate in future periods. |
|
|
|
| · | Our sales cycle can be unpredictable, time-consuming and costly, which could materially and adversely affect our business, financial condition and results of operations. |
|
|
|
| · | Because competition for key employees is intense, we may not be able to attract and retain the highly skilled employees we need to support our operations and future growth. |
|
|
|
| · | Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand. |
|
|
|
| · | Claims by others that we infringe, misappropriate or otherwise violate their proprietary technology or other rights could have a material and adverse effect on our business, financial condition and results of operations. |
8
Summary of the Offering | ||
|
|
|
Total Common Stock offered by the Company |
| 3,750,000 shares of Common Stock
|
Shares of Common Stock outstanding immediately before this offering: |
| 8,000,004 |
|
|
|
Shares of Common Stock outstanding immediately after this offering (1) |
| 11,750,004 |
|
|
|
Over-allotment Option |
| We have granted the representative of the underwriters a 45-day option to purchase up to an additional 562,500 shares of our common stock at the public offering price to cover over-allotments, if any. |
|
|
|
Use of proceeds |
| We expect to receive approximately $15,000,000 of gross proceeds, based upon the assumed offering price of $4.00 per share, and after deducting the underwriting discount of $1,050,000, the non-accountable expense allowance of $300,000, and $1,701,529 other offering expenses, we expect to receive approximately $11,948,000. If the underwriters fully exercise their right to purchase additional shares of Common Stock, we estimate that we will receive gross proceeds of $17,250,000 from the sale of the Common Stock and net proceeds of approximately $13,996,000 after deducting $1,207,500 for underwriting discounts and commissions, $345,000 for non-accountable expense allowance, and $1,701,529 other offering expenses. The Company will use the proceeds of this offering to fund organic and acquisitive growth and other uses as described in the “Use of Proceeds” section.
Please read “Use of Proceeds.”
|
Listing and trading symbol |
| Our stock is presently listed on the OTCID Market under the symbol “VRHI” and there is a limited public market for our stock. We have applied for a listing on the NASDAQ Capital Market under the symbol “VRHI”.
|
Lock-Up |
| We, our directors, executive officers, and holders of more than 5% of the outstanding shares of our Common Stock have agreed not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any of our securities for a period of 180 days after the date of this prospectus. See “Underwriting”. |
Underwriter’s Warrants |
| We have agreed to issue to the representative of the underwriters or its designees at the closing of this offering, warrants to purchase the number of shares of our common stock equal to 5% of the aggregate number of shares sold in this offering (the “Representative’s Warrants”). The Representative’s Warrants will be exercisable at any time and from time to time, in whole or in part, during the period commencing upon issuance and ending five years after the commencement of sales in this offering. The exercise price of the Representative’s Warrants will equal 120% of the initial public offering price per share or $4.80, subject to adjustments. See “Underwriting”.
|
Risk factors |
| You should carefully read and consider the information set forth under the heading “Risk Factors” and all other information set forth in this prospectus before deciding to invest in our Common Stock. |
|
|
|
(1) The number of shares of Common Stock that will be outstanding after this offering set forth above (11,750,004 shares) is based upon 8,000,004 shares of Common Stock outstanding as of September 14, 2026, but does not include the exercise by the underwriter of its option to purchase additional Shares. | ||
9
Investing in our securities involves a great deal of risk. Careful consideration should be made of the following factors as well as other information included in this prospectus before deciding to purchase our securities. There are many risks that affect our business and results of operations, some of which are beyond our control. Our business, financial condition or operating results could be materially harmed by any of these risks. This could cause the trading price of our securities to decline, and you may lose all or part of your investment. Additional risks that we do not yet know of or that we currently think are immaterial may also affect our business and results of operations.
Risks Related to our Business and Industry
The Company has limited operating history, limited working capital, and is in the initial commercialization stage.
We began offering services in 2017 through our subsidiary Veriheal Inc. Since that time, our business has expanded. The Company’s business is subject to all of the risks inherent in the establishment of a new business enterprise, including, but not limited to, limited capital, need to expand its workforce, unanticipated costs, uncertain markets, adverse changes in technology. If the Company’s revenues grow more slowly than it anticipates or if its operating expenses exceed expectations, the Company’s financial performance will be adversely affected. The Company’s prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of development. The Company cannot assure investors that it will be successful in addressing the risks it may encounter, and its failure to do so could have a material adverse effect on its business, prospects, financial condition and results of operations. Failure of the Company to meet its objectives would have a material adverse effect on the Company and its operations. In particular, insufficient market demand would have a material adverse effect on the Company’s business, financial condition and results of operations.
Our limited operating history and evolving business make it difficult to evaluate our current business and future prospects and plan for our future growth. We have encountered and will continue to encounter significant risks and uncertainties frequently experienced by new and growing companies in rapidly changing and heavily regulated industries, such as attracting new customers and healthcare providers (sometimes referred to herein as “providers”) to our platform, retaining our customers, competition from other companies, whether online healthcare providers or traditional healthcare providers, hiring, integrating, training and retaining skilled personnel, verifying the identity of customers and credentials of providers serving our customers, unforeseen expenses, challenges in forecasting accuracy, and new or adverse regulatory developments affecting the use of healthcare technology, or other aspects of the healthcare industry. Additional risks include our ability to effectively manage growth and process, store, protect, and use personal data in compliance with governmental regulation, contractual obligations, and other legal obligations related to privacy and security. If our assumptions regarding these and other similar risks and uncertainties that relate to our business, which we use to plan our business, are incorrect or change as we gain more experience operating our platform or expand into the treatment of new conditions, or if we do not address these challenges successfully, our operating and financial results could differ materially from our expectations and our business could suffer. Similar risks apply to our subsidiary cloud-based software as a service business that is exposed to many of the risks typically experienced by a new and growing company including ability to attract new customers, entrance of competitors, and other risk factors.
The healthcare technology market is immature and volatile, and if it does not develop as we hope it will, the growth of our business will be harmed.
With respect to our healthcare technology services, the healthcare technology market is relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand, consumer acceptance and market adoption. Our success will depend to a substantial extent on the willingness of our customers to use, and to increase the frequency and extent of their utilization of, our healthcare technology platform, as well as on our ability to continue to grow our existing business. Negative publicity concerning our platform or the healthcare technology market as a whole, could limit market acceptance of our product. If our customers do not perceive the benefits of our healthcare technology product and services, or if our product does not drive customer retention, then our market may not develop, or it may develop more slowly than we expect. Similarly, individual and healthcare industry concerns, negative publicity regarding patient confidentiality and privacy in the context of healthcare technology could limit market acceptance of our healthcare services. If any of these events occurs, it could have a material adverse effect on our business, financial condition, and results of operations.
10
If we are unable to expand the scope of our services, including the number and quality of healthcare providers, and the number of individuals being treated through our platform, our business and results of operations may be materially and adversely affected.
We provide customers with access to healthcare technology-based medical consultations with providers, and cannabis products prescribed by the providers for specific medical conditions. In order for our business to continue growing and expanding, we need to continue expanding our customer base and services we offer our customers, including healthcare technology consultations. Additionally, changes in laws and regulations (or enforcement thereof) could impact the usefulness of our platform and could necessitate changes or modifications to our platform or services to accommodate such changes. In addition, we may lose existing customers who choose a competitor’s products and services. This could result in a temporary or permanent revenue shortfall and adversely affect our business.
If we are unable to successfully market to new customers and retain existing customers or healthcare laws prevent or limit our marketing activities, our business and results of operations could be harmed.
We generate revenue from our platform by charging a flat fee for our initial services regarding procurement of medical cannabis cards. There is an annual subscription fee that customers pay if they want to continue to use our services to renew their medical cannabis card. Unless we are able to acquire new customers, and retain existing customers, our business, financial condition, and results of operations may be harmed.
In order to acquire new customers and patients, and to incentivize existing customers and patients to purchase more of our offerings, we use social media platforms, search engine marketing, emails, text messages, influencers, and many other online and offline marketing strategies to reach new customers. State and federal laws and regulations governing the privacy and security of personal information, including healthcare data, are evolving rapidly and could impact our ability to identify and market to potential and existing customers. Similarly, certain federal and state laws regulate, and in some cases limit, the use of discounts, promotions, and other marketing strategies in the healthcare industry. If federal, state, or local laws governing our marketing activities become more restrictive or are interpreted by government authorities to prohibit or limit these activities, our ability to attract new customers and retain customers would be affected and our business could be materially harmed. In addition, any failure, or perceived failure, by us, to comply with any federal, state, or local laws or regulations governing our marketing activities could adversely affect our reputation, brand, and business, and may result in claims, proceedings, or actions against us by governmental entities, consumers, or others, or other liabilities or may require us to change our operations and/or cease using certain marketing strategies.
Changes to social networking or advertising platforms’ terms of use, terms of service, or traffic algorithms that limit promotional communications, impose restrictions that would limit our ability or our customers’ ability to send communications through their platforms, disruptions, or downtime experienced by these platforms or reductions in the use of or engagement with social networking or advertising platforms by customers and potential customers could also harm our business. As laws and regulations rapidly evolve to govern the use of these channels, the failure by us, our employees, or third parties acting at our direction to abide by applicable laws and regulations in the use of these channels could adversely affect our reputation or subject us to fines or other penalties. In addition, our employees or third parties acting at our direction may knowingly or inadvertently make use of social media in ways that could lead to the loss or infringement of intellectual property, as well as the public disclosure of proprietary, confidential or sensitive personal information of our business, employees, consumers or others. Any such inappropriate use of social media, emails and text messages could also cause reputational damage and adversely affect our business.
Additionally, we use emails, phone calls, and text messages to communicate with customers and we collect consumer data, including email addresses and phone numbers, to further our marketing efforts with such consenting consumers. If we fail to adequately or accurately collect such data or if our data collection systems are breached or information therein is misused, our business, financial condition, and results of operations could be harmed. Further, any failure, or perceived failure, by us, or any third parties processing such data, to comply with privacy policies or with any federal or state healthcare, privacy, or consumer protection-related laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject, or other legal obligations relating to privacy or consumer protection could adversely affect our reputation, brand, and business, and may result in claims, proceedings, or actions against us by governmental entities, consumers, or others or other liabilities or may require us to change our operations and/or cease using certain data sets.
11
Our business relies heavily on Facebook, Google, Amazon and many other social networks and search engines for customer acquisition.
Social media platforms enforce strict rules against cannabis-related content, often flagging or removing posts that hint at promotion or usage, even if they comply with community guidelines. Any changes and restrictions to the advertising policy of these platforms could materially adversely affect our revenue and business.
Our business is highly dependent upon online advertising platforms for promoting our brand and product. Changes to advertising policies by these platforms could restrict or eliminate our ability to run advertisements for our product which would adversely impact our business. Changes in advertising costs could dramatically increase our customer acquisition costs, which could adversely affect profitability and result in us having to raise more capital to grow our business.
If we are unable to expand our marketing infrastructure, we may fail to increase the usage of our platform to meet our forecasts.
Veriheal first launched our healthcare technology platform in 2017. As a result, we have only limited experience marketing our product and engaging customers at our current scale. We derive a substantial majority of our revenue from customers’ annual subscriptions made available through our platform. Our financial condition and results of operations are and will continue to be highly dependent on the ability of our marketing function to adequately promote, market, and attract customers to our platform in a manner that complies with applicable laws and regulations and at a cost that does not exceed our current budget allocated to marketing.
A key element of our business strategy is the continued expansion of our marketing infrastructure, to drive customer acquisition and retention. As we increase our marketing efforts in connection with the expansion of our platform, we will need to further expand the reach of our marketing networks. Our future success will depend largely on our ability to continue to hire, train, retain, and motivate a skilled marketing workforce with significant industry-specific knowledge in various areas, including direct-to-consumer business models, ecommerce, technology, healthcare, and the regulatory restrictions related thereto, as well as the competitive landscape for our solutions.
If we are unable to expand our marketing capabilities, we may not be able to effectively expand the scope of our platform to attract new customers. Relatedly, if any of our marketing platforms significantly increase their advertising fees, our ability to expand our marketing reach will be greatly impeded. Any such failure could adversely affect our reputation, revenue, and results of operations.
Our revenue growth depends on consumers’ willingness to adopt our product, and the failure of our product to achieve and maintain market acceptance could result in us achieving revenue below our expectations, which could cause results of operations to be materially and adversely affected.
Our growth is highly dependent upon the adoption by consumers of our product, and we are subject to the risk of reduced demand for our product. If the market for our product does not gain broad market acceptance or develops more slowly than we expect, our business, prospects, financial condition and operating results will be harmed.
Our current business strategy is highly dependent on our platform and product achieving and maintaining market acceptance. Market acceptance and adoption of our model and the product and services we make available depend on educating potential customers who may find our services and our product useful, as well as potential partners, suppliers, and providers, as to the distinct features, ease-of-use, positive lifestyle impact, cost savings, and other perceived benefits of our product as compared to those of competitors. If we are not successful in demonstrating to existing and potential customers the benefits of our services, our revenue may decline or we may fail to increase our revenue in line with our forecasts.
12
Achieving and maintaining market acceptance of our model and our services could be negatively impacted by many factors, including, to the extent they arise:
| · | perceived risks associated with the use of our platform, healthcare technology or similar technologies generally, including those related to privacy and customer data; |
|
|
|
| · | our inability to expand into new conditions and to attract providers qualified to treat those conditions; |
|
|
|
| · | regulatory developments that affect our business, including in healthcare, data privacy and security, and consumer protection; |
|
|
|
| · | competitors offering healthcare technology options or technologies for customers and the rate of acceptable of those solutions as compared to our platform; |
|
|
|
| · | perceived difficulty or complexity of obtaining a medical consultation or prescription on our platform; and |
|
|
|
| · | negative reviews of providers treating our customers. |
In addition, our business model and the services and products we make available may be perceived by potential customers, and providers to be less trustworthy or effective than traditional medical care or competitive healthcare technology options, and people may be unwilling to change their current health regimens or adopt our product. Moreover, we believe that providers can be slow to change their treatment practices or approaches because of perceived liability risks or distrust of departures from traditional practice. Accordingly, we may face resistance to our offerings from brick-and-mortar providers until there is overwhelming evidence to convince them to alter their current approach.
The market for our model and services is new, and increasingly competitive. The healthcare industry is undergoing significant structural change and consolidation, which makes it difficult to forecast demand for our solutions.
The market for our products is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, and changing consumer demands and behaviors. We are expanding our business by offering access to consultation and treatment options for new conditions, and it is uncertain whether our offerings will achieve and sustain high levels of demand and market adoption. Our future financial performance depends in part on growth in this market, our ability to market effectively and in a cost-efficient manner, and our ability to adapt to emerging demands of our customers. It is difficult to predict the future growth rate and size of our target market. Negative publicity concerning healthcare technology generally, our offerings, customer success on our platform, or our market as a whole could limit market acceptance of our business model and services. If our customers do not perceive the benefits of our offerings, or if our offerings do not drive customer use and enrollment, then our market and our customer base may not continue to develop, or they may develop more slowly than we expect. Our success depends in part on the willingness of providers and healthcare organizations to partner with us, increase their use of healthcare technology, and our ability to demonstrate the value of our technology to providers, as well as our existing and potential customers. If providers, healthcare organizations or regulators work in opposition to us or if we are unable to reduce healthcare costs or drive positive health outcomes for our customers, then the market for our services may not continue to develop, or it might develop more slowly than we expect. Similarly, negative publicity regarding customer confidentiality and privacy in the context of healthcare technology could limit market acceptance of our business model and services.
The healthcare industry in the United States is continually undergoing or threatened with significant structural change and is rapidly evolving. We believe demand for our offerings has been driven in part by rapidly growing costs in the traditional healthcare system, difficulties accessing the healthcare system, patient stigma associated with sensitive medical conditions, the movement toward patient-centricity and personalized healthcare, and advances in technology. Widespread acceptance of personalized healthcare enabled by technology is critical to our future growth and success. A reduction in the growth of technology-enabled personalized healthcare could reduce the demand for our services and result in a lower revenue growth rate or decreased revenue. Additionally, the majority of our revenue is driven by products and services offered through our platform on a subscription basis, and the adoption of subscription business models is still relatively new, especially in the healthcare industry. If customers do not shift to subscription business models and subscription health management tools do not achieve widespread adoption, or if there is a reduction in demand for subscription products and services or subscription health management tools, our business, financial condition, and results of operations could be adversely affected.
13
Additionally, if healthcare or healthcare benefits trends shift or entirely new technologies are developed that replace existing offerings, our existing or future services could be rendered obsolete and require that we materially change our technology or business model. If we are unable to do so, our business could be adversely affected. In addition, we may experience difficulties with software development, industry standards, design or marketing that could delay or prevent our development, introduction, or implementation of new options on our platform and any enhancements thereto. Any such difficulties may have an adverse effect on our business, financial condition, and results of operations.
We operate in highly competitive markets and face competition from large, well-established healthcare providers with significant resources, and, as a result, we may not be able to compete effectively.
The markets for healthcare are intensely competitive, subject to rapid change and significantly affected by new product and technological introductions and other market activities of industry participants. Our current competitors include traditional healthcare providers expanding into the healthcare technology market, incumbent healthcare technology providers, as well as new entrants into our market that are focused on direct-to-consumer healthcare. Our competitors include enterprise-focused companies who may enter the direct-to-consumer healthcare industry, as well as direct-to-consumer healthcare providers. Many of our current and potential competitors may have greater name and brand recognition, longer operating histories, significantly greater resources than we do and may be able to offer products and services similar to the product offered on our platform at more attractive prices than we can. Further, our current or potential competitors may be acquired by third parties with greater available resources, which has recently occurred in our industry. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or customer requirements and may have the ability to initiate or withstand substantial price competition.
New competitors or alliances may emerge that have greater market share, a larger customer base, more widely adopted proprietary technologies, greater marketing expertise, and greater financial resources, which could put us at a competitive disadvantage. Although it is unclear whether these regulatory changes will be permanent or that they will have a long-term impact on the adoption of healthcare technology services by the general public or legislative and regulatory authorities, these changes may result in greater competition for our business. The lower barriers to entry may allow various new competitors to enter the market more quickly and cost effectively than before the COVID-19 pandemic. Additionally, we believe that the COVID-19 pandemic has introduced many new users to healthcare technology and further reinforced its benefits to potential competitors. We believe this may drive additional industry consolidation or collaboration involving competitors that may create competitors with greater resources and access to potential customers. The COVID-19 pandemic may also cause various traditional healthcare providers to evaluate and eventually pursue healthcare technology options that can be paired with their in-person capabilities. These industry changes could better position our competitors to serve certain segments of our current or future markets, which could create additional price pressure. In light of these factors, even if our offerings are more effective than those of our competitors, current or potential customers may accept competitive solutions in lieu of purchasing from us.
Our ability to compete effectively depends on our ability to distinguish our company and our offerings from our competitors and their products, and includes factors such as:
| · | accessibility, ease of use and convenience; |
|
|
|
| · | price and affordability; |
|
|
|
| · | personalization; |
|
|
|
| · | brand recognition; |
|
|
|
| · | long-term outcomes; |
|
|
|
| · | market penetration; |
|
|
|
| · | marketing resources and effectiveness; |
|
|
|
| · | partnerships and alliances; |
|
|
|
| · | relationships with providers; and |
|
|
|
| · | regulatory compliance recourses. |
14
If we are unable to successfully compete with existing and potential competitors, our business, financial condition, and results of operations could be adversely affected.
We have experienced rapid growth in recent periods. If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service, or adequately address competitive challenges.
We anticipate that we will continue to significantly expand our operations and headcount in the near term as we continue to scale domestically. We also anticipate entering the international market to meet perceived demand for our product. We are continually executing a number of growth initiatives, strategies and operating plans designed to enhance our business. The anticipated benefits from these efforts are based on several assumptions that may prove to be inaccurate. Moreover, we may not be able to successfully complete these growth initiatives, strategies and operating plans and realize all of the benefits, including growth targets and cost savings, that we expect to achieve, or it may be more costly to do so than we anticipate.
This growth has placed, and future growth will place, a significant strain on our management, administrative, operational, and financial infrastructure. Our success will depend in part on our ability to manage this growth effectively and execute our business plan. To manage the expected growth of our operations and personnel, we will need to continue to improve our operational, financial, and management controls, and our reporting systems and procedures, and we will need to ensure that we maintain high levels of patient care and support. Failure to effectively manage growth and execute our business plan could result in difficulty or delays in increasing the size of our customer base, declines in quality of patient care, support, or satisfaction, increases in costs, difficulties in introducing new products or features, or other operational difficulties, and any of these difficulties could adversely affect our business performance and results of operations.
If we fail to develop widespread brand awareness cost-effectively, our business may suffer.
We believe that developing and maintaining widespread awareness of our brand in a cost-effective manner is critical to achieving widespread adoption of our solution and attracting new customers. Our brand promotion activities may not generate consumer awareness or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain our brand, or incur substantial expenses in doing so, we may fail to attract or retain customers necessary to realize a sufficient return on our brand-building efforts or to achieve the widespread brand awareness that is critical for broad client adoption of our brand. In addition, any factor that diminishes our reputation or that of our management, including failing to meet the expectations of our customers or providers, could harm our reputation and brand and make it substantially more difficult for us to attract new customers and providers.
If we are unable to attract and retain high quality healthcare providers for our customers, our business may be materially and adversely affected.
Our success depends on our continued ability to maintain customer access to a network of qualified healthcare providers, which include medical doctors and physician assistants. If we are unable to recruit and retain licensed physicians and other qualified providers to perform services on our platform, it could have a material adverse effect on our business and ability to grow and could adversely affect our results of operations. In any particular market, providers could demand higher payments or take other actions that could result in higher medical costs, less attractive service for our customers, or difficulty meeting regulatory requirements. The failure to maintain or to secure new cost-effective arrangements with third party medical groups and independent providers on our platform may result in a loss of, or inability to grow, our customer base, higher costs, less attractive service for our customers and/or difficulty in meeting regulatory requirements, any of which could have a material adverse effect on our business, financial condition, and results of operations.
15
Any failure to offer high-quality support may adversely affect our relationships with customers and healthcare providers, and in turn our business and results of operations.
In using our platform, our customers depend on our patient care and support to resolve issues in a timely manner. We may be unable to respond quickly enough to accommodate short-term increases in demand for patient care and support. We also may be unable to modify the nature, scope, and delivery of our offerings or patient care and support to compete with changes in solutions provided by our competitors. Increased customer demand for support could increase costs and adversely affect our business, financial condition, and results of operations. Our revenue is highly dependent on our reputation and on positive recommendations from our customers and providers. Any failure to maintain high-quality patient care and support or a market perception that we do not maintain high-quality patient care and support, could adversely affect our reputation, our ability to sell our product on our platform, and in turn our business, financial conditions, and results of operations.
We face risk that may arise from acquisitions and investments, which could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business.
We may pursue inorganic methods of growth, including strategic acquisitions and mergers in the future, to add complementary or strategic companies, products, solutions, technologies, or revenue. These transactions could be material to our results of operations and financial condition. We also expect to continue to evaluate and enter into discussions regarding a wide array of potential strategic transactions. The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to complete acquisitions on favorable terms, if at all. The process of integrating an acquired company, business, or technology may create unforeseen operating difficulties and expenditures. The related areas where we face risks include, but are not limited to:
| · | diversion of management time and focus from operating our business to addressing acquisition integration challenges; |
|
|
|
| · | loss of key employees of the acquired company and other challenges associated with integrating new employees into our culture, as well as reputational harm if integration is not successful; |
|
|
|
| · | difficulties in integrating and managing the combined operations, technologies, technology platforms, and products of the acquired companies, and realizing the anticipated economic, operational and other benefits in a timely manner, which could result in substantial costs and delays or other operational, technical, or financial problems; |
|
|
|
| · | regulatory complexities of integrating or managing the combined operations or expanding into other industries or parts of the healthcare industry; |
|
|
|
| · | assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights, or increase our risk for liabilities; |
|
|
|
| · | failure to successfully further develop the acquired technology or realize our intended business strategy; |
|
|
|
| · | uncertainty of entry into markets in which we have limited or no prior experience or in which competitors have stronger market positions; |
|
|
|
| · | unanticipated costs associated with pursuing acquisitions; |
|
|
|
| · | failure to find commercial success with the products or services of the acquired company; |
|
|
|
| · | difficulty transitioning the acquired technology onto our existing platforms and maintaining the security standards for such technology consistent with our other solutions; |
|
|
|
| · | failure to successfully onboard customers or maintain brand quality of acquired companies; |
|
|
|
| · | responsibility for the liabilities of acquired businesses, including those that were not disclosed to us or exceed our estimates, as well as, without limitation, liabilities arising out of their failure to maintain effective data protection and privacy controls and comply with applicable regulations; |
|
|
|
| · | failure to generate the expected financial results related to an acquisition on a timely manner or at all; and |
|
|
|
| · | potential accounting charges to the extent intangibles recorded in connection with an acquisition, such as goodwill, trademarks, client relationships, or intellectual property, are later determined to be impaired and written down in value. |
16
Future acquisitions could also result in expenditures of significant cash, dilutive issuances of our equity securities, the incurrence of debt, restrictions on our business, contingent liabilities, amortization expenses, or write-offs of goodwill, any of which could harm our financial condition. In addition, any acquisitions we announce could be viewed negatively by customers, providers, partners, suppliers, or investors.
Additionally, competition within our industry for acquisitions of business, technologies and assets may become intense. Even if we are able to identify an acquisition that we would like to consummate, we may not be able to complete the acquisition on commercially reasonable terms or the target may be acquired by another company. We may enter into negotiations for acquisitions that are not ultimately consummated. Those negotiations could result in diversion of management time and significant out-of-pocket costs. If we fail to evaluate and execute acquisitions successfully, we may not be able to realize the benefits of these acquisitions, and our results of operations could be harmed. If we are unable to successfully address any of these risks, our business, financial condition, or results of operations could be harmed.
Expansion into international markets can be a driver of long-term growth, when we expand into international markets, we will face additional business, political, legal, regulatory, operational, financial, and economic risks, any of which could increase our costs and hinder such growth.
Expanding our business to attract customers and providers in countries other than the United States is an opportunity for growth for us going-forward. An important part of targeting international markets is increasing our brand awareness and establishing relationships with partners internationally. Doing business internationally involves a number of risks, including:
| · | uncertain legal and regulatory requirements applicable to healthcare technology; |
| · | our inability to replicate our domestic business structure consistently outside of the United States, especially as it relates to our contractual arrangement with professional entities; |
| · | multiple conflicting and changing laws and regulations such as tax laws, privacy, and data protection laws and regulations, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits, and licenses; |
| · | obtaining regulatory approvals or clearances where required for the sale of our offerings, products, devices, and services in various countries; |
| · | requirements to maintain data and the processing of that data on servers located within the United States or in such countries; |
| · | protecting and enforcing our intellectual property rights; |
| · | logistics and regulations associated with prescribing medicine online and engaging with partner pharmacies to ship the prescribed medication; |
| · | natural disasters, political and economic instability, including wars, terrorism, social or political unrest, including civil unrest, protests, and other public demonstrations, outbreaks of disease, pandemics or epidemics, boycotts, curtailment of trade, and other market restrictions; and |
| · | regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the U.S. Foreign Corrupt Practices Act (the “FCPA”), and comparable laws and regulations in other countries. |
Our ability to expand our business and to attract talented employees, customers and providers in various international markets will require considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal systems, alternative dispute resolution systems, regulatory systems, and commercial infrastructures. Entering new international markets will be expensive, our ability to successfully gain market acceptance in any particular market is uncertain and the distraction of our senior management team could harm our business, financial condition, and results of operations.
17
Economic uncertainty or downturns, particularly as it impacts particular industries, could adversely affect our business and results of operations.
A significant downturn in the domestic or global economy may cause our customers to pause, delay, or cancel spending on our platform or seek to lower their costs by exploring alternative providers or our competitors. To the extent purchases of our product are perceived by customers and potential customers as discretionary, our revenue may be disproportionately affected by delays or reductions in general healthcare spending. Also, competitors may respond to challenging market conditions by lowering prices and attempting to lure away our customers.
We cannot predict the timing, strength, or duration of any economic slowdown or any subsequent recovery generally, or in any particular industry. If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, and results of operations could be materially adversely affected.
Our business depends on continued and unimpeded access to the internet and mobile networks.
Our ability to deliver our internet-based and mobile-application based services depends on the development and maintenance of the infrastructure of the internet by third parties. This includes maintenance of a reliable network backbone with the necessary speed, data capacity, bandwidth capacity, and security. Our services are designed to operate without interruption. However, we may experience future interruptions and delays in services and availability from time to time. In the event of a catastrophic event with respect to one or more of our systems or those of our service providers, we may experience an extended period of system unavailability, which could negatively impact our relationships with customers, providers, partners, and suppliers. To operate without interruption, both we and our service providers must guard against:
| · | damage from fire, power loss, natural disasters, and other force majeure events outside our control; |
| · | communications failures; |
| · | software and hardware errors, failures, and crashes; |
| · | security breaches, computer viruses, hacking, denial-of-service attacks, and similar disruptive problems; and |
| · | other potential interruptions. |
We also rely on software licensed from third parties in order to offer our services. These licenses are generally commercially available on varying terms. However, it is possible that this software may not continue to be available on commercially reasonable terms, or at all. Any loss of the right to use any of this software could result in delays in the provisioning of our services until equivalent technology is either developed by us, or, if available, is identified, obtained and integrated. Furthermore, our use of additional or alternative third-party software would require us to enter into license agreements with third parties, and integration of our software with new third-party software may require significant work and require substantial investment of our time and resources. Also, any undetected errors or defects in third-party software could prevent the deployment or impair the functionality of our software, delay new updates or enhancements to our solution, result in a failure of our solution, and injure our reputation. The occurrence of any of the foregoing events could have an adverse impact on our business, financial condition, and results of operations.
Cyber security risks and the failure to maintain the integrity of data belonging to our Company could expose us to data loss, litigation and liability, and our reputation could be significantly harmed.
We collect and retain large volumes of data relating to our business and from our customers for business purposes, including for transactional and promotional purposes, and our various information technology systems enter, process, summarize, and report such data. The integrity and protection of this data is critical to our business. We are subject to significant security and privacy regulations, as well as requirements imposed by the credit card industry. Maintaining compliance with these evolving regulations and requirements could be difficult and may increase our expenses. In addition, a penetrated or compromised data system or the intentional, inadvertent or negligent release or disclosure of data could result in theft, loss or fraudulent or unlawful use of data relating to our company or our employees, independent distributors or preferred customers, which could harm our reputation, disrupt our operations, or result in remedial and other costs, fines or lawsuits.
18
Any disruption of service at Amazon Web Services or other third-party service providers could interrupt access to our platform or delay our customers’ ability to seek treatment.
We currently host our platform, serve our customers, and support our operations in the United States using Amazon Web Services (“AWS”), a provider of cloud infrastructure services, as well as through other third-party service providers, including shipping providers and contract manufacturers. We do not have control over the operations of AWS, or other third-party service providers. Such facilities are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cyber security attacks, terrorist attacks, power losses, telecommunications failures, and similar events. The occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice, or other unanticipated problems could result in lengthy interruptions in our ability to generate revenue through customer purchases on the platform. The facilities also could be subject to break-ins, computer viruses, sabotage, intentional acts of vandalism, and other misconduct. Our platform’s continuing and uninterrupted performance is critical to our success. Because our platform is used by our customers to engage with providers it is critical that our platform be accessible without interruption or degradation of performance. Customers may become dissatisfied by any system failure that interrupts our ability to provide our platform or access to our product and services offered through our platform to them. Outages could lead to claims of damages from our customers, providers, and others. We may not be able to easily switch our AWS operations to another cloud provider if there are disruptions or interference with our use of AWS. Sustained or repeated system failures could reduce the attractiveness of our product to customers and result in contract terminations, thereby reducing revenue. Moreover, negative publicity arising from these types of disruptions could damage our reputation and may adversely impact use of our platform. We may not carry sufficient business interruption insurance to compensate us for losses that may occur as a result of any events that cause interruptions in our platform. Thus, any such disruptions could have an adverse effect on our business and results of operations.
We depend on a number of other companies to perform functions critical to our ability to operate our platform, generate revenue from customers, and to perform many of the related functions.
We depend on third party medical groups and their providers to deliver quality healthcare consultations and services through our platform. Through our platform, providers are able to prescribe our medical cannabis cards. Any interruption in the availability of a sufficient number of providers could materially and adversely affect our ability to satisfy our customers and ensure they receive consultation services. If we were to lose our relationship with one of the third-party medical groups, we cannot guarantee that we will be able to ensure access to a sufficient network of providers. Our ability to service customer requirements could be materially impaired or interrupted if our relationship with a third-party medical group or partner pharmacy is terminated. We also depend on cloud infrastructure providers, payment processors, suppliers of non-prescription products and packaging, and various others that allow our platform to function effectively and serve the needs of our customers. Difficulties with our significant partners and suppliers, regardless of the reason, could have a material adverse effect on our business.
Our payments system depends on third party service providers and is subject to evolving laws and regulations.
Cannabis companies face significant scrutiny from payment processors due to the federal classification of cannabis as illegal, which complicates banking relationships and payment options, which can lead to increased fees and compliance costs.
We have engaged third-party service providers to perform underlying card processing and currency exchange. If these service providers do not perform adequately or if our relationships with these service providers were to terminate, our ability to accept orders through the platform could be adversely affected and our business could be harmed. In addition, if these service providers increase the fees they charge us, our operating expenses could increase and if we respond by increasing the fees we charge to our customers, we could lose some of our customers.
The laws and regulations related to payments are complex and vary across different jurisdictions in the United States and globally. As a result, we are required to spend significant time and effort to comply with those laws and regulations. Any failure or claim of our failure to comply, or any failure by our third-party service providers to comply, could cost us substantial resources, could result in liabilities, or could force us to stop offering third-party payment systems. As we expand the availability of payments via third parties or offer new payment methods to our customers in the future, we may become subject to additional regulations and compliance requirements.
19
Further, through our agreement with our third-party credit card processor, we are indirectly subject to payment card association operating rules and certification requirements, including the Payment Card Industry Data Security Standard. We are also subject to rules governing electronic funds transfers. Any change in these rules and requirements could make it difficult or impossible for us to comply. Any such difficulties or failures with respect to the payment systems we utilize may have an adverse effect on our business.
Our pricing decisions may adversely affect our ability to attract new customers and healthcare providers.
We have limited experience determining the optimal prices for our offerings. As competitors introduce new solutions that compete with our product, especially in the healthcare technology market where we face significant competition, we may be unable to attract new customers or partners at the same price or based on the same pricing models as we have used historically. Pricing decisions may also impact the mix of adoption among our services and products and negatively impact our overall revenue. As a result, in the future we may be required to reduce our prices, which could adversely affect our revenue, gross profit, profitability, financial position, and cash flows.
We depend on our talent to grow and operate our business, and if we are unable to hire, integrate, develop, motivate and retain our personnel, we may not be able to grow effectively.
Our success depends in large part on our ability to attract and retain high-quality management in marketing, engineering, operations, healthcare, regulatory, legal, finance and support functions. Competition for qualified employees is intense in our industry, and the loss of even a few qualified employees, or an inability to attract, retain and motivate additional highly skilled employees required for the planned expansion of our business could harm our operating results and impair our ability to grow. To attract and retain key personnel, we use various measures, including an equity incentive program for key executive officers and other employees. These measures may not be enough to attract and retain the personnel we require to operate our business effectively.
As we continue to grow, we may be unable to continue to attract or retain the personnel we need to maintain our competitive position. In addition to hiring new employees, we must continue to focus on retaining our best talent. Competition for these resources, particularly for engineers, is intense. We may need to invest significant amounts of cash and equity for new and existing employees, and we may never realize returns on these investments. If we are not able to effectively increase and retain our talent, our ability to achieve our strategic objectives will be adversely impacted, and our business will be harmed. The loss of one or more of our key employees, and any failure to have in place and execute an effective succession plan for key employees, could seriously harm our business. Employees may be more likely to leave us if the shares of our capital stock they own, or the shares of our capital stock underlying their equity incentive awards have significantly reduced in value, or the vested shares of our capital stock they own or vested shares of our capital stock underlying their equity incentive awards have significantly appreciated. Many of our employees may receive significant proceeds from sales of our equity in the public markets once the applicable lock-up restrictions expire, which may reduce their motivation to continue to work for us.
We permit most of our employees to work remotely should their positions allow. While we believe that most of our operations can be performed remotely, there is no guarantee that we will be as effective while working remotely because our team is dispersed, and many employees may have additional personal needs to attend to or distractions in their remote work environment. To the extent our current or future remote work policies result in decreased productivity, impacts our company culture, or otherwise negatively affect our business, our financial condition and results of operations could be adversely affected.
The Company has a limited operating history, limited working capital, and is in the initial commercialization stage.
The Company’s business is subject to all of the risks inherent in the establishment of a new business enterprise, including, but not limited to, limited capital, need to expand its workforce, unanticipated costs, uncertain markets, adverse changes in technology. If the Company’s revenues grow more slowly than it anticipates or if its operating expenses exceed expectations, the Company’s financial performance will be adversely affected. The Company’s prospects must be considered considering the risks, expenses and difficulties frequently encountered by companies in their early stages of development. The Company cannot assure investors that it will be successful in addressing the risks it may encounter, and its failure to do so could have a material adverse effect on its business, prospects, financial condition and results of operations. Failure of the Company to meet its objectives would have a material adverse effect on the Company and its operations. Insufficient market demand would have a material adverse effect on the Company’s business, financial condition and results of operations.
20
Our consolidated financial statements have been prepared on a going concern basis, raising substantial doubt about our ability to continue as a going concern.
The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
As reflected in the consolidated financial statements, the Company had stockholders’ deficit, accumulated deficit and working capital deficit of approximately $2,733,000, $5,338,000 and $2,457,000, respectively, at June 30, 2026. A significant portion of our current liability (note payable) is already scheduled to be fully paid for the remainder of year 2026 pending continued revenue generation.
The Company reported a net loss of approximately $496,000 for the six months ended June 30, 2026. Notwithstanding this result, the Company continues to generate revenue and maintain active operations across its core business segment. Based on current forecasts and available cash as of June 30, 2026, the Company may require additional capital to fully support its planned growth initiatives and capital expenditures over the next twelve months.
Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern for at least the twelve months following the issuance of the consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon management’s ability to further implement its business plan, generate sufficient revenues and raise additional capital resources as needed.
The Company will have broad discretion in the Use of Proceeds.
The proceeds will be used for the development, marketing and promoting of the Company’s brand, product, and services. Investors will have no control over the use of proceeds from this offering.
The market may not accept the products.
The growth and future financial performance of the Company will depend on its ability to demonstrate to prospective buyers and users the value of the Company’s product. There can be no assurance that the Company will be successful in this effort. Furthermore, competing alternatives may be seen to have, or may actually have, certain advantages over the Company’s product or service.
The Company may have losses in the foreseeable future.
The Company may not be profitable until the Company can produce sufficient revenues to cover its costs. Even if the Company does achieve profitability, the Company may be unable to sustain or increase profitability in the future.
The Company’s projections are based on assumptions which inherently contain significant uncertainties and as a result, the Company’s financial condition and results of operations may differ materially from the projections.
The projections are based upon a number of assumptions and estimates that inherently are subject to significant business, economic, competitive, regulatory and operational uncertainties, contingencies and risks, many of which are beyond the Company’s control. Such assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur that could have a material adverse effect upon the Company’s ability to achieve the projections. The projections also assume the success of the Company’s business strategy. The success of this strategy is subject to uncertainties and contingencies beyond the Company’s control, and no assurance can be given that the strategy will be successful or that the anticipated benefits from the strategy will be realized in the manner or during the periods reflected in the projections or at all. These uncertainties may result in material changes in the Company’s financial condition and results of operations.
The successful implementation of the Company’s business plan is dependent upon key personnel.
The success of the Company’s business depends, in large part, upon the ability of its Founder to manage the execution of its business plan. The loss of the services of any of its executive officers within a short period of time could have a material adverse effect on the Company’s business. The Company’s future success is also dependent upon its ability to attract and retain a significant number of other highly qualified personnel. Competition for such personnel is intense, and if the Company is unable to attract and retain significant numbers of additional key employees, its business, financial condition, and results of operations may be adversely affected. The Company can make no assurance that such key personnel will remain in its employ or that it will be able to attract and retain key personnel in the future.
21
The Company’s business is subject to State Corporate Practice of Medicine and Fee Splitting Laws.
With respect to our healthcare technology platform, we contract with physicians to deliver our healthcare technology offerings to their patients in the United States. These relationships are subject to various state laws, which are intended to prevent unlicensed persons from interfering with or influencing the physician’s professional judgment and prohibiting the sharing of professional services income with non-professional or business interests. These laws vary from state to state and are subject to broad interpretation and enforcement by state regulators. A determination of non-compliance could lead to adverse judicial or administrative action against us and/or our providers, civil or criminal penalties, receipt of cease-and-desist orders from state regulators, loss of provider licenses, or a restructuring of our arrangements with professional entities.
Certain states have enacted laws regulating companies that offer and market discount medical plans, including prescription drug plans, subscription membership programs, or discount cards, such as our prescription offering. These state laws are intended to protect consumers from fraudulent, unfair, or deceptive marketing, sales and enrollment practices by such plans. It is possible that other states may enact new requirements or interpret existing requirements to include our programs. Failure to obtain the required licenses, certifications or registrations to offer and market these subscription discount programs may result in civil penalties, receipt of cease-and-desist orders, or a restructuring of our operations.
We may be subject to claims that we are engaged in the corporate practice of medicine or that our contractual arrangements with our physicians constitutes unlawful fee-splitting.
We have contracted with physician-owned professional corporations (“P.C.’s”) or professional associations (“P.A.’s”) to facilitate the delivery of healthcare technology services to their patients.
These relationships are subject to various state laws that prohibit fee splitting or the practice of medicine by lay entities or persons. Corporate practice of medicine laws and enforcement varies by state. In some states, decisions and activities such as contracting with third party payors, setting rates and the hiring and management of non-clinical personnel may implicate the restrictions on the corporate practice of medicine. In addition, corporate practice of medicine restrictions are subject to broad powers of interpretation and enforcement by state regulators.
Some of these requirements may apply to us even if we do not have a physical presence in a state, solely because we provide management services to a provider licensed in the state or facilitate the provision of healthcare technology to a resident of the state. State medical practice boards, other regulatory authorities, or other parties, including the physicians or other providers whom we otherwise contract, may assert that, despite these arrangements, we are engaged in the corporate practice of medicine or that our contractual arrangements constitute unlawful fee-splitting. In this event, failure to comply could lead to adverse judicial or administrative action against us and/or our providers, civil or criminal penalties, receipt of cease-and-desist orders from state regulators, loss of provider licenses, the need to make changes to the terms of engagement with providers that interfere with our business and other materially adverse consequences.
Premature abandonment. The Company’s products, services, research, development, marketing and implementation may be abandoned at any stage if further expenditures do not appear commercially feasible, with the resulting loss of some or all of the funds previously expended on such objectives. In the event that the offering is not fully funded, it is likely that the Company will not be able to operate and that any investment in the Company will be lost in its entirety.
Commercial success. Many businesses are started each year that are not commercially successful and fail to recoup their establishment and start-up costs. The Company is in the start-up phase, has limited history of operations or success and may fail to recoup its establishment and start-up costs, resulting in the loss of some or all of the investors’ investment in the Company.
Growth strategy. The Company’s business model may require an effective execution of its growth strategy over a short period of time in order to scale operations quickly and establish market presence. Achieving the Company’s growth strategy may be critical in order for its business to achieve profitability. If the Company is unable to effectively implement its growth strategy ahead of its competition, the Company’s business, financial condition or results of operation could be materially and adversely affected.
Competition. The Company’s market space is competitive. If the Company is unable to successfully compete with its competitors (including both existing and new companies that enter this market space), the business, financial condition or results of operations of the Company could be materially and adversely affected. The market for the Company’s products and services is rapidly changing. Competitors may develop products and/or services that are better, less expensive or otherwise more attractive than those offered by the Company.
22
The successful implementation of the Company’s business plan is dependent upon key personnel.
The success of the Company’s business depends, in large part, upon the ability of its Founder to manage the execution of its business plan. Any loss or interruption of the services provided by the Founder and/or other members of the management team could significantly reduce the Company’s ability to manage its operations and implement its business plan and otherwise harm or impact the Company’s performance because the Company may not be able to find an appropriate replacement for him/them, should the need arise. The loss of the services of any of the Company’s executive officers could have a material adverse effect on the Company’s business. The Company’s future success is also dependent upon its ability to attract and retain a significant number of other highly qualified personnel. Competition for such personnel is intense, and if the Company is unable to attract and retain additional key employees, its business, financial condition, and results of operations may be adversely affected. The Company can make no assurance that such key personnel will remain in its employ or that it will be able to attract and retain key personnel in the future.
The Company is subject to many of the operating risks common to any start-up business.
Operating risks common to the Company include:
| · | changes in general economic conditions, including the timing and robustness of recoveries from economic downturns; |
| · | decreases in the demand for the product; |
| · | the impact of intermediaries on pricing; |
| · | changes in operating costs; and |
| · | the availability of capital to fund operations. |
The Company’s business revenue generation model is unproven and could fail.
The Company’s revenue model is new and evolving, and it cannot be certain that it will be successful. The potential profitability of its business model is unproven and there can be no assurance that the Company can achieve profitable operations. The Company’s ability to generate revenues depends, among other things, on its ability to generate revenues relating to helping customers engage cleaner living in an ecological community. Accordingly, the Company cannot assure investors that its business model will be successful or that it can sustain revenue growth, or achieve or sustain profitability.
The Company may be unable to maintain its relationships.
The Company cannot assure investors that it will be successful in maintaining relationships with its customers and counterparties. The Company’s inability to maintain these relationships could have a material adverse effect on its business, results of operations and financial condition.
Damage to the Company’s reputation could damage its businesses.
Maintaining a positive reputation is critical to the Company attracting and maintaining customers, counterparties, investors and employees. Damage to its reputation can therefore cause significant harm to the Company’s business and prospects. Harm to the Company’s reputation could arise from numerous sources, including, among others, employee misconduct, litigation or regulatory outcomes, compliance failures, unethical behavior and the activities of customers and counterparties. Further, negative publicity regarding the Company, whether or not true, may also result in harm to its prospects.
The Company may not be able to protect the intellectual property rights.
The Company may rely on a combination of contractual agreements and trademark & copyright laws to protect the proprietary aspects of its products and services. These legal measures afford limited protection and may not prevent others from gaining access to the Company’s or the Company’s proprietary information. The Company has and will continue to take measures to enforce its intellectual property rights, to protect its trade secrets and to determine the validity and scope of its proprietary rights. Any litigation could result in substantial expense, may reduce the Company’s financial resources and may not adequately protect its intellectual property rights.
23
The Company’s success depends on its ability to adapt to changing market conditions.
The Company’s success may be dependent upon its ability to develop its market and change its business model as may be necessary to react to changing market conditions. The Company’s ability to modify or change its business model to fit the needs of a changing market place may be critical to its success, and its inability to do so could have a material adverse effect on the Company’s business, liquidity and financial condition.
Risks Related to Governmental Regulation
States adopting laws that legalize recreational cannabis could diminish demand for medicinal cannabis.
The cannabis industry is subject to evolving state laws and regulations. Changes in state cannabis laws, including restrictions on cannabis sales, advertising, product availability, taxation, or consumer access, could reduce demand for cannabis products and negatively affect our business, financial condition, and results of operations. Additionally, the adoption of laws or regulations that limit cannabis use, expand competing markets, or otherwise alter consumer behavior could adversely impact the growth of the cannabis industry and our ability to maintain or increase revenue.
Government regulation of healthcare creates risks and challenges with respect to our compliance efforts and our business strategies.
The healthcare industry is subject to changing political, economic and regulatory influences that may affect companies like ours. During the past several years, the healthcare industry has been subject to an increase in governmental regulation and subject to potential disruption due to legislative initiatives and government regulation, as well as judicial interpretations thereof. While these regulations may not directly impact us or our offerings in every instance, they will affect the healthcare industry as a whole and may impact customer use of our services. We currently accept payments only from our customers - not any third-party payors, such as government healthcare programs or health insurers. Because of this approach, we are not subject to many of the laws and regulations that impact many other participants in healthcare industry. If the government asserts broader regulatory control over companies like us, or if we determine that we will facilitate payment from and/or participate in third-party payor programs, the complexity of our operations and our compliance obligations will materially increase.
If we fail to comply with applicable healthcare and other governmental regulations, we could face substantial penalties and our business could be adversely affected, and we may be required to restructure our operations.
Our business is subject to a variety of federal, state, local, and international laws and regulations that carry substantial criminal and civil fines and penalties. Under our current business model, we accept payments only from our customers, and not from any third party payors, such as government healthcare programs or health insurers. Because of this approach, we are not subject to many of the laws and regulations that impact many other participants in healthcare industry. If the government asserts broader regulatory control over companies like ours or if we determine that we will change our business model and accept payment from and/or participate in third-party payor programs, the complexity of our operations and our compliance obligations will materially increase. Failure to comply with any applicable federal, state, and local laws and regulations could have a material adverse effect on our business, financial condition and results of operations.
Even within the narrowed band of applicable healthcare laws and regulations, because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our activities could be subject to challenge under one or more such laws. Any action brought against us for violations of these laws or regulations, even if successfully defended, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.
Although we have adopted policies and procedures designed to comply with these laws and regulations and conduct internal reviews of our compliance with these laws, our compliance is also subject to governmental review. The growth of our business and sales organization and our future expansion outside of the United States may increase the potential of violating these laws or our internal policies and procedures. The risk of being in violation of these or other laws and regulations is further increased by the fact that many have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action brought against us for violation of these or other laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any of the federal, state, and foreign laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to penalties, including significant criminal, civil, and administrative penalties, damages, and fines, disgorgement, additional reporting requirements and oversight, imprisonment for individuals and exclusion from participation in government healthcare programs, such as Medicare and Medicaid, as well as contractual damages and reputational harm.
24
We could also be required to curtail or cease our operations. Any of the foregoing consequences could seriously harm our business and our financial results.
Our ability to offer access to healthcare technology services internationally is subject to the applicable laws governing remote care and the practice of medicine in the applicable jurisdiction. Each country’s interpretation and enforcement of these laws is evolving and could vary significantly. We cannot provide assurance that we have accurately interpreted each such law and regulation. Moreover, these laws and regulations may change significantly as this manner of providing services and products evolves. New or revised laws and regulations (or interpretations thereof) could have a material adverse effect on our business, financial condition, and results of operations.
In the U.S., we conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations or experience adverse publicity, which could have a material adverse effect on our business.
The U.S. healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments. Comprehensive statutes and regulations govern the manner in which we provide and bill for services and collect reimbursement from governmental programs and private payors, our contractual relationships with our providers, vendors and customers, our marketing activities and other aspects of our operations. Of particular importance are:
| · | the federal physician self-referral law, commonly referred to as the Stark Law, that, subject to limited exceptions, prohibits physicians from referring Medicare or Medicaid patients to an entity for the provision of certain “designated health services” if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including an ownership interest or a compensation arrangement) with the entity, and prohibit the entity from billing Medicare or Medicaid for such designated health services; |
| · | the federal Anti-Kickback Statute that prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by any federal healthcare program, such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; |
| · | the criminal healthcare fraud provisions of the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, which we collectively refer to as HIPAA, and related rules that prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; |
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. Achieving and sustaining compliance with these laws may prove costly. Failure to comply with these laws and other laws can result in civil and criminal penalties such as fines, damages, overpayment, recoupment, imprisonment. The risk of our being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are sometimes open to a variety of interpretations. Our failure to accurately anticipate the application of these laws and regulations to our business or any other failure to comply with regulatory requirements could create liability for us and negatively affect our business. Any action against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business and result in adverse publicity.
25
To enforce compliance with the federal laws, the U.S. Department of Justice and the U.S. Department of Health and Human Services Office of Inspector General, or OIG, have recently increased their scrutiny of healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations can be time- and resource-consuming and can divert management’s attention from the business. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business. In addition, because of the potential for large monetary exposure under the federal False Claims Act, which provides for treble damages and penalties of $11,463 to $22,927 per false claim or statement, healthcare providers often resolve allegations without admissions of liability for significant and material amounts to avoid the uncertainty of treble damages that may be awarded in litigation proceedings. Such settlements often contain additional compliance and reporting requirements as part of a consent decree, settlement agreement or corporate integrity agreement. Given the significant size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating healthcare providers’ compliance with the healthcare reimbursement rules and fraud and abuse laws.
The laws, regulations and standards governing the provision of healthcare services may change significantly in the future. We cannot assure you that any new or changed healthcare laws, regulations or standards will not materially adversely affect our business. We cannot assure you that a review of our business by judicial, law enforcement, regulatory or accreditation authorities will not result in a determination that could adversely affect our operations.
State legislative and regulatory changes specific to the area of healthcare technology law may present the third-party medical groups and independent physicians on our platform with additional requirements and state compliance costs, which may create additional operational complexity and increase costs.
Our third-party medical groups and independent physicians’ ability to provide healthcare technology services to patients in a particular jurisdiction is dependent upon the laws that govern the provision of remote care, the practice of medicine and healthcare delivery in general in that jurisdiction. Laws and regulations governing the provision of healthcare technology services are evolving at a rapid pace and are subject to changing political, regulatory, and other influences. Some states’ regulatory agencies or medical boards may have established rules or interpreted existing rules in a manner that limits or restricts providers’ ability to provide healthcare technology services or for physicians to supervise nurse practitioners and physician assistants remotely. Additionally, there may be limitations placed on the modality through which healthcare technology services are delivered. For example, some states specifically require synchronous (or “live”) communications and restrict or exclude the use of asynchronous healthcare technology modalities, which is also known as “store-and-forward” healthcare technology. However, other states do not distinguish between synchronous and asynchronous healthcare technology services. Because this is a developing area of law and regulation, we continually monitor our compliance in every jurisdiction in which we operate. However, we cannot be assured that our third-party medical groups’ or independent providers’ activities and arrangements, if challenged, will be found to be in compliance with the law or that a new or existing law will not be implemented, enforced, or changed in manner that is unfavorable to our business model. We cannot predict the regulatory landscape for those jurisdictions in which we operate and any significant changes in law, policies, or standards, or the interpretation or enforcement thereof, could occur with little or no notice. The majority of the consultations provided through our platform are asynchronous consultations for customers located in jurisdictions that permit the use of asynchronous healthcare technology. If there is a change in laws or regulations related to our business, or the interpretation or enforcement thereof, that adversely affects our structure or operations, including greater restrictions on the use of asynchronous healthcare technology or remote supervision of nurse practitioners or physician assistants, it could have a material adverse effect on our business, financial condition, and results of operations.
Evolving government regulations and enforcement activities may require increased costs or adversely affect our results of operations.
In a regulatory climate that is uncertain, our operations may be subject to direct and indirect adoption, expansion or reinterpretation of various laws and regulations. This risk is especially acute in the healthcare industry given the level of government spending, oversight and control over the industry as a whole. Compliance with these evolving laws, regulations and interpretations may require us to change our practices at an undeterminable and possibly significant initial monetary and annual expense. These additional monetary expenditures may increase future overhead, which could have a material adverse effect on our results of operations.
There could be laws and regulations applicable to our business that we have not identified or that, if changed, may be costly to us, and we cannot predict all the ways in which implementation of such laws and regulations may affect us.
26
In the states in which we operate, we believe we are in material compliance with all applicable material regulations, but, due to the uncertain regulatory environment, certain states may determine that we are in violation of their laws and regulations. If we must remedy such violations, we may be required to modify our business and services in such states in a manner that undermines our platform’s attractiveness to customers, we may become subject to fines or other penalties or, if we determine that the requirements to operate in compliance in such states are overly burdensome, we may elect to terminate our operations in such states. In each case, our revenues may decline and our business, financial condition, and results of operations could be adversely affected.
Additionally, the introduction of new products, services, or solutions to our platform may require us to comply with additional, yet undetermined, laws and regulations. Compliance may require obtaining appropriate federal, state, or local licenses or certificates, increasing our security measures, and expending additional resources to monitor developments in applicable rules and ensure compliance. The failure to adequately comply with these future laws and regulations may delay or possibly prevent our products or services from being offered to customers, which could have a material adverse effect on our business, financial condition, and results of operations.
Changes in public policy that mandate or enhance healthcare coverage could have a material adverse effect on our business.
We cannot predict the enactment or content of new legislation and regulations or changes to existing laws or regulations or their enforcement, interpretation or application, or the effect they will have on our business or results of operations, which could be materially adverse. Even if we could predict such matters, we may not be able to reduce or eliminate the potential adverse impact of public policy changes that could fundamentally change the dynamics of our industry.
Changes in insurance and healthcare laws, as well as the potential for further healthcare reform legislation and regulation, could materially affect our business.
The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act, each enacted in March 2010, generally known as the “Health Care Reform Law,” significantly expanded health insurance coverage to uninsured Americans and changed the way healthcare is financed by both governmental and private payers. Since then, the Health Care Reform Law has prompted legislative efforts to significantly modify or repeal the Health Care Reform Law, which may impact how the federal government responds to lawsuits challenging the Health Care Reform Law. We cannot predict what further reform proposals, if any, will be adopted, when they may be adopted, or what impact they may have on our business. While we currently only accept payments from customers, not any third parties or insurance providers-and our business model may not be directly impacted by healthcare reform, healthcare reform will impact the healthcare industry in which we operate. If we are required to comply with the Health Care Reform Law and fail to comply or are unable to effectively manage such risks and uncertainties, our financial condition and results of operations could be adversely affected.
The information that we provide to healthcare providers, customers, and our partners could be inaccurate or incomplete, which could harm our business.
We collect and transmit healthcare-related information to and from our customers and providers in connection with the healthcare technology consultations conducted by the providers. If the data that we provide to our customers and providers is incorrect or incomplete or if we make mistakes in the capture or input of these data, our reputation may suffer and we could be subject to claims of liability for resulting damages. While we maintain insurance coverage, this coverage may prove to be inadequate or could cease to be available to us on acceptable terms, if at all. Even unsuccessful claims could result in substantial costs and the diversion of management resources. A claim brought against us that is uninsured or under-insured could harm our business, financial condition, and results of operations.
27
Our use, disclosure, and other processing of personally identifiable information, including health information, is subject to federal, state, and foreign privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm and, in turn, a material adverse effect on our customers, providers, and revenue.
Numerous state and federal laws and regulations govern the collection, dissemination, use, privacy, confidentiality, security, availability, integrity, and other processing of health information and other types of personal data or personally identifiable information (“PII”). We believe that, because of our operating processes, we are not a covered entity or a business associate under HIPAA, which establishes a set of national privacy and security standards for the protection of protected health information by health plans, healthcare clearinghouses, and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract for services. Notwithstanding that we do not believe that we meet the definition of a covered entity or business associate under HIPAA, we have executed business associate agreements with certain other parties and have assumed obligations that are based upon HIPAA-related requirements.
We have developed and maintained policies and procedures with respect to health information and personal information that we use or disclose in connection with our operations, including the adoption of administrative, physical, and technical safeguards to protect such information.
In addition to HIPAA, numerous other federal, state, and foreign laws and regulations protect the confidentiality, privacy, availability, integrity and security of health information and other types of PII, including the California Confidentiality of Medical Information Act. These laws and regulations in many cases are more restrictive than, and may not be preempted by, HIPAA and its implementing rules. These laws and regulations are often uncertain, contradictory, and subject to changed or differing interpretations, and we expect new laws, rules and regulations regarding privacy, data protection, and information security to be proposed and enacted in the future. This complex, dynamic legal landscape regarding privacy, data protection, and information security creates significant compliance issues for us, and the providers and potentially exposes us to additional expense, adverse publicity, and liability. While we have implemented data privacy and security measures in an effort to comply with applicable laws and regulations relating to privacy and data protection, some health information and other PII or confidential information is transmitted to us by third parties, who may not implement adequate security and privacy measures, and it is possible that laws, rules, and regulations relating to privacy, data protection, or information security may be interpreted and applied in a manner that is inconsistent with our practices or those of third parties who transmit health information and other PII or confidential information to us. If we or these third parties are found to have violated such laws, rules or regulations, it could result in government-imposed fines, orders requiring that we or these third parties change our or their practices, or criminal charges, which could adversely affect our business. Complying with these various laws and regulations could cause us to incur substantial costs or require us to change our business practices, systems, and compliance procedures in a manner adverse to our business.
We also publish statements to our customers through our privacy policy that describe how we handle health information or other PII. If federal or state regulatory authorities or private litigants consider any portion of these statements to be untrue, we may be subject to claims of deceptive practices, which could lead to significant liabilities and consequences, including, without limitation, costs of responding to investigations, defending against litigation, settling claims, and complying with regulatory or court orders. Any of the foregoing consequences could seriously harm our business and our financial results. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations and policies that are applicable to us may limit customers’ use and adoption of, and reduce the overall demand for, our platform. Any of the foregoing consequences could have a material adverse impact on our business and our financial results.
Public scrutiny of internet privacy and security issues may result in increased regulation and different industry standards, which could deter or prevent us from providing services to our customers, thereby harming our business.
The regulatory framework for privacy and security issues worldwide is evolving and is likely to remain in flux for the foreseeable future. Various government and consumer agencies have also called for new regulations and changes in industry practices. Practices regarding the registration, collection, processing, storage, sharing, disclosure, use and security of personal and other information by companies offering an online service like our platform have recently come under increased public scrutiny.
For example, the California Consumer Privacy Act (“CCPA”), which went into effect on January 1, 2020, requires, among other things, covered companies to provide new disclosures to California consumers and afford such consumers new abilities to opt-out of certain sales of personal information. Similar legislation has been proposed or adopted in other states. Aspects of the CCPA and these other state laws and regulations, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them. Additionally, a new privacy law, the California Privacy Rights Act (“CPRA”), was passed
28
on November 3, 2020 and will enter into force on January 1, 2023, with a look-back to January 2022. The CPRA will significantly modify the CCPA, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses.
Our business, including our ability to operate and to expand internationally, could be adversely affected if legislation or regulations are adopted, interpreted, or implemented in a manner that is inconsistent with our current business practices and that require changes to these practices, the design of our websites, mobile applications, solutions, features, or our privacy policies. In particular, the success of our business has been, and we expect will continue to be, driven by our ability to responsibly gather and use data from data subjects. Therefore, our business could be harmed by any significant change to applicable laws, regulations, or industry standards or practices regarding the storage, use, or disclosure of data our customers or providers share with us, or regarding the manner in which the express or implied consent of customers or providers for such collection, analysis, and disclosure is obtained. Such changes may require us to modify our platform, possibly in a material manner, and may limit our ability to develop new offerings, functionality or features.
If our security measures fail or are breached and unauthorized access to a consumer’s data is obtained, our services may be perceived as insecure, we may incur significant liabilities, our reputation may be harmed, and we could lose sales and customers.
Our services involve the storage and transmission of customers’ and our vendors’ proprietary information, sensitive or confidential data, including valuable intellectual property and personal information of employees, consumers, customers and others, as well as the protected health information, or PHI, of our customers. Because of the extreme sensitivity of the information we store and transmit, the security features of our computer, network, and communications systems infrastructure are critical to the success of our business. A breach or failure of our security measures could result from a variety of circumstances and events, including third-party action, employee negligence or error, malfeasance, computer viruses, cyber-attacks by computer hackers, failures during the process of upgrading or replacing software and databases, power outages, hardware failures, telecommunication failures, user errors, or catastrophic events. Information security risks have generally increased in recent years because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. As cyber threats continue to evolve, we may be required to expend additional resources to further enhance our information security measures and/or to investigate and remediate any information security vulnerabilities. If our security measures fail or are breached, it could result in unauthorized persons accessing sensitive consumer or partner data (including PHI), a loss of or damage to our data, an inability to access data sources, or process data or provide our services to our customers. Such failures or breaches of our security measures, or our inability to effectively resolve such failures or breaches in a timely manner, could severely damage our reputation, adversely affect customers, vendors or investor confidence in us, and reduce the demand for our services from existing and potential customers. In addition, we could face litigation, damages for contract breach, monetary penalties, or regulatory actions for violation of applicable laws or regulations and incur significant costs for remedial measures to prevent future occurrences and mitigate past violations. Although we maintain insurance covering certain security and privacy damages and claim expenses, we may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident.
We may experience cyber-security and other breach incidents that remain undetected for an extended period. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched, we may be unable to anticipate these techniques or to implement adequate preventive measures. If an actual or perceived breach of our security occurs, or if we are unable to effectively resolve such breaches in a timely manner, the market perception of the effectiveness of our security measures could be harmed and we could lose sales, customers, and vendors which could have a material adverse effect on our business, operations, and financial results.
29
Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws could subject us to penalties and other adverse consequences.
We are subject to the FCPA and other anti-corruption, anti-bribery, and anti-money laundering laws in the jurisdictions in which we do business, both domestic and abroad. These laws generally prohibit us and our employees from improperly influencing government officials or commercial parties in order to obtain or retain business, direct business to any person or gain any improper advantage. The FCPA and similar applicable anti-bribery and anti-corruption laws also prohibit our representatives and agents from engaging in corruption and bribery. We and our representatives, and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or professional entities. We may be held liable for the corrupt or other illegal activities of these intermediaries, our employees, representatives, and agents, even if we do not explicitly authorize such activities. These laws 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, we cannot assure that our employees and agents will not take actions in violation of our policies or applicable law, for which we may be ultimately held responsible. Our exposure for violating these laws will increase as we expand internationally and as we commence sales and operations in foreign jurisdictions. Any violation of the FCPA or other applicable anti-bribery, anti-corruption, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, substantial diversion of management’s attention, drop in stock price, or overall adverse consequences to our business, all of which may have an adverse effect on our reputation, business, financial condition, and results of operations.
Risks Related to Intellectual Property
Failure to protect or enforce our intellectual property rights could harm our business and results of operations.
Our intellectual property includes a combination of patent, copyright, service mark, trademark, and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection. We cannot assure you that any patents will issue with respect to our currently pending patent applications, in a manner that gives us the protection that we seek, if at all, or that any future patents issued to us will not be challenged, invalidated or circumvented. Our currently issued patents and any patents that we may issue in the future, with respect to pending or future patent applications, may not provide sufficient broad protection or they may not prove to be enforceable in actions against alleged infringers. Also, we cannot assure you that any future service mark registrations will be issued with respect to pending or future applications or that any registered service marks will be enforceable or provide adequate protection of our proprietary rights.
In addition, from time to time we make our technology and other intellectual property available to others under license agreements, including open-source license agreements and trademark licenses under agreements with our partners for the purpose of co-branding or co-marketing our products or services. We endeavor to enter into agreements with our employees and contractors and agreements with parties with whom we do business in order to limit access to and disclosure of our proprietary information. We cannot be certain that the steps we have taken will prevent unauthorized use of our technology or the reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive to ours or infringe our intellectual property.
We strive to protect our intellectual property rights by relying on federal, state, and common law rights and other rights provided under foreign laws. These laws are subject to change at any time and could further restrict our ability to protect or enforce our intellectual property rights. In addition, the existing laws of certain foreign countries in which we operate may not protect our intellectual property rights to the same extent as do the laws of the United States. The enforcement of our intellectual property rights also depends on our legal actions against these infringers being successful, but we cannot be sure these actions will be successful, even when our rights have been infringed. Furthermore, effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which our services are available over the Internet. We may, over time, increase our investment in protecting innovations through investments in filings, registrations, or similar steps to protect our intellectual property, and these processes are expensive and time-consuming.
30
We may be subject to claims in the future that we violated intellectual property rights of others, which are extremely costly to defend and could require us to pay significant damages and limit our ability to operate.
Companies in our industry, and other intellectual property rights holders seeking to profit from royalties in connection with grants of licenses, own large numbers of patents, copyrights, trademarks, and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. Our future success depends in part on not infringing upon the intellectual property rights of others. We have in the past and may in the future receive notices that claim we have misappropriated, infringed, or otherwise misused other parties’ intellectual property rights. We may be unaware of the intellectual property rights of others that may cover some or all of our technology. Because patent applications can take years to issue and are often afforded confidentiality for some period of time, there may currently be pending applications, unknown to us, that later result in issued patents that could cover our technology.
Any intellectual property claims against us or parties indemnified by us, regardless of merit, could be time consuming and expensive to settle or litigate and could divert our management’s attention and other resources. These claims also could subject us to significant liability for damages and could result in our having to stop using technology, content, branding, or business methods found to be in violation of another party’s rights. We might be required or may opt to seek a license for rights to intellectual property held by others, which may not be available on commercially reasonable terms, or at all. Even if a license is available, we could be required to pay significant royalties, which would increase our operating expenses. We may also be required to develop alternative non-infringing technology, content, branding or business methods, which could require significant effort and expense, be infeasible, or make us less competitive in the market. Such disputes could also disrupt our business, which would adversely impact our customer satisfaction and ability to attract customers. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. If we cannot license or develop technology, content, branding, or business methods for any allegedly infringing aspect of our business, we may be unable to compete effectively. Additionally, we may be obligated to indemnify our customers in connection with litigation and to obtain licenses or refund subscription fees, which could further exhaust our resources. In the case of infringement or misappropriation caused by technology that we obtain from third parties, any indemnification or other contractual protections we obtain from such third parties, if any, may be insufficient to cover the liabilities we incur as a result of such infringement or misappropriation. Any of these results could harm our results of operations.
We may be subject to legal proceedings and litigation, including intellectual property disputes, which could materially harm our business.
We may be a party to lawsuits and legal proceedings in the normal course of business. These matters are often expensive and disruptive to normal business operations. We may face allegations, lawsuits, and regulatory inquiries, audits, and investigations regarding data privacy, security, labor and employment, consumer protection, practice of medicine, and intellectual property infringement, including claims related to privacy, patents, publicity, trademarks, copyrights, and other rights. A portion of the technologies we use incorporates open source software, and we may face claims claiming ownership of open source software or patents related to that software, rights to our intellectual property or breach of open source license terms, including a demand to release material portions of our source code or otherwise seeking to enforce the terms of the applicable open source license. We may also face allegations or litigation related to our acquisitions, securities issuances, or business practices, including public disclosures about our business. Litigation and regulatory proceedings, and particularly the healthcare regulatory and class action matters we could face, may be protracted and expensive, and the results are difficult to predict. Certain of these matters may include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive relief. Additionally, our litigation costs could be significant. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, or require us to modify our solution or require us to stop offering certain features, all of which could negatively impact our acquisition of customers and revenue growth. We may also become subject to periodic audits, which could likely increase our regulatory compliance costs and may require us to change our business practices, which could negatively impact our revenue growth. Managing legal proceedings, litigation and audits, even if we achieve favorable outcomes, is time-consuming and diverts management’s attention from our business.
31
The results of regulatory proceedings, litigation, claims, and audits cannot be predicted with certainty, and determining reserves for pending litigation and other legal, regulatory and audit matters require significant judgment. There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our reputation, business, financial condition and results of operations.
We rely on data center providers, Internet infrastructure, bandwidth providers, third-party computer hardware and software, other third parties and our own systems, and any failure or interruption in the services could expose us to litigation and negatively impact our relationships with customers, adversely affecting our brand and our business.
While we control and have access to our servers, we do not control the operation of these facilities. The cloud vendor and the owners of our data center facilities have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If we are unable to renew these agreements on commercially reasonable terms, or if one of our cloud vendors or data center operators is acquired, we may be required to transfer our servers and other infrastructure to a new vendor or a new data center facility, and we may incur significant costs and possible service interruption in connection with doing so. Problems faced by our cloud vendors or third-party data center locations with the telecommunications network providers with whom we or they contract or with the systems by which our telecommunications providers allocate capacity among their customers, including us, could adversely affect the experience of our customers. Our cloud vendors or third-party data center operators could decide to close their facilities without adequate notice. In addition, any financial difficulties, such as bankruptcy faced by our cloud vendors or third-party data centers operators or any of the service providers with whom we or they contract may have negative effects on our business, the nature and extent of which are difficult to predict.
Additionally, if our cloud or data centers vendors are unable to keep up with our growing needs for capacity, this could have an adverse effect on our business. For example, a rapid expansion of our business could affect the service levels at our cloud vendors or data centers or cause such cloud systems or data centers and systems to fail. Any changes in third-party service levels at our cloud vendors or data centers or any disruptions or other performance problems with our solution could adversely affect our reputation and may damage our customers’ stored files or result in lengthy interruptions in our services. Interruptions in our services may reduce our revenue, cause us to issue refunds to customers for prepaid and unused subscriptions, subject us to potential liability or adversely affect client renewal rates.
In addition, our ability to deliver our Internet-based services depends on the development and maintenance of the infrastructure of the Internet by third parties. This includes maintenance of a reliable network backbone with the necessary speed, data capacity, bandwidth capacity and security. Our services are designed to operate without interruption in accordance with our service level commitments. However, we have experienced and expect that we may experience future interruptions and delays in services and availability from time to time. In the event of a catastrophic event with respect to one or more of our systems, we may experience an extended period of system unavailability, which could negatively impact our relationship with customers. To operate without interruption, both we and our service providers must guard against:
| · | damage from fire, power loss, natural disasters and other force majeure events outside our control; |
| · | communications failures; |
| · | software and hardware errors, failures and crashes; |
| · | security breaches, computer viruses, hacking, denial-of-service attacks and similar disruptive problems; |
| · | business interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks (such as the outbreak of COVID-19, or the novel coronavirus); and |
| · | other potential interruptions. |
We exercise limited control over third-party vendors, which increases our vulnerability to problems with technology and information services they provide. Interruptions in our network access and services may in connection with third-party technology and information services reduce our revenue, cause us to issue refunds to customers for prepaid and unused subscription services, subject us to potential liability or adversely affect client renewal rates. Although we maintain a security and privacy damages insurance policy, the coverage under our policies may not be adequate to compensate us for all losses that may occur related to the services provided by our third-party vendors. In addition, we may not be able to continue to obtain adequate insurance coverage at an acceptable cost, if at all.
32
Risks Related to Our Results of Operations and Additional Capital Requirements
Our results of operations, as well as our key metrics, may fluctuate on a quarterly and annual basis, which may result in us failing to meet the expectations of industry and securities analysts or our investors.
Our results of operations have in the past and could in the future vary significantly from quarter-to-quarter and year-to-year and may fail to match the expectations of securities analysts because of a variety of factors, many of which are outside of our control and, as a result, should not be relied upon as an indicator of future performance. As a result, we may not be able to accurately forecast our results of operations and growth rate. Any of these events could cause the market price of our common stock to fluctuate. Factors that may contribute to the variability of our results of operations include:
| · | new developments on our platform or in our product; |
| · | our ability to attract and retain providers to our platform; |
| · | changes in our pricing policies and those of our competitors; |
| · | long-term treatment outcomes of customers on our platform; |
| · | our ability to maintain relationships with customers and providers; |
| · | our ability to retain key members of our executive leadership team; |
| · | breaches of security or privacy; |
| · | the amount and timing of operating costs and capital expenditures related to the expansion of our business; |
| · | costs related to litigation, investigations, regulatory enforcement actions, or settlements; |
| · | changes in the legislative or regulatory environment, including with respect to practice of medicine, healthcare technology, privacy or data protection, or enforcement by government regulators, including fines, orders, or consent decrees; |
| · | announcements by competitors or other third parties of significant new products or acquisitions or entrance into certain markets; |
| · | our ability to make accurate accounting estimates and appropriately recognize revenue for our platform and offerings for which there are no relevant comparable products; |
| · | instability in the financial markets; |
| · | global economic conditions; and |
| · | political, economic and social instability, including terrorist activities, and any disruption these events may cause to the global economy. |
The impact of one or more of the foregoing and other factors may cause our results of operations to vary significantly. As such, we believe that quarter-to-quarter comparisons of our results of operations may not be meaningful and should not be relied upon as an indication of future performance.
We rely significantly on revenue from customers purchasing our annual subscriptions.
To date the majority of our revenue has been, and we expect it to continue to be, derived from customers who purchase our annual subscription through the platform. These customers generate a substantial majority of our revenue. The introduction of competing products with lower prices for consumers, changes in consumer purchasing habits, including an increase in the use of mail-order prescriptions, changes in the regulatory landscape, and other factors could result in changes to our contracts or a decline in our revenue, which may have an adverse effect on our business, financial condition, and results of operations. Because we derive a vast majority of our revenue from customers who purchase our annual subscriptions, any material decline in such purchases could have a pronounced impact on our future revenue and results of operations, particularly if we are unable to expand our offerings overall.
33
We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our business, results of operations, and financial condition.
As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the listing standards of the NASDAQ Capital Market, and other applicable securities rules and regulations. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems, and resources. For example, the Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations. As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management’s attention may be diverted from other business concerns, which could harm our business, results of operations, and financial condition. Although we have already hired additional employees to assist us in complying with these requirements, we may need to hire more employees in the future or engage outside consultants, which will increase our operating expenses.
In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest substantial resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from business operations to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
The Company is committed to strengthening its internal control environment and addressing the identified material weaknesses. As part of its remediation plan, management intends to utilize a portion of the proceeds from the contemplated public offering to further enhance its finance and accounting function by expanding its accounting team and adding experienced financial personnel as appropriate to support the Company's continued growth and public company reporting obligations.
The Company will also continue to engage qualified third-party financial and accounting consultants to evaluate and strengthen its internal control environment, recommend enhancements, and assist management in implementing best practices designed to improve the effectiveness of the Company's internal controls over financial reporting and its overall corporate governance processes.
Management believes these initiatives will further strengthen the Company's financial reporting infrastructure and internal control environment as it continues its transition to a Nasdaq-listed public company.
Certain U.S. state tax authorities may assert that we have a state nexus and seek to impose state and local income and sales taxes which could harm our results of operations.
There is a risk that certain state tax authorities where we do not currently file a state income tax return or collect sales tax could assert that we are liable for state and local income and sales taxes based upon income, sales, or gross receipts allocable to such states. States are becoming increasingly aggressive in asserting a nexus for state income and sales tax purposes. If a state tax authority successfully asserts that our activities give rise to a nexus, we could be subject to state and local taxation, including penalties and interest attributable to prior periods. Such tax assessments, penalties and interest may adversely impact our results of operations.
Risks Related to Our Common Stock and this Offering
The Company is a holding company with no operations of its own, and it depends on its operating subsidiary for cash to fund all of its operations and expenses, including to make future dividend payments, if any.
34
Our operations are conducted entirely through our operating subsidiaries, and our ability to generate cash to fund operations and expenses, to pay dividends or to meet debt service obligations is highly dependent on the earnings and the receipt of funds from our affiliates through dividends or intercompany loans. Deterioration in the financial condition, earnings or cash flow of the Company and its affiliates for any reason could limit or impair their ability to pay such distributions.
Additionally, to the extent that the Company needs funds, and its affiliates are restricted from making such distributions under applicable law or regulation or under the terms of our financing arrangements, or are otherwise unable to provide such funds, it could materially adversely affect our business, financial condition, results of operations, and cash flows.
Our charter documents and Delaware law could make it more difficult for a third party to acquire us and discourage a takeover.
Our Certificate of Incorporation, Bylaws, and Delaware law contain certain provisions that may have the effect of deterring or discouraging, among other things, a non-negotiated tender or exchange offer for shares of Common Stock, a proxy contest for control of our company, the assumption of control of our company by a holder of a large block of Common Stock, and the removal of the management of our company. Such provisions also may have the effect of deterring or discouraging a transaction which might otherwise be beneficial to stockholders. Our Certificate of Incorporation also may authorize our board of directors, without stockholder approval, to issue one or more series of preferred stock, which could have voting and conversion rights that adversely affect or dilute the voting power of the holders of Common Stock. Delaware law also imposes conditions on certain business combination transactions with “interested stockholders.” Our Bylaws authorize our Board of Directors to fill vacancies or newly created directorships. A majority of the directors then in office may elect a successor to fill any vacancies or newly created directorships. Such provisions could limit the price that investors might be willing to pay in the future for shares of our Common Stock and impede the ability of the stockholders to replace management.
The elimination of monetary liability against our directors, officers, and employees under Delaware law and the existence of indemnification rights to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers, and employees. We also may have entered into contractual indemnification obligations under employment agreements with our executive officers. The foregoing indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage us from bringing a lawsuit against our directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by our stockholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and our stockholders.
We currently do not intend to pay dividends on our Common Stock. As a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.
We currently do not expect to declare or pay dividends on our Common Stock. In addition, in the future we may enter into agreements that prohibit or restrict our ability to declare or pay dividends on our Common Stock. As a result, your only opportunity to achieve a return on your investment will be if the market price of our common stock appreciates and you sell your shares at a profit.
You may experience dilution of your ownership interest due to the possible future issuance of additional shares of our Common Stock.
We are in a capital-intensive business and we may not have sufficient funds to finance the growth of our business or to support our projected capital expenditures. As a result, we would require additional funds from future equity or debt financings, including sales of preferred shares or convertible debt, to complete the development of new projects and pay the general and administrative costs of our business. We may in the future issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of holders of our Common Stock. We are currently authorized to issue 100,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock. Additionally, the Board may subsequently approve increases in authorized Common Stock. The potential issuance of such additional shares of Common or Preferred Stock or convertible debt may create downward pressure on the trading price of our Common Stock. We may also issue additional shares of Common Stock or other securities that are convertible into or exercisable for common stock in future public offerings or private placements for capital raising purposes or for other business purposes. The future issuance of a substantial number of common shares into the public market, or the perception that such issuance could occur, could adversely affect the prevailing market price of our Common Shares. A decline in the price of our Common Shares could make it more difficult to raise funds through future offerings of our Common Shares or securities convertible into common shares.
35
If and when a trading market for our securities develops, the market price of such securities is still likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your securities at or above the price at which you acquired them.
The stock market in general and the market for smaller health service companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price for our securities may be influenced by many factors that are beyond our control, including, but not limited to:
| · | actual or anticipated changed in our operating results; |
| · | our ability to execute our business plan; |
| · | variations in our quarterly results; |
| · | changes in expectations relating to our products, plans, and strategic position or those of our competitors or customers; |
| · | announcements or introduction of technological innovations or new products by us or our competitors; |
| · | market conditions within our market; |
| · | the sale of even small blocks of Common Stock by stockholders; |
| · | price and volume fluctuations in the overall stock market from time to time; |
| · | significant volatility in the market price and trading volume of public companies in general and small emerging companies in particular; |
| · | changes in investor perceptions; |
| · | the level and quality of any research analyst coverage of our Common Stock, changes in earnings estimates or investment recommendations by securities analysis, or our failure to meet such estimates; |
| · | any financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance; |
| · | various market factors or perceived market factors, including rumors, whether or not correct, involving us, our customers, or our competitors; |
| · | future sales of our Common Stock; |
| · | Introductions of new products or new pricing policies by us or by our competitors; |
| · | acquisitions or strategic alliances by us or by our competitors; |
| · | litigation involving us, our competitors, or our industry; |
| · | regulatory, legislative, political, and other developments that may affect us, our customers, and the purchasers of our products; |
| · | the gain or loss of significant customers; |
| · | the volume and timing of customers’ orders; |
| · | recruitment or departure of key personnel; |
| · | developments with respect to intellectual property rights; |
| · | our international acceptance; |
| · | market conditions in our industry, the business success of our customers, and economy as a whole; and |
| · | general global economic and political instability. |
The trading price of our shares might also decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors, among others, could harm the value of your investment in our securities. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, operating results and financial condition.
If securities or industry analysts do not publish or cease publishing research or reports about us, or publish inaccurate or unfavorable reports about, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The trading market for our common stock, to some extent, will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts.
36
A substantial portion of our total issued and outstanding shares may be sold into the market at any time. This could cause the market price of our Common Stock to drop significantly, even if our business is doing well.
All of the Common Stock being sold in this Offering will be freely tradable without restrictions or further registration under the federal securities laws unless purchased by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. Of the remaining shares of Common Stock issued and outstanding upon the closing of this Offering, approximately % are restricted securities as defined in Rule 144 under the Securities Act. Restricted securities may be sold in the United States public market only if registered or if they qualify for an exemption from registration, including by reason of Rules 144 or 701 under the Securities Act. All of our restricted Common Stock will be eligible for sale in the public market 12 months following the effective date of the registration for this Offering, subject in certain circumstances to the volume, manner of sale and other limitations under Rule 144, and also the lock-up agreements described under “Underwriting” in this prospectus. Additionally, we may register all our Common Stock that we may issue under our employee benefit plans. Once we register these shares of Common Stock, they can be freely sold in the public market upon issuance, unless pursuant to their terms these share awards have transfer restrictions attached to them. Sales of a substantial number of shares of our Common Stock, or the perception in the market that the holders of a large number of shares intend to sell their Common Stock, could reduce the market price of our Common Stock.
If our listing application for our Common Stock is not approved by NASDAQ Capital, we will not be able to consummate the Offering and will terminate the Offering.
If our listing application is not approved by NASDAQ Capital, we will not be able to consummate the Offering and will terminate the Offering. Failure to have our Common Stock listed on NASDAQ Capital would make it more difficult for our stockholders to dispose of our Common Stock and more difficult to obtain accurate price quotations on our Common Stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our Common Stock is not traded on a national securities exchange.
For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.
We are classified as an “emerging growth company” under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things: (i) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; (iii) provide certain disclosures regarding executive compensation required of larger public companies; or (iv) hold nonbinding advisory votes on executive compensation. We will remain an emerging growth company for up to five years, although we will lose that status sooner if we have more than $1.235 billion of revenue in a fiscal year, have more than $700 million in market value of our Common Stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.
To the extent that we rely on any exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find our Common Stock to be less attractive as a result, there may be a less active trading market for our Common Stock, and their trading prices may be more volatile.
If you purchase our Common Stock in the Offering, you will suffer immediate and substantial dilution of your investment.
The offering price of the Common Stock is substantially higher than the net tangible book value per share. Therefore, if you purchase Common Stock in the Offering, your interest will be diluted immediately to the extent of the difference between the offering price and the net tangible book value per share after this Offering. See “Dilution.”
Exercise of warrants, and issuance of incentive stock grants may have a dilutive effective on our Stock, and negatively impact the price of our Common Stock.
As a part of this Offering, underwriter warrants will be issued. The underwriter warrants consist of warrants to purchase shares of Common Stock at an exercise price of $4.80 per share during the period commencing upon issuance and ending five years after the commencement of sales in this offering .
37
In September 2025, the Company approved the 2025 Equity and Incentive Plan (“the Plan”). Under the Plan, 50,000,000 shares of common stock were reserved and authorized to be issued. As of June 30, 2026, there have been no shares issued under the Plan.
To the extent that any of the warrants described above are exercised, dilution, to the interests of our stockholders may occur. For the life of such warrants, the holders will have the opportunity to profit from a rise in the price of the Common Stock with a resulting dilution in the interest of the other holders of Common Stock. The existence of such warrants may adversely affect the market price of our Common Stock and the terms on which we can obtain additional financing, and the holders of such warrants can be expected to exercise them at a time when we would, in all likelihood, be able to obtain additional capital by an offering of our unissued capital stock on terms more favorable to us than those provided by such warrants and options.
Effect of Issuance of Preferred Stock May Discourage, Delay, or Prevent a Change in Control
Our Certificate of Incorporation allow us to issue Preferred Stock with voting, liquidation, and dividend rights senior to those of the Common Stock without the approval of our stockholders. The issuance of Preferred Stock could have the effect of making it more difficult for a third party to acquire a majority of the outstanding stock of our company and result in the dilution of the value of the then current stockholders’ Common Stock. We have no current plans to issue additional shares of Preferred Stock. We are authorized to issue 5,000,000 shares of preferred stock with such designations, rights and preferences as may be determined from time to time by the Board of Directors. We have issued 100 shares of Series A Preferred stock with 80% of the voting power in the Company. The Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our Common Stock. The issuance of the 100 shares of Series A preferred stock has been utilized as a method of discouraging, delaying or preventing a change in control of the Company.
As a “controlled company,” as defined in the NASDAQ Capital Market (“NASDAQ”) Rules, we may choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public shareholders, and you may not have the protection of certain corporate governance requirements which are otherwise required by NASDAQ’s rules.
Under NASDAQ’s Rules, a controlled company is a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company. We are a controlled company because our executive officers have 38,114,688 votes based on 8,000,004 shares of Common Stock issued and outstanding and we expect we will continue to be a controlled company upon completion of this offering. For so long as we remain a controlled company, we are not required to comply with the following requirements and are permitted to elect to rely, and may rely, on certain exemptions from the obligation to comply with certain NASDAQ corporate governance requirements, including:
• an exemption from the rule that a majority of our Board must be independent directors;
• an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors or a compensation committee comprised solely of independent directors; and
• an exemption from the rule that our director nominees must be selected or recommended to the board of directors by a majority of its independent directors or by a nominating and corporate governance committee that is composed entirely of independent directors.
As long as our officers and directors, either individually or in the aggregate, own at least 50% of the voting power of our company, we are a “controlled company” as defined under NASDAQ Rules.
Accordingly, to the extent that we may choose to rely on one or more of these exemptions, our shareholders would not be afforded the same protections generally as shareholders of other NASDAQ-listed companies for so long as our officer/director shareholders are collectively able to control the composition of our Board and our Board determines to rely upon one or more of such exemptions.
Purchasers of our common shares will be unable to elect any directors of our company or participate in our corporate governance.
38
We presently have not taken advantage of these exemptions. Although we do not currently intend to take advantage of the controlled company exemptions, we cannot assure you that, in the future, we will not seek to take advantage of these exemptions. If we cease to be a “controlled company” in the future, we will be required to comply with the NASDAQ listing standards, which may require replacing a number of our directors and will require development of certain other governance-related policies and practices. These and any other actions necessary to achieve compliance with such rules may increase our legal and administrative costs, will make some activities more difficult, time-consuming and costly and may also place additional strain on our personnel, systems and resources.
We are a controlled company because our executive officers hold 6,114,672 shares of Common Stock and 100 shares of Series A Preferred Stock with 80% of the voting power in the Company which is equivalent to 32,000,016 votes under the present number of issued and outstanding shares of Common Stock (8,000,004 shares) regardless of how many shares of Series A Preferred Stock are issued and outstanding and as long as at least one share of Series A Preferred Stock is issued and outstanding. Accordingly, the total number of votes held by our executive officers is 38,114,688.
39
We estimate that the net proceeds from this offering, after deducting underwriting discounts and offering expenses payable by us, will be approximately $11,948,000 assuming a public offering price of $4.00 per share, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriter’s over-allotment option is exercised in full, we estimate that our net proceeds will be approximately $13,996,000.
We intend to use the net proceeds of this offering (assuming no exercise of over-allotment option), as follows:
Use of Funds |
|
|
|
|
Operations and Administration |
| $ | 2,550,000 |
|
Marketing, Research and Development, and Business Development |
|
| 3,000,000 |
|
Merger and Acquisition |
|
| 2,000,000 |
|
Working Capital (Reserves) |
|
| 4,398,000 |
|
Total Uses |
| $ | 11,948,000 |
|
We may change the amount of net proceeds to be used specifically for any of the foregoing purposes. The amounts and timing of our actual expenditures will depend upon numerous factors. We may also use a portion of the net proceeds to acquire, license and invest in complementary products, technologies or additional businesses; however, we currently have no agreements or commitments with respect to any such transaction.
A $1.00 increase (decrease) in the assumed public offering price would increase (decrease) the net proceeds to us from this offering by approximately $3,412,500, after deducting the estimated underwriting discounts, non-accountable expense allowance and estimated aggregate other offering expenses payable by us and assuming no change to the number of shares of common stock offered by us as set forth on the cover page of this prospectus.
The foregoing represents our current intentions based upon our present plans and business conditions to allocate and use the net proceeds of this offering. However, the nature, amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management has and will retain broad discretion over the allocation of the net proceeds from this offering. We may find it necessary or advisable to use the net proceeds from this offering for other purposes, and we will have broad discretion in the application of net proceeds from this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments, and U.S. government securities.
40
The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2026. Such information is set forth on the following basis:
· | an actual basis as of June 30, 2026; and |
|
|
· | on an as adjusted basis to give effect to reflect our sale of 3,750,000 shares of Common Stock in this offering at the assumed public offering price of approximately $4.00 per share, after deducting approximately $3,052,000 of estimated underwriting discounts and commissions and estimated offering expenses payable by us. |
The as adjusted information below is illustrative only and our capitalization following the closing of this offering will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. You should read this information together with our financial statements and the related notes thereto included elsewhere in this prospectus and the information set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.
|
| As of June 30, 2026 |
|
|
|
| ||
|
| Actual |
|
| As Adjusted |
| ||
|
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 6,146 |
|
| $ | 11,954,617 |
|
Total Indebtedness |
|
| 763,860 |
|
|
| 763,860 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit |
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 5,000,000 shares authorized, Series A preferred stock, $0.0001 par value; 100 shares issued and outstanding on an actual basis and 100 shares issued and outstanding on an as adjusted basis. |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value; 100,000,000 shares authorized; 8,000,004 shares issued and outstanding on an actual basis and 11,750,004 shares issued and outstanding on an as adjusted basis. |
|
| 800 |
|
|
| 1,175 |
|
Additional paid-in capital |
|
| 2,604,124 |
|
|
| 14,552,220 |
|
Accumulated deficit |
|
| (5,337,798 | ) |
|
| (5,337,798) |
|
Total stockholders’ (deficit) equity |
|
| (2,732,874 | ) |
|
| 9,215,597 |
|
Total capitalization |
| $ | (1,969,014 | ) |
| $ | 9,979,457 |
|
The number of common shares that will be outstanding after this offering set forth above is based on shares of our common stock outstanding as of June 30, 2026, after giving effect to the Reverse Stock Split.
Each $1.00 increase (decrease) in the assumed public offering price of approximately $4.00 per share would increase (decrease) the as adjusted amount of cash and cash equivalents, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $3,412,500, assuming that the number of shares of Common Stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
The number of shares of our Common Stock to be outstanding after this offering will be 11,750,004 shares based on 8,000,004 shares of our Common Stock outstanding as of September 14, 2026. The as adjusted numbers do not take into account the issuance of any over-allotment shares.
41
If you purchase shares of our common stock offered by this prospectus, your interest will be diluted immediately to the extent of the difference between the initial public offering price and the pro forma as adjusted net tangible book value per share of our common stock immediately upon the consummation of this offering.
As of June 30, 2026, our historical net tangible book value was $(2,732,874) or $(0.34) per share of Common Stock. Historical net tangible book value per share represents the amount of our total tangible assets reduced by total liabilities, divided by the number of shares of Common Stock outstanding on June 30, 2026.
After giving effect to the sale of 3,750,000 shares of Common Stock, at the assumed offering price of approximately $4.00 per share, after deducting approximately $3,052,000 in estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of June 30, 2026 would have been $9,215,597 or $0.78 per share of Common Stock. This represents an immediate increase in pro forma net tangible book value to our existing stockholders of $1.12 per share and an immediate dilution to new investors of $3.22 per share. Dilution per share to new investors represents the difference between the price per share to be paid by new investors for the shares of common stock sold in this offering and the pro forma as adjusted net tangible book value per share immediately after this offering.
The following table illustrates this dilution on a per share basis:
|
|
| Offering Without Over-Allotment |
|
| Offering With Over-Allotment |
|
Assumed offering price per share |
| $ | 4.00 |
| $ | 4.00 |
|
Historical net tangible book value per share as of June 30, 2026 |
| $ | (0.34) |
| $ | (0.34) |
|
|
|
|
|
|
|
|
|
Increase in pro forma net tangible book value per share attributable to new investors |
| $ | 1.12 |
| $ | 1.26 |
|
Pro forma as adjusted net tangible book value per share after the offering |
| $ | 0.78 |
| $ | 0.92 |
|
Dilution per share to new investors participating in this offering |
| $ | 3.22 |
| $ | 3.08 |
|
Assuming the underwriters’ over-allotment option is not exercised, each $1.00 increase (decrease) in the assumed public offering price of $4.00 per share of Common Stock would increase (decrease) our net tangible book value after this offering by approximately $0.91 per share, and increase (decrease) the dilution per share to new investors by approximately $0.16 per share, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us in full.
Assuming the underwriters’ over-allotment option is exercised in full to purchase 562,500 additional shares of Common Stock in this offering, each $1.00 increase (decrease) in the assumed public offering price of $4.00 per share of Common Stock would increase (decrease) our net tangible book value after this offering by approximately $1.38 ($0.44) per share, and increase (decrease) the dilution per share to new investors by approximately $0.45 ($0.19) per share, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us in full.
The number of shares of our Common Stock to be outstanding after this offering (i.e., 11,750,004 shares) is based on 8,000,004 shares of our Common Stock outstanding as of September 14, 2026.
If we issue additional shares of Common Stock in the future, there could be further dilution to investors participating in this offering. In addition, we anticipate needing to raise additional capital before generating positive cash flows and we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders. To the extent any outstanding options or other rights are exercised, or we issue additional equity or convertible securities in the future, there will be further dilution to new investors.
Except as otherwise indicated, all information in this prospectus assumes no exercise of the underwriters’ option to purchase up to an additional 15% of shares of Common Stock to cover over-allotments.
42
DETERMINATION OF OFFERING PRICE
The offering price for the shares of Common Stock offered by this prospectus has been negotiated between the underwriter and us. In determining such offering price and exercise price, the following factors were considered:
| · | prevailing market conditions; |
|
|
|
| · | our historical performance and capital structure; |
|
|
|
| · | estimates of our business potential and earnings prospects; |
|
|
|
| · | an overall assessment of our management; and |
|
|
|
| · | the consideration of these factors in relation to the market valuation of companies in related businesses. |
Transactions in our Common Stock are currently reported under the symbol “VRHI” on the OTCIQ. Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.
As of June 30, 2026, there are approximately 100 record holders of our shares of Common Stock.
43
Holders of our shares of Common Stock are entitled to dividends when, as and if declared by our Board of Directors out of legally available funds.
We have not declared or paid any dividends in the past to the holders of our Common Stock and do not currently anticipate declaring or paying any dividends in the foreseeable future. We intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy will be subject to the discretion of our Board of Directors and will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions, and other factors. Therefore, we can give no assurance that any dividends of any kind will ever be paid to holders of our Common Stock.
44
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements regarding our business development plans, pre-clinical and clinical studies, regulatory reviews, timing, strategies, expectations, anticipated expenses levels, business prospects and positioning with respect to market, demographic and pricing trends, business outlook, technology spending and various other matters (including contingent liabilities and obligations and changes in accounting policies, standards and interpretations) and express our current intentions, beliefs, expectations, strategies or predictions. These forward-looking statements are based on a number of assumptions and currently available information and are subject to a number of risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Special Note Regarding Forward-Looking Statements” and under “Risk Factors” and elsewhere in this Prospectus. The following discussion should be read in conjunction with our financial statements and related notes thereto included elsewhere in this Prospectus.
Corporate History
We conduct our business through our wholly-owned subsidiaries. Our subsidiary, Veriheal Inc. (“Veriheal”) was founded in the state of Delaware on November 17, 2017 and redomiciled in state of Wyoming in January 2026, by Joshua Green and Samuel Adetunji to provide concierge services to patients seeking prescription cards for medical marijuana. The idea was born out of their own difficulties in obtaining medical cannabis in Washington DC. Mr. Green and Mr. Adetunji saw that there were not any credible tech platforms or one-stop-shop providers that provided services for patients looking to adopt medical cannabis in their treatment plan. Mr. Green and Mr. Adetunji also both observed the benefits of medical cannabis in helping family, friends and those in need cope with severe medical conditions such as cancer. As a result, both saw a significant potential in providing a tech-oriented platform to assist with the procurement of medical cannabis cards and education around medical cannabis use.
Effective on January 1, 2025, Veri Holdings, Inc. (“Veri Holdings’’) merged with and into Veri Medtech Holdings, Inc. (the “Company”) in a transaction treated as a reverse merger and recapitalization of Veri Holdings. Veri Holdings was incorporated in August 2023 and acquired Alternative Medical Clinic LLC (“AMC”) and Dosepop in 2023. Veriheal Inc. (“Veriheal”), was incorporated in November 2017 and is the primary operating entity which operates as a digital healthcare company with a fully technology-enabled service model via its healthcare technology platform which provides accessible consultations for alternative medicine and medical cannabis and offers on-demand virtual consultations via video and chat, allowing patients to discuss sensitive health issues confidentially and receive personalized treatment plans. On December 31, 2024, Veri Holdings acquired Veriheal. All entities were under common control during years 2024 and 2025 and became consolidated on December 31, 2024. Therefore, the accompanying financial statements are presented on a retrospective basis as consolidated financial statements for all periods presented.
Veri Medtech Holdings serves as a holding company for operating wholly owned subsidiaries:
| · | Veriheal Inc. formed in the state of Delaware on November 17, 2017 and redomiciled in state of Wyoming on January 2, 2026; |
| · | Alternative Medical Clinic LLC formed in the state of Delaware on April 28, 2023; |
| · | DosePop Inc. (f/k/a “Verinew”) was formed in the state of Delaware on June 23, 2023 |
| · | Sky Clinics LLC formed in the state of Wyoming on January 12, 2026 |
Since its founding, the Company has increased its coverage to more states and has also added a service to provide personal or educational consultations for patients looking for more hand holding than just a doctor’s prescription for a medical cannabis card. The Company has also grown the number of doctors on its platform over time as the Company and medical cannabis industry gain further traction. Throughout, the Company has also invested in building a team of software developers and customer service associates.
45
Business Overview and Strategy
Veri MedTech Holdings, Inc. (“Veri MedTech” or the “Company” or “VRHI”) is a healthcare technology company that provides access to alternative medicine for sensitive health issues, through discreet and personalized online care. The Company operates as a health technology leader at the intersection of healthcare technology, alternative healthcare, and direct-to-consumer wellness solutions. Our core strength lies in our proven ability to disrupt traditional healthcare models by leveraging cutting-edge technology, data analytics, and strategic marketing to serve millions of patients in the United States and beyond.
Veri MedTech was built on the foundation of solving real-world healthcare access challenges. The Company began with its first subsidiary, Veriheal, which quickly became the largest medical cannabis healthcare technology platform in the U.S., providing seamless doctor-patient connectivity, patient education, and digital prescription approvals. Over the past five years, Veriheal has processed over 350,000 medical cannabis patient approvals and generated over $100 million in revenue, demonstrating the ability to scale, dominate, and innovate within a niche healthcare sector.
With this track record of success in the alternative medicine space, the Company is now expanding its business model into broader healthcare technology through DosePop-a next-generation, direct-to-consumer healthcare technology platform designed specifically for Millennials and Gen Z. DosePop is set to revolutionize access to essential wellness, mental health, and lifestyle-enhancing medications, including weight loss treatments, dermatology prescriptions, ADHD therapy, sexual health, peptides, and anti-aging solutions.
Together, Veriheal and DosePop form the backbone of Veri MedTech’s diversified healthcare technology strategy, creating an ecosystem where patients seamlessly transition between alternative medicine and mainstream wellness services. This strategic synergy-referred to as the “Infinite Wellness Loop”-allows Veri MedTech to cross-sell, retain, and maximize patient lifetime value in a way that no other healthcare technology provider currently does.
In January 2026, Veri Medtech formed, a new wholly-owned subsidiary, Sky Clinics. The goal for Sky Clinics is to provide a technology-enabled clinical infrastructure platform. Sky Clinics is in initial idea, incubation stage with no revenue, no operations.
With a proven business model, deep industry expertise, and a high-growth roadmap, Veri MedTech is poised to become the dominant force in the next generation of digital healthcare. the Company is redefining patient access, removing barriers to treatment, and creating an ecosystem where healthcare is convenient, personalized, and stigma-free.
Corporate Overview
The idea for Veriheal was born out of personal necessity. The Company’s founders, experienced firsthand the difficulties of obtaining a medical cannabis prescription in Washington, D.C. Despite the increasing medical research supporting cannabis as a treatment for chronic pain, PTSD, and other conditions, patients faced significant obstacles in gaining access to legal medical cannabis.
The absence of a streamlined, tech-enabled solution inspired them to create Veriheal-a patient-first, digital concierge service that connects individuals with licensed physicians who can approve them for medical cannabis cards. From a small startup disrupting a niche market, Veriheal has since grown into a national powerhouse, serving hundreds of thousands of patients across every legal medical cannabis state in the U.S.
By developing their own proprietary cutting-edge healthcare technology, data-driven insights, and next-generation patient engagement strategies, Veriheal is redefining the way people access medical cannabis. Veriheal’s strength lies in its unique ability to market, scale, and dominate underserved healthcare verticals, leveraging proprietary technology, customer acquisition expertise, and strategic partnerships to create the most accessible, patient-focused healthcare technology experience in the industry.
46
Business Overview and Strategy
Veri Medtech Holdings is a healthcare technology and ePrescribe company and is focused on providing a platform that offers a concierge like service to patients that are looking to obtain a medical cannabis card for personal use. Veri Medtech Holdings MedTech platform enables the connection between patients and doctors for facilitating the procurement of medical cannabis cards. The key offerings include a HIPAA-compliant platform that allows patients to access all the relevant information with respect to obtaining a marijuana card, search for qualified doctors that are knowledgeable about medical marijuana and are authorized to provide prescriptions. The platform also provides information on the nearest dispensaries that the patient can use to procure medical cannabis.
The Company over the years has grown both by investing in its service offerings as well as geographical expansion across the continental United States. Veri Medtech Holdings has grown from operating solely in Washington state to now operating nationwide. The Company has also expanded its service offerings by moving beyond doctor consultations for obtaining marijuana cards to introducing cannabis education focused consultations with coaches that new medical cannabis consumers can book to learn more about the “how” and “what” of medical cannabis.
The Company has built a formidable position in the United States’ healthcare technology industry by developing a leading technology platform that provides patients the ability to see a qualified doctor both online and in person, unlike its key competitors that offer online consultations only. As a result, it has become the largest volume issuer of cannabis cards (5.3% US market share), along with maintaining the largest coverage area in the US amongst its competitors as it can provide services in states that allow healthcare technology as well as those that only allow in person visits. Its market leading presence is also evident in the large lead it has taken in terms of followers on social media platforms. Veri Medtech Holdings strong well-rounded management team has been instrumental in laying the groundwork with superior execution and strategy. The management team has dedicated considerable resources to perfect the Company’s digital platform, building out a large doctor’s network and setting up a customer care operation.
The Company has quickly scaled to an enviable position in a rapidly growing industry. Its market presence is currently considerably larger than its competitors. The scale difference between the Company and its competitors is a function of multiple factors. The Company was one of the early entrants in its market segment as the founders saw a need for this service from their own personal experience. Early entry into the market allowed the company to get a leg up over competitors. Veri Medtech Holdings has approximately 430,000 paid successful patient approvals from inception up to June 30, 2026. The Company also refers to these successful patient approvals as paid subscribers or activated patients. The Company defines a successful patient approval as a patient who (i) registered on the Veriheal platform, (ii) paid for services, and (iii) obtained a physician certification through the platform. This metric excludes unpaid registrations, abandoned bookings, or incomplete consultations. Patient retention rate is another metric that measures the percentage of patients who continue and return to renew for the same service year over year. Revenue per paid subscriber is measured by calculating total revenue generated during a period and dividing it by the total number of paid subscribers or successful patient approvals in that period. Management uses these metrics to make informed decisions for marketing purposes.
For the years ended December 31, 2025 and 2024, we have approximately 71,000 and 101,000 successful patient approvals and approximately $152 and $164 revenue per paid subscriber, respectively. For the three months ended June 30, 2026, and 2025, we had approximately 13,800 and 18,800 successful patient approvals, respectively, and generated approximately $149 and $152 in revenue per paid subscriber, respectively, and for the six months ended June 30, 2026, and 2025, we had approximately 29,600 and 40,200 successful patient approvals, respectively, and generated approximately $151 and $152 in revenue per paid subscriber, respectively, on the Veriheal platform.
The Company operates in the business of providing services to procure medical cannabis card, which is subject to evolving market trends, regulatory uncertainty, and fluctuations in patient participation. Demand for the Company’s services is driven in part by the recurring nature of medical marijuana license applications and renewals and by the increasing complexity of state regulatory requirements. However, the Company’s operating results may fluctuate due to changes in state laws and regulations, including modifications to qualifying conditions, renewal procedures, and administrative requirements, as well as the continued federal illegality of marijuana, which creates uncertainty related to enforcement, banking access, and taxation. In addition, patient demand and renewal activity may vary based on economic conditions, competitive pressures, and the timing of regulatory deadlines, which could result in period-to-period variability in revenue and cash flows. See our discussion under Revenues related to fluctuations due to state regulations and restrictions.
47
Results of Operations
The following discussion should be read in conjunction with the Company’s consolidated financial statements and notes thereto included elsewhere in this Report.
Year ended December 31, 2025, as compared to the year Ended December 31, 2024
Revenues
Revenues for the year ended December 31, 2025, were approximately $10.8 million, a decrease of approximately 35% compared to approximately $16.7 million for the year ended December 31, 2024. The decline in revenues was primarily driven by regulatory changes affecting telemedicine services. The state of Florida, a top 10 state in our market, revised its requirements, mandating in-person consultations for medical marijuana certifications instead of allowing online telemedicine. Given that our core business model heavily relies on telemedicine, this shift had a material impact. Similar restrictions were implemented in states such as Arizona and Colorado.
Cost of Revenues
Cost of revenues for the year ended December 31, 2025, were approximately $2.7 million, a decrease of approximately 37% compared to approximately $4.3 million for the year ended December 31, 2024. Total cost of revenues consists primarily of fees paid to contracted physicians for consultation services (approximately 25% and 26% of revenues for the years ended December 31, 2025, and 2024, respectively) and merchant processing fees (approximately 3% of revenues for both periods). This decrease is primarily attributable to the decrease in revenues as discussed above.
Gross Profit
Gross profit for the year ended December 31, 2025, was approximately $8.2 million, a decrease of approximately 34% compared to approximately $12.4 million for the year ended December 31, 2024. Gross margins were approximately 75% and 74% for the years ended December 31, 2025, and 2024, respectively. This decrease in gross profit is primarily attributable to the decrease in revenues as discussed above.
Operating Expenses
Total operating expenses for the years ended December 31, 2025 and 2024 were approximately $10,414,000 and $12,691,000, respectively. The approximate $2,277,000 decrease in operating expenses for the year ended December 31, 2025, as compared to the year ended December 31, 2024, is comprised of (i) the increase in compensation expense of approximately $1,464,000 which was primarily attributable to stock-based compensation of approximately $2,193,000 in connection with restricted common stock award grants to our officers offset by the decrease in overall salaries and employee related health benefits of approximately $729,000 due to decreased number of employees, (ii) decrease in professional, consulting and contractor fees of approximately $23,000 primarily due to decreases in legal expenses, outsourced IT and contractors expenses as a result of cost cutting measures offset by increase in stock-based compensation in connection with restricted common stock award grants to certain consultants and increase in accounting fees related to audit services, compliance and reporting related accounting services, (iii) an increase in technology expense of approximately $63,000 due to continued investment in maintaining platform stability, (iv) a decrease of approximately $3,568,000 in sales and marketing expenses due to tighter campaign management, moderated volume-driven spend, and a strategic shift toward higher-return marketing channels, (v) a decrease in rent and occupancy expenses of approximately $62,000 primarily due to space optimization initiatives implemented during the year, including consolidation of facility usage, and elimination of underutilized areas, and (vi) a decrease in general and administrative costs of approximately $151,000 primarily due to decrease in sponsorship, insurance expenses, and office expenses due to cost cutting measures implemented by the management.
Income (Loss) from Operations
We reported loss from operations of approximately $(2,247,000) and $(302,000) for the years ended December 31, 2025, and 2024, respectively.
Total Other Expense, Net
We reported other expenses, net of approximately $73,000 and $107,000 for the years December 31, 2025, and 2024, respectively. We incurred interest expense of approximately $72,000 and $105,000 for the years ended December 31, 2025, and 2024, respectively related to a promissory note with a bank.
48
Net Loss
We reported a net loss of approximately $(2,320,000) and $(409,000) for the years ended December 31, 2025, and 2024, respectively. The change relates to the factors discussed above.
Liquidity and Capital Resources
The following table summarizes total current assets, liabilities and working capital deficit at December 31, 2025, compared to December 31, 2024, and the changes between those periods:
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
Total Current Assets |
| $ | 136,451 |
|
| $ | 161,081 |
|
Total Current Liabilities |
|
| 2,180,990 |
|
|
| 2,674,787 |
|
Working Capital Deficit |
| $ | (2,044,539 | ) |
| $ | (2,513,706 | ) |
Despite the negative working capital position, the Company continues to meet its obligations. Management remains focused on improving cash flow efficiency and exploring opportunities to optimize working capital through better expense controls.
|
| Year Ended December 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Net Loss |
| $ | (2,320,131 | ) |
| $ | (408,809 | ) |
Net cash provided by operating activities |
|
| 319,316 |
|
|
| 55,416 |
|
Net cash used in investing activities |
|
| (3,103 | ) |
|
| (2,286 | ) |
Net cash used in financing activities |
|
| (334,856 | ) |
|
| (65,884 | ) |
Net decrease in cash |
| $ | (18,643 | ) |
| $ | (12,754 | ) |
Net Cash Flow from Operating Activities
Net cash provided in operating activities was $319,316 for the year ended December 31, 2025, due to our net loss of $2,320,131 offset primarily by non-cash charges of stock-based compensation of $2,379,298, depreciation of $7,486, bad debt of $600, non-cash interest expense of $4,135, and amortization of right-of-use assets of $106,381. Net changes in operating assets and liabilities totaled $141,547, which is primarily attributable to an increase in accounts payable and accrued liabilities of $128,795, an increase due to related party of $85,763, an increase in unearned revenues of $28,311, an increase in prepaid expenses and other current assets of $9,180, a decrease in accounts receivable of $14,567, and a decrease in operating lease liability of $106,709.
Net cash provided in operating activities was $55,416 for the year ended December 31, 2024, due to our net loss of $408,809 offset primarily by non-cash charges of depreciation of $6,057 and amortization of right-of-use assets of $96,743. Net changes in operating assets and liabilities totaled $361,425, which is primarily attributable to an increase in accounts payable of $365,839, increase in due to related party of $47,937, decrease in prepaid expenses and other current assets of $79,582, decrease in unearned revenues of $41,402 and decrease in operating lease liability of $96,414.
Net Cash Flow from Investing Activities
During the year ended December 31, 2025, net cash used in investing activities of $3,103 which relates to purchase of equipment as compared to $2,286 during the year ended December 31, 2024.
Net Cash Flow from Financing Activities
Net cash used in financing activities for the year ended December 31, 2025, was $334,856 as compared to $65,884 for the year ended December 31, 2024. During the year ended December 31, 2025, we repaid notes of $588,595 and line of credit of $74,581 offset by net proceeds from advances from officers, net of $321,148, and proceeds from line of credit of $7,172.
During the year ended December 31, 2024, we repaid notes of $615,724 and line of credit of $95,199, offset by contribution from principal stockholders, net of $549,498 and proceeds received from line of credit of $95,541.
49
Three and six months ended June 30, 2026, as compared to three and six months ended June 30, 2025
Revenues
Revenues for the three months ended June 30, 2026, were approximately $2.0 million, representing a decrease of approximately $800,000 or 28% compared to approximately $2.8 million for the three months ended June 30, 2025. The decrease in sales during the three months ended June 30, 2026, as compared to the prior period, reflects the impact of evolving market conditions within the telehealth and medical cannabis industry, as well as broader changes affecting demand across the sector.
For the three months ended June 30, 2026, and 2025, we had approximately 13,800 and 18,800 successful patient approvals, respectively, and generated approximately $149 and $152 in revenue per paid subscriber, respectively, on the Veriheal platform. Accordingly, the approximate decrease of 5,000 successful patient approvals during the three months ended June 30, 2026, was the primary factor contributing to the decrease in revenues. The decline in patient approvals was primarily driven by a reduction in advertising spend during the period. As the Company shifted a greater portion of its resources toward infrastructure, platform development, and operational investments, marketing expenditures decreased, which directly impacted lead volume and corresponding patient bookings. Revenue per paid subscriber remained relatively stable year-over-year, indicating that the decline was volume-driven rather than pricing- or conversion-related.
For the six months ended June 30, 2026, revenues were approximately $4.5 million, as compared to $6.1 million for the same period in 2025, representing a decrease of approximately $1.6 million or 27%. The decrease was primarily attributable to a decline in successful patient approvals, which decreased from approximately 40,200 during the six months ended June 30, 2025 to approximately 29,600 in the current period for the six months ended June 30, 2026 thereby generating approximately $151 and $152 in revenue per paid subscriber, respectively, on the Veriheal platform. Accordingly, the approximate decrease of 10,600 successful patient approvals during the six months ended June 30, 2026, was the primary factor contributing to the decrease in revenues.
Cost of Revenues
Cost of revenues for the three months ended June 30, 2026, were approximately $546,000, a decrease of approximately $160,000 or 23% compared to approximately $706,000 for the three months ended June 30, 2025. Total cost of revenues consists primarily of fees paid to contracted physicians for consultation services (approximately 23% and 22% of revenues for the three months ended June 30, 2026, and 2025, respectively) and merchant processing fees (approximately 4% and 3% of revenues for the three months ended June 30, 2026, and 2025, respectively).
For the six months ended June 30, 2026, cost of revenues was approximately $1.1 million, compared to $1.5 million for the six months ended June 30, 2025, representing a decrease of approximately $405,000 or 27%. This decrease is primarily attributable to the decrease in revenues as discussed above. Total cost of revenues consists primarily of fees paid to contracted physicians for consultation services (approximately 22% of revenues for both periods during the six months ended June 30, 2026, and 2025, respectively) and merchant processing fees (approximately 3% of revenues for both periods).
Gross Profit
For the three months ended June 30, 2026, gross profit was approximately $1.5 million, compared to $2.1 million for the same period in 2025, representing a decrease of approximately $640,000 or 30%. For the six months ended June 30, 2026, gross profit was approximately $3.4 million, compared to $4.6 million during the six months ended June 30, 2025, representing a decrease of approximately $1,230,000 or 27%.
Gross margins were approximately 73% and 75% for the three months ended June 30, 2026 and 2025, respectively, and approximately 75% for both periods during the six months ended June 30, 2026 and 2025. The decrease in gross profit is primarily attributable to the decrease in revenues as discussed above.
50
Operating Expenses
Total operating expenses for the three months ended June 30, 2026 and 2025 were approximately $1,800,000 and $2,787,000, respectively. The approximate $987,000 decrease in operating expenses for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, was comprised of:
(i)a decrease in compensation expense of approximately $800,000, primarily due to no stock-based compensation expense to employees during the three months ended June 30, 2026 since the restricted common stock awards fully vested in January 2026, as compared to the prior period, as well as a decrease in overall salaries and employee-related health benefits due to a decreased number of employees;
(ii)a decrease in professional, consulting, and contractor fees of approximately $94,000, primarily due to a decrease in stock-based compensation expense related to restricted common stock award grants to certain consultants, decreases in outsourced IT and contractor expenses resulting from cost-cutting measures, and decrease in accounting fees, for a total decrease of approximately $129,000, offset by increase in legal fees of approximately $35,000;
(iii)a decrease in technology expenses of approximately $14,000, primarily attributable to management’s implementation of more cost-effective technology solutions and operational efficiencies within the Company’s technology infrastructure;
(iv)a decrease in sales and marketing expenses of approximately $79,000, due to reduced advertising and promotional expenses resulting from management’s scaling back of marketing campaigns;
(v)an increase in rent and occupancy expenses of approximately $9,900 primarily due to higher repair and maintenance expenses; and
(vi) a decrease in general and administrative costs of approximately $9,900, primarily due to reduced office expenses resulting from cost-cutting measures implemented by management.
For the six months ended June 30, 2026, total operating expenses were approximately $3.8 million, as compared to $5.3 million for the same period in 2025, representing a decrease of approximately $1,500,000, or 28%. The decrease in operating expenses was comprised of:
(i)a decrease in compensation expense of approximately $1,299,000, which was primarily due to reduced stock-based compensation expense to employees during the six months ended June 30, 2026 since the restricted common stock awards fully vested in January 2026, as compared to the prior period, as well as the decrease in overall salaries and employee related health benefits due to decreased number of employees;
(ii)a decrease in professional, consulting, and contractor fees of approximately $89,000, primarily due to a decrease in stock-based compensation expense related to restricted common stock award grants to certain consultants and decreases in outsourced IT and contractor expenses resulting from cost-cutting measures, for a total decrease of approximately $162,000, offset by increase in accounting and legal fees of approximately $73,000;
(iii)a decrease in technology expenses of approximately $16,000, primarily attributable to management’s implementation of more cost-effective technology solutions and operational efficiencies within the Company’s technology infrastructure;
(iv)a decrease in sales and marketing expenses of approximately $80,000, due to reduced advertising and promotional expenses resulting from management’s scaling back of marketing campaigns;
(v)an increase in rent and occupancy expenses of approximately $15,000, primarily due to higher repair and maintenance expenses; and
(vi)a decrease in general and administrative expenses of approximately $23,000, primarily due to reduced office expenses resulting from cost-cutting measures implemented by management.
Loss from Operations
We reported a loss from operations of approximately $303,000 and $649,000 for the three months ended June 30, 2026 and 2025, respectively. We reported a loss from operations of approximately $449,000 and $711,000 for the six months ended June 30, 2026 and 2025, respectively.
51
Total Other Income (Expense), Net
For the three months ended June 30, 2026, other income (expense), net was approximately $6,000, compared to ($20,000) in the same period of 2025. For the six months ended June 30, 2026, other expense, net was approximately $($7,500) as compared to ($32,000) in the same period of 2025. These amounts primarily reflect interest expense on promissory note with a bank and financing charges.
Provision for Income Taxes
For the three months ended June 30, 2026 and 2025, there was no provision for income tax. We reported provision for income taxes of approximately $39,500 and $0 for the six months ended June 30, 2026, and 2025, respectively, which are primarily related to state income taxes.
Net Loss
For the three months ended June 30, 2026, net loss was approximately $296,000, compared to $669,000 in the same period of 2025. For the six months ended June 30, 2026, net loss was approximately $496,000, compared to $743,000 in the prior period. The change relates to the factors discussed above.
Liquidity and Capital Resources
The following table summarizes total current assets, liabilities and working capital deficit at June 30, 2026, compared to December 31, 2025, and the changes between those periods:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Total Current Assets |
| $ | 125,767 |
|
| $ | 136,451 |
|
Total Current Liabilities |
|
| 2,583,121 |
|
|
| 2,180,990 |
|
Working Capital Deficit |
| $ | (2,457,354) |
|
| $ | (2,044,539) |
|
Despite the negative working capital position, the Company continues to meet its obligations. Management remains focused on improving cash flow efficiency and exploring opportunities to optimize working capital through better expense controls.
|
| Six Months Ended June 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Net Loss |
| $ | (496,260) |
|
| $ | (743,366) |
|
Net cash provided by operating activities |
|
| 35,688 |
|
|
| 118,670 |
|
Net cash used in investing activities |
|
| - |
|
|
| (3,102) |
|
Net cash used in financing activities |
|
| (74,651) |
|
|
| (168,661) |
|
Net decrease in cash |
| $ | (38,963) |
|
| $ | (53,093) |
|
Net Cash Flow from Operating Activities
Net cash provided by operating activities was $35,688 for the six months ended June 30, 2026, compared to $118,670 for the six months ended June 30, 2025. Net cash provided by operating activities during the six months ended June 30, 2026 was primarily attributable to non-cash charges of stock-based compensation of $109,066, depreciation of $3,700, amortization of debt discount of $477, non-cash financing charges of $1,653 and amortization of right-of-use assets of $10,820, offset by a net loss of $496,260. Net changes in operating assets and liabilities totaled $406,232, which is primarily attributable to a decrease in accounts receivable of $6,600, a decrease in accounts payable of $18,856 and accrued liabilities of $61,797, and an increase in due to related party of $31,614 offset by an increase in prepaid expenses and other current assets of $34,879, an increase in accrued compensation of $493,700 and unearned revenues of $998 and a decrease in operating lease liabilities of $11,148.
Net cash provided by operating activities was $118,670 for the six months ended June 30, 2025. Net cash provided by operating activities during the six months ended June 30, 2025 was primarily attributable to non-cash charges of stock-based compensation of $1,125,041, depreciation of $3,700, and amortization of right-of-use assets of $51,718, offset by a net loss of $743,366. Net changes in operating assets and liabilities totaled $318,423, which is primarily attributable to increase in prepaid expenses and other current assets of $9,549, a decrease in accrued liabilities of $368,880 and accrued compensation of $115,058, and a decrease in operating lease liabilities of $51,717, offset by a decrease in accounts receivable of $21,767, an increase in accounts payable of $124,826 and unearned revenues of $40,340, and an increase in due to related party of $39,848.
52
Net Cash Flow from Investing Activities
Net cash used in investing activities during the six months ended June 30, 2026 and 2025 was $0 and $3,102, respectively, which was related to the purchase of computer equipment.
Net Cash Flow from Financing Activities
Net cash used in financing activities was $74,651 for the six months ended June 30, 2026, compared to $168,661 for the six months ended June 30, 2025. During the six months ended June 30, 2026, the Company received proceeds from a line of credit of $912 and advances from officers of $36,251, offset by repayments of notes payable of $92,468, repayments on line of credit of $3,671, and repayments to officers of $15,675.
During the six months ended June 30, 2025, the Company received proceeds from a line of credit of $3,565 and advances from officers of $139,500, offset by repayments of notes payable of $291,895 and repayments of line of credit of $19,831.
The Company reported a net loss of approximately $2,320,000 for the year ended December 31, 2025. The Company reported a net loss of approximately $496,000 and $743,000 for the six months ended June 30, 2026 and 2025, respectively. Notwithstanding this result, the Company continues to generate revenue and maintain active operations across its core business segment. Based on current forecasts and available cash as of June 30, 2026, the Company may require additional capital to fully support its planned growth initiatives and capital expenditures over the next twelve months.
The Company believes that our existing available capital resources which includes available cash and financing resources, will be sufficient to fund our planned operations between 3 to 6 months from the date of this report. Management has determined that a minimum funding of approximately $2,000,000 is required to remain in business for at least the next 12 months from the date of this report.
Critical Accounting Policies and Estimates
Below is a discussion of our more subjective accounting estimation processes for purposes of explaining (i) the methodology used in calculating the estimates, (ii) the inherent uncertainties pertaining to such estimates, and (iii) the possible effects of a significant variance in actual experience, from that of the estimate, on our financial condition. Estimates involve numerous assumptions that, if incorrect, could create a material adverse impact on the Company’s results of operations and financial condition.
Reference is frequently made herein to the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”). This is the source of authoritative US GAAP recognized by the FASB to be applied to non-governmental entities. Each ASC reference in this filing is presented with a three-digit number, which represents its Topic. As necessary for explanation and as applicable, an ASC topic may be followed with a two-digit subtopic, a two-digit section or a two-or-three-digit paragraph.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606 Revenue from Contracts with Customers, which requires revenue to be recognized in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration which the entity expects to be entitled in exchange for those goods or services. In accordance with ASU Topic 606 - Revenue from Contracts with Customers, the Company recognizes revenue in accordance with that core principle by applying the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Company through its wholly owned subsidiary, Veriheal, generates revenue from service processing fees by facilitating patient consultations with licensed physicians for the purpose of medical marijuana (“MMJ”) card evaluations. Revenue is recognized at a point in time upon completion of both the consultation service and the licensed physicians providing medical decision. This is when the performance obligation is satisfied. The Company acts as the principal in these transactions and recognizes the full transaction price as revenue when its performance obligation is satisfied. The service processing fees are paid in advance and are non-refundable, however, the Company may reserve the right to refund the fees under limited circumstances at its discretion. Payments received before the completion of the consultation service are recorded as unearned revenue to be recognized upon completion of both the consultation service and conveyance of the medical decision which generally occurs within two months but can take up to six months from the date of payment.
53
The Company through its wholly owned subsidiary, Veriheal, also engages in business-to-business activities whereby the Company provides services by collaborating with licensed medical professionals and clinics and offering digital marketing services to connect them with the Company’s patients. Additionally, the Company provides research services for certain universities and organizations. The Company recognizes revenues for both marketing and research services for the agreed upon price when such services are completed, which satisfies the performance obligation.
The Company through its wholly owned subsidiary, Dosepop offers a comprehensive healthcare platform for both mental and physical health. The platform provides various treatments options by licensed professionals, addressing issues ranging from weight loss to anti-aging treatments. Revenue is recognized upon completion of both the consultation service and the licensed physicians providing the treatment option, which is when the performance obligation is satisfied.
Cost of Revenues
Cost of revenues primarily includes fees paid to contracted physicians for consultation services and merchant processing fees related to patient payments. These costs are directly attributable to revenue-generating activities and are expensed as incurred.
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 - “Compensation -Stock Compensation”, which requires recognition in the financial statements of the cost of employee and director services along with non-employee services received in exchange for an award of equity instruments over the period the employee, director or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director or non-employee services received in exchange for an award based on the grant-date fair value of the award.
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU Topic 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025. Early adoption is permitted. Management does not believe the adoption of ASU 2023-09 will have a material impact on the accompanying consolidated financial statements and disclosures.
On November 4, 2024 the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) requiring additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. This standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 applies to all public business entities (PBEs) and is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted.
On December 17, 2025, the FASB issued ASU 2025-12, Codification Improvements. The amendments in this update are to make other incremental improvements to GAAP and facilitate codification updates for a broad range of Topics arising from technical corrections, unintended application of the codification, clarifications, and other minor improvements. The resulting amendments are collectively referred to as Codification improvements. ASU 2025-12 is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact the adoption of ASU 2025-12 may have on the Company’s consolidated financial statements.
54
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
55
Business Overview and Strategy
Corporate History
We conduct our business through our wholly-owned subsidiaries. Our subsidiary, Veriheal Inc. (“Veriheal”) was founded in the state of Delaware on November 17, 2017, by Joshua Green and Samuel Adetunji to provide concierge services to patients seeking prescription cards for medical marijuana. The idea was born out of their own difficulties in obtaining medical cannabis in Washington DC. They saw that there were not any credible tech platforms or one-stop-shop providers that provided services for patients looking to adopt medical cannabis in their treatment plan. They also both personally observed the benefits of medical cannabis in helping loved ones cope with severe medical conditions such as cancer. As a result, both saw a significant potential in providing a tech-oriented platform to assist with the procurement of medical cannabis cards and education around medical cannabis use.
Corporate Structure & Key Subsidiaries
Veri MedTech Holdings, Inc. is the parent company for its wholly-owned subsidiaries:
1. Veriheal Inc. (Founded in 2017)
| · | Core Focus: Medical Cannabis Healthcare technology |
| · | Revenue Generated: $100M+ in the past 5 years |
| · | Patients Served: Over 400,000 successful patient approvals to date |
2. DosePop Inc. (f/k/a “Verinew”)
| · | Core Focus: Direct-to-Consumer Healthcare technology & Digital Wellness |
| · | Market Position: High-growth disruptor in the D2C health market |
| · | Revenue Generated (Soft Launch): ~$24,000, with ~$5,000 in recurring monthly revenue |
| · | Growth Strategy: Expanding into weight loss, ADHD, dermatology, anti-aging, and sexual health |
| · | Competitive Advantage: Millennial & Gen Z-focused branding, AI-driven patient engagement, subscription-based model |
3. Sky Clinics LLC
| · | Core Focus: Direct-to Business Healthcare platform technology |
| · | Status: Idea Incubated in January 2026 - No Revenues. No Operations. Initial Idea, Incubation Formation and Concept Development stage |
By owning and operating these two market-leading brands, Veri MedTech controls the full spectrum of healthcare technology services, from specialized alternative medicine to mainstream, direct-to-consumer healthcare.
Key Performance Metrics: Veriheal’s Market Leadership
| · | Approximately 430,000 successful patient approvals from inception to June 30, 2026 |
| · | Generated over $100 million in total revenue from inception to June 30, 2026 |
| · | Highly engaged audience, with millions of site visitors annually from inception to June 30, 2026. |
In year 2022, Veriheal acquired MarijuanaDoctors.com for $3 million, solidifying its market dominance and increasing its physician network. The acquisition doubled Veriheal’s lead generation capacity, allowing the company to serve even more patients while lowering customer acquisition costs (CAC).
These consistent growth metrics demonstrate Veriheal’s ability to scale, adapt, and capitalize on regulatory tailwinds in the expanding cannabis industry.
56
Competitive Advantage
Veri MedTech’s competitive edge stems from our mastery of digital healthcare marketing, patient conversion, and retention strategies. the Company is not just a healthcare company-the Company is a healthcare technology and marketing powerhouse that has successfully built one of the most dominant brands in alternative medicine.
We have applied this expertise to Veriheal, turning it into a category-defining leader in medical cannabis healthcare technology, with:
|
|
|
| · | A proprietary digital platform that ensures compliance with evolving state regulations. |
| · | Over $100M in total revenue generated since inception. |
| · | Unmatched brand awareness, with hundreds of thousands of patients recognizing Veriheal as the most trusted name in medical cannabis healthcare technology. |
The Company is now aiming to apply the same expertise to a broader, even more lucrative market: mainstream health and wellness.
Core Strengths & Competitive Edge
Veri MedTech’s success is driven by four key pillars:
1. Industry Leadership in Healthcare technology
| · | Proven Success in Medical Cannabis: Veri MedTech has dominated one of the most complex and highly regulated healthcare markets-medical cannabis. |
| · | Expansion into Mainstream Wellness: With DosePop, the Company is now applying this expertise to the market in general wellness, dermatology, weight loss, and mental health. |
| · | First-Mover Advantage: Veri MedTech specializes in healthcare verticals that traditional providers overlook, giving us an edge in high-demand, underserved markets. |
2. Technology & AI-Driven Personalization
| · | Proprietary HIPAA-Compliant Platform: Veri MedTech’s secure, scalable digital infrastructure ensures seamless healthcare technology operations. Veri Medtech intends to seek to capitalize on its technology platform, via Sky Clinics. |
| · | AI & Machine Learning: Predictive analytics help personalize patient recommendations, improve adherence, and increase retention. |
| · | Automated Prescription Fulfillment: Fast-track approvals and seamless medication delivery set us apart from legacy healthcare technology providers. |
3. Direct-to-Consumer Healthcare Mastery
| · | Consumer-Centric Marketing: Veri MedTech excels at digital-first patient acquisition-a major weakness for traditional healthcare companies. |
| · | Subscription-Based Model: DosePop’s recurring revenue strategy maximizes LTV and reduces reliance on one-time consultations. |
| · | Stigma-Free Branding: Unlike competitors that feel like insurance-driven clinics, DosePop is modern, engaging, and youth-friendly. |
57
4. A Unique & Scalable Growth Strategy
| · | The “Infinite Wellness Loop” - Our ability to cross-sell between Veriheal and DosePop creates a continuous patient lifecycle. |
| · | Massive Data Monetization Potential - Veri MedTech owns one of the largest alternative medicine patient datasets, which presents significant future monetization opportunities. |
The Market & Future Growth Potential
Veri MedTech is strategically positioned in two of the fastest-growing healthcare markets:
1. Medical Cannabis Market (Veriheal)
| · | The global medical cannabis industry is projected to reach $40 billion by 2030, according to a 2022 report by Grand Review Research. |
| · | 27% of Americans ages 16-65 use cannabis medicinally. |
| · | State expansion opportunities in Texas, Pennsylvania, Florida, and beyond present massive new patient pools. |
2. Direct-to-Consumer Healthcare technology (DosePop)
| · | The U.S. healthcare technology industry is expected to grow to $180 billion+ by 2030. |
| · | Weight loss drugs alone (e.g., Ozempic, Mounjaro) represent a $100 billion opportunity. |
| · | Millennials & Gen Z overwhelmingly prefer digital-first healthcare models. |
Veri MedTech is uniquely positioned to capture both of these high-growth sectors, leveraging our healthcare technology infrastructure, consumer insights, and strategic marketing expertise.
Growth Strategies
Veriheal has already dominated the U.S. medical cannabis market, but significant growth opportunities remain. Veriheal has already established itself as a leader in the U.S. medical cannabis market. To further solidify its position and drive growth, the company is implementing a series of strategic initiatives aimed at expanding its market presence, leveraging data monetization, and diversifying its service offerings.
As medical cannabis laws continue to evolve, Veriheal is actively preparing to extend its operations into new states and international markets. With increasing cannabis adoption in Texas, Pennsylvania, and Florida, these states represent key domestic opportunities for expansion. Additionally, Veriheal is positioning itself to enter international markets, beginning with Germany, France, and Canada, where regulatory frameworks are becoming more favorable toward medical cannabis access.
Beyond geographical expansion, Veriheal is also focused on unlocking new revenue streams through data monetization. With millions of patient interactions recorded on its platform, the company has amassed one of the most extensive medical cannabis datasets in the industry. This presents significant opportunities to generate value by selling anonymized health insights to cannabis research firms, partnering with insurance companies for risk modeling, and developing predictive analytics to enhance patient outcomes. By leveraging its vast data resources, Veriheal aims to enhance decision-making across the healthcare ecosystem while creating additional revenue channels.
In addition to expanding its footprint and monetizing its data assets, Veriheal is broadening its service offerings to provide patients with a more comprehensive healthcare experience. Moving beyond medical cannabis evaluations, the company is introducing adjacent health services, including mental health therapy, sleep coaching, holistic wellness coaching, and lifestyle optimization programs. These new offerings are designed to improve patient engagement, increase retention, and enhance lifetime value (LTV) by positioning Veriheal as a long-term partner in patient wellness. Through these strategic initiatives, Veriheal is not only reinforcing its market dominance but also laying the foundation for sustained, long-term growth in the evolving healthcare landscape.
58
MARKET ANALYSIS
Veri MedTech is strategically positioned in two of the fastest-growing, highest-potential healthcare markets:
| 1. | The medical cannabis market (Veriheal) |
| 2. | The direct-to-consumer (D2C) healthcare technology and wellness market (DosePop) |
Both sectors are experiencing rapid adoption, regulatory tailwinds, and shifting consumer behaviors favoring digital-first, on-demand healthcare solutions. Veri MedTech’s unique dual-platform approach allows it to capture growth in both markets simultaneously, creating a diversified, scalable, and resilient business model.
Industry Growth & Market Size
The global medical cannabis market is experiencing explosive growth:
| · | Projected to reach $40 billion by 2030 |
| · | CAGR of 21%, making it one of the fastest-growing healthcare segments |
| · | 27% of U.S. adults (16-65) use medical cannabis |
| · | Continued state & federal legalization efforts will expand market opportunities |
Veriheal’s strong market position ensures that it will capture significant future growth as medical cannabis adoption increases.
Medical Cannabis Market (Veriheal)
Industry Growth & Market Size
The global medical cannabis market has grown exponentially over the past decade, driven by:
| · | Increasing legalization of medical cannabis across U.S. states and globally. |
| · | Expanding scientific research supporting cannabis as a treatment for pain, anxiety, epilepsy, PTSD, and more. |
| · | Shifting public perception-with 77% of U.S. adults now supporting legal medical cannabis use. |
Market Forecasts:
| · | The global medical cannabis market was valued at $13.8 billion in 2022 and is expected to reach $65.9 billion by 2030, growing at a CAGR of 21.6%. |
| · | The U.S. medical cannabis market alone is projected to hit $40 billion by 2030. |
| · | 27% of Americans aged 16-65 report using medical cannabis, a figure expected to increase as accessibility expands. |
Regulatory Expansion: More States, More Patients
| · | Medical cannabis is now legal in 38 U.S. states, but many still have restrictive, underdeveloped programs. |
| · | States like Texas, Pennsylvania, and Florida-which have large populations but limited access-represent major growth opportunities as their laws evolve. |
| · | Federal legalization efforts could further accelerate patient growth and industry expansion. |
Opportunity: As one of the largest medical cannabis healthcare technology providers, Veriheal is well-positioned to capitalize on this expansion, with the ability to scale rapidly as new states open up.
59
Competitive Landscape
Veriheal dominates independent healthcare technology in the medical cannabis space, standing apart from competitors such as:
| · | Leafwell & NuggMD - Smaller-scale healthcare technology platforms with limited state coverage. |
| · | Large dispensary chains offering doctor referrals - These lack Veriheal’s national reach and seamless online experience. |
Why Veriheal Leads the Market:
| · | Largest state-by-state coverage for healthcare technology & in-person consultations. |
| · | Highest brand awareness and market share (5.3% of U.S. cannabis card approvals). |
| · | A trusted, patient-first experience, ensuring strong customer retention & referrals. |
| · | Data-driven expansion strategy, allowing rapid adaptation to new regulations. |
Veri MedTech’s Market Opportunity
Medical Cannabis Remains a $40 Billion Market, and Veriheal is the Industry Leader
Veriheal has established itself as the leading independent provider of medical cannabis healthcare technology services, holding 5.3% of the U.S. market and maintaining the highest patient retention rates in the industry. As more states continue to legalize medical cannabis, the number of eligible patients is expected to increase significantly, creating millions of new medical cannabis consumers in the coming years.
The Direct-to-Consumer Healthcare technology Industry Presents an Even Larger Opportunity, and DosePop is Positioned to Lead
The direct-to-consumer (D2C) healthcare technology industry is projected to exceed $180 billion in value, with rapid growth occurring in weight loss treatments, mental health services, dermatology, and anti-aging solutions. DosePop is uniquely positioned to capitalize on this expansion due to its distinct branding, high patient engagement, and long-term retention model. Unlike many competitors that focus on transactional patient interactions, DosePop is designed to maximize lifetime patient value through subscription-based, personalized treatment plans. Additionally, DosePop benefits from Veriheal’s extensive existing patient pipeline, which serves as a powerful springboard for rapid expansion into new healthcare verticals. This built-in patient network allows DosePop to scale at a significantly lower customer acquisition cost than traditional healthcare technology companies reliant on high digital advertising expenditures.
60
The “Infinite Wellness Loop” Creates a Continuous Growth Cycle
Veri MedTech’s proprietary “Infinite Wellness Loop” serves as a self-reinforcing growth mechanism that enhances retention, monetization, and long-term value. Every new Veriheal patient represents a potential DosePop subscriber, and every DosePop patient further increases the total lifetime value (LTV) across Veri MedTech’s healthcare ecosystem. This integrated, multi-platform patient journey allows the Company to scale more efficiently, reduce acquisition costs, and achieve higher profitability than competitors who depend on paid digital marketing for growth. By leveraging the synergies between Veriheal and DosePop, Veri MedTech can expand more aggressively while maintaining a sustainable and cost-effective growth trajectory.
Veri MedTech is Positioned for Long-Term Market Dominance
DosePop is strategically entering a $180 billion industry, utilizing a proven, patient-focused model to establish itself as a market leader in healthcare technology verticals such as weight loss, dermatology, and mental health. The Infinite Wellness Loop ensures that Veri MedTech can continuously expand its patient base, maximize retention, and optimize revenue per user or paid subscriber, creating a highly scalable and profitable ecosystem. More than just capturing market share, Veri MedTech is fundamentally transforming the way healthcare is accessed, setting the stage for long-term dominance in the evolving digital healthcare landscape.
DOSEPOP Overview
Introduction: The Future of Digital Healthcare
DosePop represents Veri MedTech’s strategic expansion into the broader healthcare technology and direct-to-consumer wellness market, leveraging the same technology and marketing expertise that established Veriheal as the dominant force in medical cannabis. Designed to capture the next major healthcare shift, DosePop offers a modernized, stigma-free, and accessible approach to healthcare for Millennials and Gen Z consumers who are increasingly dissatisfied with traditional medical systems. Unlike conventional healthcare, which is often slow, inefficient, and impersonal, DosePop prioritizes convenience, trust, and engagement, addressing the shortcomings of legacy healthcare technology companies such as HIMS, Ro, and Teladoc. These competitors have largely failed to establish meaningful relationships with younger consumers, offering transactional services that lack personalization and long-term patient retention.
DosePop differentiates itself by creating a healthcare experience tailored to the unique preferences of younger demographics. The platform is designed to be engaging and stigma-free, ensuring that patients feel comfortable seeking treatment for sensitive health issues. It operates on an affordable, flat-rate pricing model that does not require insurance, making high-quality care accessible without financial barriers. DosePop integrates licensed U.S. physicians with AI-powered health recommendations, ensuring that treatment plans are optimized for efficacy and patient convenience. Additionally, it offers fast and discreet medication delivery, providing next-day shipping for essential treatments. A key advantage of DosePop’s model is its integration with Veriheal’s established patient base through what the Company refers to as the “Infinite Wellness Loop.” This approach enables seamless transitions from Veriheal to DosePop, enhancing patient lifetime value while lowering acquisition costs.
The market opportunity for DosePop is substantial, given the projected growth of the U.S. direct-to-consumer healthcare technology market, which is expected to surpass $180 billion by 2030. The demand for prescription-based treatments in specific verticals, such as medical weight loss, dermatology, ADHD, and mental health, is growing rapidly. The medical weight loss industry, fueled by the rise of GLP-1 drugs like Ozempic, Wegovy, and Mounjaro, is anticipated to exceed $100 billion in value. Similarly, the dermatology healthcare technology sector is expanding at a compound annual growth rate (CAGR) of 17%, driven by increased demand for prescription skincare solutions. Meanwhile, ADHD and mental health prescriptions are at record-high demand, particularly among Gen Z, as cognitive performance and mental wellness become increasingly prioritized. By combining trust, affordability, and convenience, DosePop is uniquely positioned to dominate these high-growth categories.
61
DosePop’s operational model is built around simplicity, speed, and efficiency. The patient journey begins with a visit to the DosePop digital health platform, where users can select their treatment category, including weight loss, ADHD management, skincare, or sexual health. Patients then complete an AI-driven health assessment, which matches them with a licensed physician for an online consultation. Once the consultation is complete, the prescribed medication is discreetly shipped to the patient’s doorstep within 24 to 48 hours. This streamlined process eliminates long wait times, unnecessary in-person doctor visits, and the complexities associated with insurance-based care, making DosePop an attractive alternative for modern consumers.
A key differentiator of DosePop’s business model is its focus on recurring revenue through subscription-based healthcare services. Unlike traditional healthcare technology providers that primarily rely on one-time patient interactions, DosePop emphasizes long-term engagement through monthly medication plans and bundled wellness packages that combine treatments across multiple verticals, such as weight loss, anti-aging, and ADHD management. Automated refill reminders and ongoing physician check-ins further enhance patient adherence and retention, increasing customer lifetime value and average revenue per user or paid subscriber.
DosePop also incorporates AI-driven healthcare optimization to enhance treatment efficacy and user experience. By utilizing machine learning and predictive analytics, the platform can recommend additional treatments based on user data, helping patients proactively manage their health. AI-powered insights also allow for the continuous optimization of prescription plans, ensuring that treatment regimens are tailored to each patient’s evolving needs. Additionally, personalized patient communication helps improve engagement, reinforcing long-term retention while fostering a sense of trust between the patient and provider. This data-driven approach enables DosePop to deliver superior health outcomes while maintaining operational efficiency, further differentiating it from competitors in the healthcare technology space.
Through its innovative technology, subscription-based model, and seamless integration with Veri MedTech’s existing patient ecosystem, DosePop is set to transform the direct-to-consumer healthcare landscape. By prioritizing accessibility, personalization, and long-term patient engagement, the platform is not only positioned for rapid growth but is also establishing a new standard for digital healthcare services in the evolving wellness market.
DosePop Service
DosePop is strategically targeting the fastest-growing and most in-demand segments of modern healthcare, offering personalized, prescription-based treatments in key verticals. By integrating advanced healthcare technology capabilities with AI-driven personalization, DosePop provides patients with streamlined, effective healthcare solutions across multiple high-growth categories.
Weight Loss Treatments: GLP-1s, Peptides, and Metabolism Boosters
The global market for obesity medications is projected to exceed $100 billion by 2030, driven by the rapid adoption of GLP-1 receptor agonists such as Ozempic, Wegovy, and Mounjaro. These medications have seen exponential demand, particularly among patients seeking sustainable weight management solutions. DosePop offers a subscription-based, physician-led approach to weight loss, integrating prescription treatments with diet coaching and fitness tracking to improve long-term adherence and patient success.
Competitive Advantage: Unlike traditional healthcare technology providers such as HIMS or Ro, DosePop incorporates AI-powered weight loss tracking and behavioral coaching, ensuring patients receive personalized, data-driven treatment plans that improve adherence and long-term results.
Anti-Aging and Longevity Treatments
The field of anti-aging and longevity medicine is rapidly expanding, with growing consumer demand for peptide therapy, hormone optimization, and regenerative treatments. Millennials and Gen Z consumers are increasingly investing in preventative health solutions, fueling demand for science-backed, prescription-based anti-aging treatments.
62
Competitive Advantage: DosePop recognizes that aging is no longer solely a cosmetic concern but a holistic healthcare priority. Unlike competitors that focus exclusively on skincare or hormone replacement therapy, DosePop integrates peptide therapies, hormone treatments, and wellness coaching into a comprehensive longevity platform, ensuring a multi-faceted approach to long-term health.
Dermatology and Prescription Skincare
The dermatology healthcare technology market is growing at a 17% compound annual growth rate (CAGR) as demand for prescription skincare solutions continues to increase. DosePop offers a range of Rx treatments for acne, hyperpigmentation, hair loss, and age-related skin concerns, all delivered through an AI-driven, personalized treatment model.
Competitive Advantage: Unlike most skincare brands, which focus primarily on cosmetic solutions, DosePop provides medical-grade skincare treatments backed by licensed physicians. By integrating AI-driven skin analysis, DosePop enhances diagnostic accuracy and optimizes treatment plans for higher patient satisfaction and better clinical outcomes.
ADHD and Mental Health Treatment
The demand for ADHD medication has surged by over 30% in the past five years, with young adults aged 18 to 34 representing the largest segment seeking treatment. DosePop simplifies the ADHD evaluation process, enabling seamless, physician-led assessments for both stimulant and non-stimulant prescription therapies.
Competitive Advantage: While companies like Cerebral and Done have faced scrutiny for their prescription practices, DosePop distinguishes itself through transparency, compliance, and a stigma-free patient experience. By focusing on trust and long-term engagement, DosePop builds a more sustainable and reputable mental health platform.
Sexual Health and Hormone Optimization
The market for erectile dysfunction (ED), testosterone replacement therapy (TRT), and libido-enhancing treatments is projected to exceed $40 billion by 2027. Additionally, women’s hormone health, including treatments for polycystic ovary syndrome (PCOS), menopause, and hormone replacement therapy (HRT), remains a significantly underserved segment.
Competitive Advantage: DosePop prioritizes discreet, patient-first care, ensuring that both men and women receive personalized hormone and sexual health treatments. Unlike many platforms that focus solely on male health, DosePop is building an inclusive, research-backed approach to hormone optimization, offering comprehensive solutions that improve overall well-being.
DosePop’s Growth Strategy
In order to scale rapidly and capture market share, DosePop is executing a multi-pronged growth strategy designed to drive adoption, increase retention, and expand into high-growth healthcare verticals.
DosePop benefits from a built-in patient acquisition pipeline through its integration with Veriheal. By transitioning Veriheal’s 400,000+ engaged patients into DosePop’s healthcare technology ecosystem, the company is able to achieve:
| · | Lower customer acquisition costs (CAC) through pre-existing patient relationships. |
| · | Higher retention and increased lifetime value (LTV) by offering complementary health services. |
| · | Significant cross-selling potential between medical cannabis, weight loss, hormone therapy, and wellness treatments. |
Key Insight: No other healthcare technology company has access to a pre-established patient base of this scale, giving DosePop a significant advantage in expanding across new healthcare categories.
63
DosePop is strategically positioning itself within some of the most lucrative healthcare technology sectors, including:
| · | The $100 billion weight loss market, capitalizing on the growing demand for GLP-1 weight management treatments. |
| · | AI-powered dermatology, developing a next-generation platform for prescription skincare and medical aesthetics. |
| · | To strengthen its market position and expand its service offerings, DosePop is actively pursuing strategic acquisitions in complementary healthcare technology verticals. These acquisitions will allow the company to increase market share, enhance operational efficiencies, and drive long-term profitability. Targeted acquisitions include: |
| · | An ADHD healthcare technology platform ($1.5 million-$2.5 million) to expand its presence in cognitive health. |
| · | A naltrexone/alcohol recovery healthcare technology service ($1 million-$1.8 million) to enter the substance use treatment space. |
| · | An AI-powered diagnostics and lab testing company ($750,000-$1.5 million) to integrate at-home testing capabilities. |
| · | A prescription fulfillment center ($1.5 million-$2 million) to improve delivery speed and reduce pharmacy dependency. |
By acquiring and consolidating these key healthcare verticals, DosePop will enhance its operational efficiencies while expanding its market share in direct-to-consumer healthcare technology.
DosePop represents Veri MedTech’s next major development, leveraging the proven success of Veriheal to scale into an even larger market opportunity. With a comprehensive healthcare technology model, DosePop is redefining how Millennials and Gen Z access essential healthcare services. By focusing on personalization, transparency, and long-term patient engagement, DosePop is not merely building a healthcare technology platform-it is creating a healthcare movement that prioritizes accessibility, affordability, and innovation. As the direct-to-consumer healthcare industry continues to evolve, DosePop is uniquely positioned to lead the transformation of digital-first, patient-centered medicine in the years ahead.
CORPORATE INFORMATION
Our websites are located at: www.VeriMedtech.com, www.veriheal.com, www.Dosepop.com, www.verimedtech.com and our telephone number is 1-202-410-7411. Information on our website is not part of this prospectus or the Offering.
PROPERTIES
Our principal executive officers are located at 1660 International Dr., Suite 600, McLean, VA 22102. This office space is comprised of executive offices and leased on a month-to-month basis, at a cost of approximately $2,000 per month.
We also operate at the following location:
| · | 1700 East 17th Avenue, Denver, CO, 80218. The company office space at this site is leased on a month-to-month basis at a cost of $15,000 per month (with 30-days notice of termination required). |
LEGAL PROCEEDINGS
We are not currently subject to any material legal proceedings.
64
General
Our authorized capital stock consists of 100,000,000 shares of Common Stock, $0.0001 par value per share, and 5,000,000 shares of Preferred Stock, $0.0001 par value per share. As of June 30, 2026, there were (i) 8,000,004 shares of our Common Stock issued and outstanding and (ii) 100 shares of Series A Preferred Stock issued and outstanding (out of 5,000,000 authorized shares of Preferred Stock).
Set forth below is a summary description of all of the material terms of our securities, including those being registered hereunder. These descriptions are qualified in their entirety by reference to our Certificate of Incorporation, Bylaws and forms of warrants, each of which is filed as an exhibit to the Prospectus, of which this Prospectus forms a part.
Common Stock
Voting
Each holder of record of Common Stock shall have the right to one vote for each share of Common Stock registered in their name on the books of the Corporation on all matters submitted to a vote of shareholders except as the right to exercise such vote may be limited by the provisions of the Company’s Certificate of Incorporation.
Dividends
The holders of Common Stock shall be entitled to such dividends as may be declared by the Board of Directors from time to time, provided that dividends, if any, on the Preferred Stock have been paid or provided for.
Liquidation Preference
In the event of the liquidation, dissolution, or winding up, whether voluntary or involuntary of the Company, the assets and funds of the Company available for distribution to shareholders and remaining after the payment to holders of Preferred Stock of the amounts (if any) to which they are entitled, shall be divided and paid to the holders of the Common Stock according to their respective shares.
Preferred Stock
“Preferred Shares” or “Preferred Stock” refers to the Preferred Stock of the Company, par value $0.0001, as defined in the Company’s Certificate of Incorporation. We are authorized to issue 5,000,000 shares of preferred stock with such designations, rights and preferences as may be determined from time to time by the Board of Directors. We have issued 100 shares of Series A Preferred Stock with 80% of the voting power in the Company to our Founders. The Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our Common Stock. The issuance of the 100 shares of Series A Preferred Stock has been utilized as a method of discouraging, delaying or preventing a change in control of the Company.
Underwriter Warrants
We have agreed to issue to Network 1 Financial Securities, Inc., or its designees warrants to purchase up to a total of 5% of the shares of Common Stock sold in this offering (excluding the shares sold through the exercise of the over-allotment option). Such warrants and underlying shares of Common Stock are included in this prospectus.
The following is a brief summary of certain terms and conditions of the warrants and is subject in all respects to the provisions contained in the warrants.
65
Exercisability. The warrants are exercisable commencing upon issuance and expiring on a date which is five years from the commencement of sales in the offering. No fractional shares of Common Stock will be issued in connection with the exercise of a warrant. In lieu of fractional shares, we will pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price.
Exercise Price; Adjustments. The warrants are exercisable at a price of $4.80 per whole share. The exercise price, and the number of shares underlying the warrants is subject to customary adjustments in the event of stock dividends, stock splits, stock combinations, reclassifications or similar events affecting our shares of Common Stock.
Transferability. The holder agrees it may not: (a) sell, transfer, assign, pledge or hypothecate this warrant for a period of one hundred eighty (180) days following the issuance date to anyone other than: (i) the holder or an underwriter, placement agent, or a selected dealer participating in the offering, or (ii) a bona fide officer or partner of holder or of any such underwriter, placement agent or selected dealer, in each case in accordance with FINRA Conduct Rule 5110(g)(1), or (b) for a period of one hundred eighty (180) days following the issuance date of the warrant, cause the warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the warrant or the securities hereunder, except as provided for in FINRA Rule 5110(g)(2). After 180 days of issuance, transfers to others may be made subject to compliance with or exemptions from applicable securities laws.
Rights as a Stockholder. Except as otherwise provided in the warrants or by virtue of such holder’s ownership of shares of our Common Stock, the holder does not have the rights or privileges of a holder of our Common Stock, including any voting rights, until the holder exercises the warrant.
Governing Law. The warrants are governed by New York law.
Delaware Anti-Takeover Law and Certain Certificate of Incorporation and Bylaw Provisions
The following is a summary of certain provisions of Delaware law, our Certificate of Incorporation and our Bylaws. This summary does not purport to be complete and is qualified in its entirety by reference to the Delaware General Corporation Law (the “DGCL”) and our Certificate of Incorporation and Bylaws.
Effect of Delaware Anti-Takeover Statute. We are subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 of the DGCL prohibits a Delaware corporation from engaging in certain “business combinations” with an “interested stockholder” for a period of three years following the date on which the stockholder became an interested stockholder, subject to certain exceptions.
Section 203 of the DGCL generally defines a “business combination” to include:
·any merger or consolidation involving the corporation and the interested stockholder;
·any sale, lease, exchange, mortgage, pledge, transfer or other disposition, except proportionately as a stockholder, of 10% or more of the corporation’s assets involving the interested stockholder;
·subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
·subject to certain exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
·the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
·
In general, Section 203 of the DGCL defines an “interested stockholder” as any person or entity that beneficially owns 15% or more of the outstanding voting stock of the corporation, or is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock at any time within the three-year period immediately prior to the date on which it is determined whether such person is an interested stockholder. The statute also provides rules for determining beneficial ownership and for determining whether a person is an affiliate or associate of another person.
66
Our Certificate of Incorporation and Bylaws. Our Certificate of Incorporation and Bylaws include provisions that may have the effect of discouraging, delaying or preventing a change in control or an unsolicited acquisition proposal that a stockholder might consider favorable, including a proposal that might result in the payment of a premium over the market price for the shares held by our stockholders. Certain of these provisions are summarized below.
Effects of Authorized but Unissued Common Stock. One of the effects of the existence of authorized but unissued common stock may be to enable our board of directors to make more difficult or discourage an attempt to obtain control of our Company by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity of management. If, in the exercise of its fiduciary duties, the board of directors were to determine that a takeover proposal was not in the best interests of the Company, the board could issue authorized but unissued shares without stockholder approval, subject to the requirements of applicable law and the terms of our Certificate of Incorporation, in one or more transactions that could prevent or render more difficult or costly the completion of the takeover transaction by diluting the voting or other rights of the proposed acquirer or insurgent stockholder group, by placing a substantial voting block in institutional or other hands that might support the position of the incumbent board of directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.
Cumulative Voting. Our Certificate of Incorporation does not provide for cumulative voting in the election of directors. Accordingly, holders of less than a majority of the outstanding shares entitled to vote in the election of directors generally cannot elect a director solely through cumulative voting.
Special Meetings of Stockholders and Stockholder Action by Written Consent. A special meeting of stockholders may be called only in accordance with the provisions of our Certificate of Incorporation and Bylaws. Stockholder action by written consent may be taken only to the extent permitted by the DGCL and our Certificate of Incorporation.
Indemnification of Officers and Directors. Our Certificate of Incorporation and Bylaws provide for indemnification of our directors and officers to the fullest extent permitted by the DGCL. Our Certificate of Incorporation also provides that a director of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such liability may not be eliminated or limited under the DGCL. Such exceptions include liability for breaches of the director’s duty of loyalty to the Company or its stockholders, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, unlawful payments of dividends or unlawful stock purchases or redemptions, and transactions from which the director derived an improper personal benefit.
If the DGCL is amended to authorize the further elimination or limitation of the personal liability of directors, the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the DGCL, as amended. Any repeal or modification of these provisions by the stockholders of the Company will be prospective only and will not adversely affect any limitation on the personal liability of a director of the Company existing at the time of such repeal or modification.
Transfer Agent
VStock Transfer, LLC is the transfer agent for our Common Stock. VStock Transfer, LLC’s address is 18 Lafayette Place, Woodmere, New York 11598; its telephone number is (212) 828-8436; its website is www.vstocktransfer.com. No information found on VStock Transfer, LLC’s website is part of this prospectus.
67
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our Common Shares are quoted on the OTCID Market (“OTCID”) under the symbol “VRHI”. As of September 11, 2026, the last reported price of our Common Stock was $5.00 per share at market close. We have applied to list our Common Stock on the NASDAQ Capital Market under the symbol “VRHI”. We believe that upon completion of this offering contemplated by this prospectus, we will meet the standards for listing on the NASDAQ Capital Market. No assurance can be given that our application will be approved.
Holders
As of June 30, 2026, there are approximately 100 holders of our Common Stock; and 2 holders of our Series A Preferred Stock.
Dividend Policy
We have never declared or paid any cash dividends on our capital stock and we do not currently anticipate declaring or paying cash dividends on our capital stock in the foreseeable future. We currently intend to retain all of our future earnings, if any, to finance the operation and expansion of our business. Any future determination relating to our dividend policy will be made at the discretion of our Board and will depend on a number of factors, including future earnings, capital requirements, financial conditions, future prospects, contractual restrictions and covenants, applicable law and other factors that our Board may deem relevant. If we do not pay dividends, a return on your investment will occur only if the market price of our Common Stock appreciates.
Securities authorized for issuance under equity compensation plans
On September 12, 2026, our Board approved the Amended and Restated Stock Incentive 2025 Plan (the “Amended and Restated 2025 Plan”). On September 30, 2025, a majority of the voting power of our capital stock approved the Amended and Restated 2025 Plan. The 2025 Plan is administered by our Board or such committee appointed by the Board. The Amended and Restated 2025 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, performance units, performance shares, restricted stock units, and other stock-based awards to our employees, directors, and consultants. The purpose of the Amended and Restated 2025 Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to our employees, directors and consultants, and to promote the success of the Company’s business. The Amended and Restated 2025 Plan further authorizes the administrator to amend the exercise price and terms of certain awards thereunder.
68
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth securities authorized for issuance under any equity compensation plans approved by our shareholders as well as any equity compensation plans not approved by our stockholders as of June 30, 2026.
Plan category |
| Number of securities to be issued upon exercise of outstanding options, warrants and rights(a) |
|
| Weighted average exercise price of outstanding options, warrants and rights ($) |
|
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) |
| |||
|
|
|
|
|
|
|
|
|
| |||
Plans approved by our stockholders: |
|
| - |
|
|
| - |
|
|
| - |
|
Amended and Restated 2025 Plan (1) |
|
| - |
|
|
| - |
|
|
| - |
|
Plans not approved by stockholders |
|
| - |
|
|
| - |
|
|
| - |
|
| (1) | The Amended and Restated 2025 Plan was adopted on September 12, 2026, by the Board and approved by a majority vote of our stockholders on September 12, 2026. 50,000,000 shares of Common Stock under the Amended and Restated Stock Incentive 2025 Plan are reserved. As of June 30, 2026, we have not issued any awards or grants under the plan. |
69
EXECUTIVE OFFICERS AND DIRECTORS
Name |
| Age |
| Position |
Samuel Adetunji |
| 35 |
| Chief Executive Officer, Secretary, Director |
Joshua Green |
| 38 |
| President, Treasurer, Treasurer and Director and Chairman of the Board |
Faisal Malik |
| 32 |
| Chief Financial Officer |
Scott Dunnagan |
| 44 |
| Director (Nominee) |
Vijay Viswanathan |
| 47 |
| Director (Nominee) |
Todd Jones |
| 69 |
| Director (Nominee) |
Executive Officers
Samuel Adetunji - Chief Executive Officer, Secretary and Director
Samuel Adetunji, since January 2025, has served as Chief Executive Officer of our Company, and is also a Founder, and served as Co-CEO from November 2017 to January 2025. From September 2016 through June 2017, Mr. Adetunji was an account executive at Palisade Corporation in New York City where he presented proprietary risk management software to companies throughout the world. He consulted, marketed and advised large Fortune 500 companies on how to mitigate risk and worked directly with senior engineers and consultants at Palisade to give prospective clients a better understanding of the product and its capabilities. Mr. Adetunji serves as our Chief Executive Officer, Secretary and Director. Mr. Adetunji is a graduate of Virginia Commonwealth University where he earned a Bachelor of Science degree in Marketing. We believe that Mr. Adetunji is well qualified to serve as our director because of his extensive experience as a founder and executive of our Company, including his service as Chief Executive Officer, Secretary and Director, as well as his experience in risk management, consulting, and advising Fortune 500 companies.
Joshua Green - President, Treasurer, Director and Chairman of the Board
Joshua Green, since January 2025, has served as President, Treasurer, Chairman of the Board of Directors, and is also a Founder, and served as Co-CEO from November 2017 to January 2025. Prior to establishing Veri MedTech, Mr. Green served as a Corporate Foreign Exchange Trader at Western Union in Washington, D.C., where he managed a Fortune 500 FX portfolio and executed financial and hedging strategies across global markets. He later founded a multi-family real estate investment firm with holdings across Georgia, South Carolina, and Virginia. At Veri MedTech, Mr. Green has overseen expansion acquisitions and directs the operations of VRHI’s subsidiary companies. He also serves on several nonprofit boards focused on advancing education. Mr. Green holds a degree in International Business from Florida A&M University and completed graduate-level finance studies at American University. We believe that Mr. Green is well qualified to serve as our director because of his extensive experience as a founder and executive of our Company, including his service as President, Treasurer, Chairman of the Board and Director, as well as his experience in foreign exchange trading, financial and hedging strategies, real estate investment, acquisitions and corporate operations.
Faisal Malik - Chief Financial Officer
Faisal Malik has served as CFO since January 2025, an ACCA Qualified Accountant (CPA Equivalent) with a Bachelor’s degree in Applied Accounting from Oxford Brookes University, has over 9 years of experience in finance, developing comprehensive expertise in financial management, reporting, forecasting, and strategy development. Mr. Malik has a proven track record of managing full financial operations for businesses, from budgeting and reconciliation to cash flow analysis and financial modeling, and has provided finance and accounting services to the Company since 2023 as a Senior Accountant.
70
Non-Employee Directors (Appointment Upon Registration Statement Effective Date)
Scott Dunnagan
Scott Dunnagan is an attorney licensed to practice law in North Carolina since 2008. From 2017 through 2020, Mr. Dunnagan served as Founder and Managing Partner of Dunnagan Law, PLLC, where his practice involved various matters including secured transactions, and employment law. From 2020-2023, Mr. Dunnagan served as a partner at the law firm of Wilson Ratledge, PLLC, where his practice involved litigation as well as business law and bankruptcy matters. From 2023 to present Mr. Dunnagn serves as a partner at the law firm of Higgins Benjamin PLLC, where his practice involves litigation, secured transactions, contract disputes and real estate-related matters. We believe Mr. Dunnagan is qualified to serve as a Director because of his extensive legal experience advising businesses on a broad range of commercial matters, including secured transactions, litigation, contract disputes, bankruptcy, employment law, and real estate-related matters. His experience as a law firm founder and partner, combined with his practical understanding of business and legal risk management, provides valuable insight and judgment that will benefit the Board.
Vijay Viswanathan
Vijay Viswanathan is a founding partner of CYFORIX LLC, a defense & strategic risk consulting firm with practice spanning government and public and private sector industries, delivering actionable insights through curated intelligence analysis. Mr. Viswanathan has held such position from May 2017 through the present. Since April 2019, Mr. Viswanathan has also served as the CEO of TORQE, LLC; a research, advisory & solution engineering firm specializing in cloud & enterprise technologies, cybersecurity & risk management, synthetic intelligence & automation. From 2020 through the present, Mr. Viswanathan has been a Senior External Advisor for Bain & Company, where he provides advice on various due diligence, integration, market research, and global technology projects for Bain clients. Previously, he was senior technology executive & CISO at multi-national organizations including GE, HD Supply, Comcast & Keurig Dr Pepper. We believe Mr. Viswanathan is qualified to serve as a Director because of his extensive executive leadership experience in cybersecurity, technology, strategic risk management, and business advisory services. His background includes founding and leading consulting firms, serving as Chief Executive Officer of a technology advisory company, advising global clients on technology strategy and transactions, and holding senior technology and information security leadership roles at major multinational organizations. His expertise in cybersecurity, enterprise technology, risk management, and corporate strategy provides valuable insight and perspective to the Board.
Todd Jones
Todd Jones, MBA, MAI, AI-GRS, CRE, FRICS, Principal (RealAdvice), provides complex income-producing commercial property valuation; expert testimony; litigation support; ad valorem property tax counseling and representation; appraisal review; investment advice; marketability analysis and feasibility analysis-including highest and best use analysis for virtually all types of commercial, industrial, residential, and special purpose real estate-on behalf of financial institutions, REIT’s, government entities, publicly traded companies, and private concerns. Mr. Jones has held such position from 2017 through the present. We believe Mr. Jones is qualified to serve as a Director because of his extensive experience providing valuation, financial analysis, and strategic advisory services to financial institutions, publicly traded companies, government entities, and private businesses. His expertise in investment analysis, risk assessment, litigation support, and complex asset valuation provides the Board with valuable financial and analytical perspectives that support strategic decision-making, capital allocation, and corporate governance.
71
Board Determination of Independence
NASDAQ Capital Market Listing Rules requires a majority of a listed company’s board of directors to be composed of independent directors within one year of listing. In addition, the NASDAQ Capital Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
NASDAQ Capital Market Listing Rules, a director will only qualify as an “independent director” if, in the opinion of our Board of Directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: (1) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries. In addition, in affirmatively determining the independence of any director who will serve on a company’s compensation committee, Rule 10C-1 under the Exchange Act requires that a company’s board of directors consider all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (1) the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by such company to the director; and (2) whether the director is affiliated with the company or any of its subsidiaries or affiliates.
Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board of Directors has determined that each of our current directors, with the exception of Joshua Green and Samuel Adetunji, is an “independent director” as defined under NASDAQ Capital Market Listing Rules. Our Board of Directors also determined that Scott Dunnagan, Vijay Viswanathan. and Todd Jones, who currently constitute our Audit Committee, Compensation Committees and Corporate Governance and Nominating Committee, satisfy the independence and other qualification standards for such committees established by the SEC and the NASDAQ Capital Market Listing Rules, as applicable. In making such determinations, our Board of Directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.
72
Family Relationships
There are no family relationships among our directors and/or executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has, during the past ten (10) years:
| · | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
|
|
|
| · | Had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
|
|
|
| · | Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan or insurance activities, or to be associated with persons engaged in any such activity; |
|
|
|
| · | Been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated; |
|
|
|
| · | Been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
|
|
|
| · | Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.
Board Committees
The Board currently has the following standing committees: the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee.
The following table identifies the independent and non-independent current Board and committee members:
Name |
| Audit |
| Compensation |
| Nominating |
| Independent |
Scott Dunnagan |
| X |
| X |
| X |
| X |
Vijay Viswanathan |
| X |
| X |
| X |
| X |
Todd Jones |
| X |
| X |
| X |
| X |
Joshua Green. Chairman |
|
|
|
|
|
|
|
|
Samuel Adetunji |
|
|
|
|
|
|
|
|
73
Board and Committee Meetings
All of our committees were established on [●], 2026. As of the date of this prospectus, the Board had one meeting, the Audit Committee had no meetings, the Compensation Committee had no meetings, and the Nominating Committee had no meetings.
There were no directors (who were incumbent at the time), who attended fewer than 75 percent of the aggregate total number of Board meetings and meetings of the Board committees of which the director was a member during the applicable period.
With respect to our audit committee, compensation committee and a nominating and corporate governance committee, each has its own charter, which is available on our website at www.VeriMedtech.com. Each of the Board committees has the composition and responsibilities described below.
Members will serve on these committees until their resignation or until otherwise determined by our Board of Directors.
Audit Committee
The Audit Committee oversees our accounting and financial reporting processes and oversee the audit of our consolidated financial statements and the effectiveness of our internal control over financial reporting. The specific functions of this Committee include, but are not limited to:
| · | selecting and recommending to our board of directors the appointment of an independent registered public accounting firm and overseeing the engagement of such firm; |
|
|
|
| · | approving the fees to be paid to the independent registered public accounting firm; |
|
|
|
| · | helping to ensure the independence of the independent registered public accounting firm; |
|
|
|
| · | overseeing the integrity of our financial statements; |
|
|
|
| · | preparing an audit committee report as required by the SEC to be included in our annual proxy statement; |
|
|
|
| · | resolving any disagreements between management and the auditors regarding financial reporting; |
|
|
|
| · | reviewing with management and the independent auditors any correspondence with regulators and any published reports that raise material issues regarding the Company’s accounting policies; |
|
|
|
| · | reviewing and approving all related-party transactions; and |
|
|
|
| · | overseeing compliance with legal and regulatory requirements. |
Compensation Committee
Our Compensation Committee assists the board of directors in the discharge of its responsibilities relating to the compensation of the board of directors and our executive officers.
The Committee’s compensation-related responsibilities include, but are not limited to:
| · | reviewing and approving on an annual basis the corporate goals and objectives with respect to compensation for our Chief Executive Officer; |
|
|
|
| · | reviewing, approving and recommending to our board of directors on an annual basis the evaluation process and compensation structure for our other executive officers; |
74
| · | determining the need for and the appropriateness of employment agreements and change in control agreements for each of our executive officers and any other officers recommended by the Chief Executive Officer or board of directors; |
|
|
|
| · | providing oversight of management’s decisions concerning the performance and compensation of other company officers, employees, consultants and advisors; |
|
|
|
| · | reviewing our incentive compensation and other equity-based plans and recommending changes in such plans to our board of directors as needed, and exercising all the authority of our board of directors with respect to the administration of such plans; |
|
|
|
| · | reviewing and recommending to our board of directors the compensation of independent directors, including incentive and equity-based compensation; and |
|
|
|
| · | selecting, retaining and terminating such compensation consultants, outside counsel or other advisors as it deems necessary or appropriate. |
Nominating and Corporate Governance Committee
The purpose of the Nominating and Corporate Governance Committee is to recommend to the board nominees for election as directors and persons to be elected to fill any vacancies on the board, develop and recommend a set of corporate governance principles and oversee the performance of the board.
The Committee’s responsibilities include:
| · | recommending to the board of directors nominees for election as directors at any meeting of stockholders and nominees to fill vacancies on the board; |
|
|
|
| · | considering candidates proposed by stockholders in accordance with the requirements in the Committee charter; |
|
|
|
| · | overseeing the administration of the Company’s code of business conduct and ethics; |
|
|
|
| · | reviewing with the entire board of directors, on an annual basis, the requisite skills and criteria for board candidates and the composition of the board as a whole; |
|
|
|
| · | the authority to retain search firms to assist in identifying board candidates, approve the terms of the search firm’s engagement, and cause the Company to pay the engaged search firm’s engagement fee; |
|
|
|
| · | recommending to the board of directors on an annual basis the directors to be appointed to each committee of the board of directors; |
|
|
|
| · | overseeing an annual self-evaluation of the board of directors and its committees to determine whether it and its committees are functioning effectively; and |
|
|
|
| · | developing and recommending to the board a set of corporate governance guidelines applicable to the Company. |
The Nominating and Corporate Governance Committee may delegate any of its responsibilities to subcommittees as it deems appropriate. The Nominating and Corporate Governance Committee is authorized to retain independent legal and other advisors and conduct or authorize investigations into any matter within the scope of its duties.
Board Diversity
While we do not have a formal policy on diversity, our Board considers diversity to include the skill set, background, reputation, type and length of business experience of our Board members as well as a particular nominee’s contributions to that mix. Our Board believes that diversity promotes a variety of ideas, judgments and considerations to the benefit of our Company and stockholders.
75
Code of Ethics
Our Board has adopted a Code of Ethics that applies to all of our employees, including our Executive Chairman, Chief Executive Officer, and Chief Financial Officer. Although not required, the Code of Ethics also applies to our directors. The Code of Ethics provides written standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct. We will provide a copy of our Code of Ethics, without charge, upon request in writing to Veri Medtech Holdings, Inc., 1660 International Dr., Suite 600, McLean, VA 22102, Attention: President.
Communication with our Board
Although the Company does not have a formal policy regarding communications with the Board, stockholders may communicate with the Board by writing to us at Veri Medtech Holdings, Inc., 1660 International Dr., Suite 600, McLean, VA 22102, Attention: President. Shareholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.
Controlled Company Status
The Company notes that following the completion of the Offering, Messrs. Samuel Adetunji and Joshua Green, will hold more than 50% of the total voting power of the Company and, therefore the Company will be deemed a “controlled company” under applicable NASDAQ rules. However, the Company notes that it does not intend to rely on the corporate governance exemptions typically afforded to “controlled companies” following the Offering under applicable SEC and NASDAQ rules, including exemptions with respect to a majority of independent directors on the board, an independent compensation committee and the nomination of directors by independent directors or by a committee consisting of independent directors. Instead, the Company intends to voluntarily comply fully with these corporate governance requirements as prescribed by NASDAQ rules.
76
The following table sets forth the aggregate compensation paid to our named executive officers for the fiscal years ended December 31, 2025 and 2024. Individuals we refer to as our “named executive officers” include our Chief Executive Officer and President whose salary and bonus for services rendered in all capacities equaled or exceeded $100,000 during the fiscal years ended December 31, 2025 and 2024.
Summary Compensation Table
Name & Principal Position |
Year |
Salary ($) |
Bonus ($) |
Stock Awards ($)(3) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) | Total ($) |
Joshua Green, President(1) | 2025 | 1,058,333 | -0- | 1,146,719 | -0- | -0- | -0- | -0- | 2,205,052 |
| 2024 | 1,200,000 | -0- | -0- | -0- | -0- | -0- | -0- | 1,200,000 |
|
|
|
|
|
|
|
|
|
|
Samuel Adetunji, -CEO(2) | 2025 | 1,058,333 | -0- | 1,146,719 | -0- | -0- | -0- | -0- | 2,205,052 |
| 2024 | 1,200,000 | -0- | -0- | -0- | -0- | -0- | -0- | 1,200,000 |
(1) | Company entered into an employment agreement with Mr. Green on September 14, 2023, whereby he became the Company’s President. On September 4, 2025, the Company entered into amended employment agreements with Mr. Green whereby the annual salary was amended from $1,200,000 to $1,058,333. The employment agreement is for an indefinite term. |
|
|
(2) | The Company entered into an employment agreement with Mr. Adetunji on September 14, 2023, whereby he became the Company’s Chief Executive Officer. On September 4, 2025, the Company entered into amended employment agreements with Mr. Adetunji whereby the annual salary was amended from $1,200,000 to $1,058,333. |
|
|
(3)
| In January 2025, the Company granted 2,636,135 restricted common stock each to Mr. Green and Mr. Adetunji for services. The 2,636,135 restricted common stock had a fair value of $1,146,719 or approximately $0.44 per share of common stock based on the quoted trading price on the date of grant. The restricted common stock shall vest for one year period. |
Named Executive Officer Employment Agreements
Green Employment Agreement
The Company entered into an employment agreement with Mr. Green on September 14, 2023, whereby he became the Company’s President. The employment agreement is for an indefinite term. The employment agreement provides for discretionary bonus compensation of up to 20% of Mr. Green’s annual compensation. The employment agreement also provides that upon the successful execution of an initial public offering by the Company, Mr. Green shall be issued options in the amount of twelve million shares of Company Common stock, subject to the achievement of certain stock price levels, which options shall vest over a 36-month period. On September 4, 2025, the Company entered into amended employment agreements with Mr. Green whereby the annual salary was amended from $1,200,000 to $1,058,333. Except as expressly amended thereby, all of the other terms and conditions of the Agreements shall remain unchanged and in full force and effect in accordance with their original terms.
77
Adetunji Employment Agreement
The Company entered into an employment agreement with Mr. Adetunji on September 14, 2023, whereby he became the Company’s Chief Executive Officer. The employment agreement is for an indefinite term. The employment agreement provides for discretionary bonus compensation of up to 20% of Mr. Adetunji’s annual compensation. The employment agreement also provides that upon the successful execution of an initial public offering by the Company, Mr. Adetunji shall be issued options in the amount of twelve million shares of Company Common stock, subject to the achievement of certain stock price levels, which options shall vest over a 36-month period. On September 4, 2025, the Company entered into amended employment agreements with Mr. Adetunji whereby the annual salary was amended from $1,200,000 to $1,058,333. Except as expressly amended thereby, all of the other terms and conditions of the Agreements shall remain unchanged and in full force and effect in accordance with their original terms.
78
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth information as of September 14, 2026, regarding the number of shares of our common stock and preferred stock beneficially owned by (i) each person that we know beneficially owns more than 5% of our outstanding common stock and Series A Preferred Stock, (ii) each of our directors and named executive officer and (iii) all of our directors and named executive officer as a group.
Beneficial ownership and percentage ownership are determined in accordance with the rules of the SEC. Under these rules, beneficial ownership generally includes any shares as to which the individual or entity has sole or shared voting power or investment power and includes any shares that an individual or entity has the right to acquire beneficial ownership or within 60 days through the exercise of any option, warrant or similar right (such instruments being deemed to be “presently exercisable”).
To our knowledge, except as indicated in the footnotes to the following tables, and subject to state community property laws where applicable, all beneficial owners named in the following tables have sole voting and investment power with respect to all shares shown as beneficially owned by them. Percentage of ownership is based on 8,000,004 shares of Common Stock and 100 shares of Series A Preferred Stock outstanding as of September 14, 2026. Unless otherwise indicated, the address of each of the shareholders listed below is: c/o Veri Medtech Holdings, Inc., 1660 International Dr., Suite 600, McLean, VA 22102.
Name and Address of Beneficial Owner |
| Shares of common stock Beneficially Owned Prior to Offering (1) |
|
| Percent (1) |
|
| Shares of Common Stock Beneficially Owned After The Offering |
|
| Percent (2) |
| |||
Executive Officers, Directors and Director Nominees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joshua Green, President, Chairman |
|
| 3,054,454 |
|
|
| 38.18 | % |
|
| 3,054,454 |
|
| 32.15 | % |
Samuel Adetunji, CEO, Director |
|
| 3,060,218 |
|
|
| 38.25 | % |
|
| 3,060,218 |
|
| 32.21 | % |
Faisal Malik, CFO |
|
| 0 |
|
|
| 0 | % |
|
| 0 |
|
| 0 | % |
Scott Dunnagan, Director Nominee |
|
| 0 |
|
|
| 0 | % |
|
| 0 |
|
| 0 | % |
Todd Jones, Director Nominee |
|
| 0 |
|
|
| 0 | % |
|
| 0 |
|
| 0 | % |
Vijay Viswanathan, Director Nominee |
|
| 0 |
|
|
| 0 | % |
|
| 0 |
|
| 0 | % |
Directors & Executive Officers, Directors, and Director Nominees as a Group (6 persons) |
|
| 6,114,672 |
|
|
| 76.43 | % |
|
| 6,114,672 |
|
| 52.04 | % |
Notes:
(1) | Percentage of ownership is based on 8,000,004 shares of Common Stock and 100 shares of Series A Preferred Stock outstanding as of September 14, 2026. |
|
|
(2) | Assumes 3,750,000 common shares issued after the Offering, and total common shares issued and outstanding of 11,750,004 following the completion of the Offering. |
Preferred Stock Ownership
Name and Address of Beneficial Owner 5% or Greater Stockholders | Shares of Preferred Stock Beneficially Owned Prior to Offering (1) | Percent (1) | Shares of Preferred Stock Beneficially Owned After The Offering | Percent |
Joshua Green | 50 | 50 | 50 | 50 |
Samuel Adetunji | 50 | 50 | 50 | 50 |
(1) | Percentage of ownership is based on 100 shares of our Series A Preferred Stock issued and outstanding as of September 14, 2026. We have issued 100 shares of Series A Preferred Stock with 80% of the voting power in the Company. See, Certificate of Designations in Exhibits included herewith. This 80% portion of the voting power represented by the Series A Preferred Stock issued to Messrs. Green and Adetunji is in addition to the shares of our common stock owned by them as set forth in the table above. |
79
Changes in Control
We are not aware of any arrangements that may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.
Equity Compensation Plan Information
The following table sets forth information as of June 30, 2026, with respect to our compensation plans under which equity securities may be issued.
Plan Category |
| Number of Shares of Common Stock Reserved and Authorized to be Issued |
|
| Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights |
|
| Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
| |||
|
| (a) |
|
| (b) |
|
| (c) |
| |||
Equity compensation plans approved by security holders: |
|
|
|
|
|
|
|
|
| |||
2025 Equity and Incentive Plan (1) |
|
| 50,000,000 |
|
| $ | 0.00 |
|
|
| 0 |
|
(1) | The 2025 Equity Incentive Plan is administered by the Compensation Committee and initially provided for the issuance of up to 50,000,000 shares of Common Stock. Under the Plan, we may grant stock options, restricted stock, stock appreciation rights, restricted stock units, performance units, performance shares and other stock based awards. The objective of the Plan is to encourage and enable the officers, employees, directors, consultants and other key persons of the Company and its subsidiaries, upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business, to acquire a proprietary interest in the Company. The term of each plan option and the manner in which it may be exercised is determined by the Committee, provided that no option may be exercisable more than 10 years after the date of its grant. As of June 30, 2026, there were no options outstanding under the Plan.
The Company’s Compensation Committee of the Board of Directors may grant performance stock units (“PSUs”) to the Company’s Chief Executive Officer and President (collectively, the “Key Executive Officers”) under the Company’s 2025 Equity Incentive Plan (the “Key Executive Award Program”). Each PSU represents the contingent right to receive one share of the Company’s common stock upon satisfaction of specified performance and continued service conditions. The Committee retains full discretion to determine the number of PSUs granted, up to an aggregate maximum of 12,000,000 PSUs per Key Executive Officer, and no award or minimum entitlement is guaranteed. The Committee may also grant equity awards, such as performance stock units, restricted stock, stock options, etc., under the 2025 Equity Incentive Plan to other employees, directors, consultants, or service providers, which shall be administered separately from the Key Executive Award Program.
PSU awards vest in three performance tranches subject to Committee certification that the volume-weighted average trading price (“VWAP”) of the Company’s common stock has achieved specified trading thresholds over defined measurement periods following the Company’s initial public offering. Vesting occurs upon achievement of VWAP thresholds of $6.00, $7.00, and $8.00 per share, each maintained for at least twenty (20) trading days during any thirty (30) consecutive trading-day period, subject to the applicable performance period and continued service requirements. Vested PSUs are settled in shares of common stock on a one-for-one basis following certification, subject to continued employment, applicable tax withholding, and compliance with Section 409A of the Internal Revenue Code. In the event of a change in control, the Committee may, in its discretion, accelerate vesting or otherwise adjust awards in accordance with the terms of the Plan.
|
80
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Related Persons
As of June 30, 2026, there have been no transactions, or currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our officers or directors had or will have a direct or indirect material interest.
81
We expect to enter into an underwriting agreement with Network 1 Financial Securities, Inc., as representative of the several underwriters named therein (the “Representative”), with respect to the Common Stock in this offering. The Representative may retain other brokers or dealers to act as sub-agents on its behalf in connection with this offering and may pay any sub-agent a solicitation fee with respect to any securities placed by it. Under the terms and subject to the conditions contained in the underwriting agreement, we have agreed to issue and sell to the underwriters the number of common stock as indicated below.
Underwriters |
| Number of Shares |
| |
Network 1 Financial Securities, Inc. |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
The underwriters are offering the Common Stock subject to their acceptance of the Common Stock from us and subject to prior sale. The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the Common Stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to other conditions. The underwriters are obligated to take and pay for all of the Common Stock offered by this prospectus if any such common stock are taken. However, the underwriters are not required to take or pay for the Common Stock covered by the underwriters’ option to purchase additional common stock described below.
Discounts and Expenses
The underwriters have advised us that they propose to offer the Common Stock to the public at the public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $[●] per share. After this offering, the public offering price, concession, and reallowance to dealers may be changed by the Representative. No such change shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The Common Stock are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. The underwriters have informed us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority.
The following table shows the public offering price, underwriting discounts and commissions and proceeds before expenses to us.
|
| Per Share |
| Total Assuming No Exercise of Over- Allotment Option |
|
| Total Assuming Full Exercise of Over- Allotment Option |
| ||||
Public offering price |
| $ |
|
|
| $ |
|
|
| $ |
|
|
Underwriting discount (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds, before expenses, to us |
| $ |
|
|
| $ |
|
|
| $ |
|
|
(1) Represents an underwriting discount equal to 7% per share. The fees do not include the underwriter’s warrants or expense reimbursement provisions described below.
We have agreed to pay to the underwriters a corporate finance fee equal to 2% of the gross proceeds received by us from the sale of the shares (“Non-accountable Expense Allowance”).
82
We have agreed to pay expenses relating to the offering, including, without limitation: (i) our legal and accounting fees and disbursements; (ii) the costs of preparing, printing, mailing, and delivering the registration statement, the preliminary and final prospectus contained therein and amendments thereto, post-effective amendments and supplements thereto, the underwriting agreement and related documents (all in such quantities as the Representative may reasonably require); (iii) the costs of preparing and printing stock certificates and warrant certificates; (iv) the costs of any “due diligence” meetings; (v) all reasonable and documented fees and expenses for conducting a road show presentation; (vi) all filing fees and communication expenses relating to the registration of the shares to be sold in the offering with the SEC and the fees for filing of the offering materials with FINRA; (vii) the reasonable and documented fees and disbursements of the Representative’s counsel; (viii) background checks of the Company’s officers and directors; (ix) preparation of bound volumes and Lucite cube mementos in such quantities as the Representative may reasonably request; (x) transfer taxes, if any, payable upon the transfer of securities from us to the Representative; and (xi) the fees and expenses of the transfer agent, clearing firm, and registrar for the shares; provided that the actual accountable expenses of the Representative shall not exceed $150,000.
We estimate that expenses payable by us in connection with this offering, other than the underwriting discounts and non-accountable expense allowance referred to above, will be approximately $1,702,000, including a maximum aggregate reimbursement of $150,000 of Representative’s accountable expenses. We paid an expense deposit of $50,000 in August 2023 to the Representative, upon the execution of letter of intent between us and the Representative, and an additional $25,000 has been agreed to be payable, also pursuant to the letter of intent, for the Representative’s anticipated out-of-pocket expenses. Upon the closing of this offering, we will pay an additional $75,000 to the Representative. Any expense deposits will be returned to us to the extent the Representative’s out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(g)(4)(A).
Underwriters’ Warrants
We have agreed to issue to the representative of the underwriters or its designees at the closing of this offering, warrants to purchase the number of shares of our common stock equal to 5% of the aggregate number of shares sold in this offering (the “Representative’s Warrants”). The Representative’s Warrants will be exercisable at any time and from time to time, in whole or in part, during the period commencing upon issuance and ending five years after the commencement of sales in this offering.
The exercise price of the Representative’s Warrants will equal 120% of the public offering price per share, subject to adjustments. The underwriters’ warrants and the Common Stock underlying the warrants have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up beginning on the commencement date of sales of the public offering pursuant to FINRA Rule 5110(e)(1). The Representative and its affiliates or employees (or permitted assignees under FINRA Rule 5110(e)(1)) may not sell, transfer, assign, pledge, or hypothecate the underwriters’ warrants or the Common Stock underlying the underwriters’ warrants, nor will they engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the underwriters’ warrants or the underlying shares for a period of 180 days beginning on the date of commencement of sales of the public offering except as permitted by FINRA Rule 5110(e)(2). The Representative will have the option to exercise, transfer, or assign the underwriters’ warrants at any time, provided that the underlying securities shall not be transferred during the lock-up period; i.e., the 180-day lock-up period will remain on such underlying Common stock. In addition, although the underwriters’ warrants and the underlying shares of Common Stock are being registered in the registration statement of which this prospectus forms a part, we have also agreed that the warrants will provide for registration rights in certain cases. The Representative and its affiliates or employees will also be entitled to one demand registration of the sale of the shares underlying the underwriters’ warrants at our expense, one additional demand registration at the warrant’ holders’ expense, and unlimited “piggyback” registration rights with a duration of no more than five years from the date of commencement of sales of the offering at our expense in compliance with FINRA Rule 5110(g)(8)(D). The underwriters’ warrants will provide for adjustment in the number and price of such warrants and the shares underlying such warrants in the event of recapitalization, merger, or other structural transaction to prevent mechanical dilution. We will bear all fees and expenses attendant to registering the shares underlying the underwriters’ warrants.
83
Lock-Up Agreements
Pursuant to the underwriting agreement, we have agreed not to (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of share capital of the Company or any securities convertible into or exercisable or exchangeable for shares of the Company, (2) file or cause to be filed any registration statement with the SEC relating to the offering of any shares of the Company or any securities convertible into or exercisable or exchangeable for shares of the Company, or (3) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of share capital of the Company, whether any such transaction described in clause (1), (2) or (3) above is to be settled by delivery of shares of the Company or such other securities, in cash or otherwise without the prior written consent of the underwriters for a period of one hundred eighty days (180) after the effective date of this prospectus, except issuances pursuant to the exercise of employee share options outstanding on the date hereof and certain other exceptions.
Furthermore, each of our executive officers and directors as of the effective date of this prospectus, have agreed, without the prior written consent of the underwriters not to directly or indirectly, offer to sell, sell, pledge or otherwise transfer or dispose of any of our Common stock (or enter into any transaction or device that is designed to, or could be expected to, result in the transfer or disposition by any person at any time in the future of), enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of Common stock, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any Common stock or securities convertible into or exercisable or exchangeable for Common stock or any other securities of ours or publicly disclose the intention to do any of the foregoing, subject to customary exceptions, for a period of one hundred eighty (180) days after the effective date of this prospectus.
Determination of offering price
The public offering price of the securities we are offering was negotiated between us and the underwriters. Factors considered in determining the public offering price of the shares include the history and prospects of the Company, the stage of development of our business, our business plans for the future and the extent to which they have been implemented, an assessment of our market, general conditions of the securities markets at the time of the offering and such other factors as were deemed relevant.
Future Transactions
In the event that at any time prior to the second anniversary of the final closing of this offering, we, or any of our affiliates, enter into any transaction (including, without limitation, any merger, consolidation, acquisition, financing, joint venture or other arrangement) (a “Future Transaction”) with any party introduced, directly or indirectly, to us by the underwriters (each, a “Finder”), during such period, the Finder will be paid a transaction fee as stated below, payable at the closing thereof, based on a percentage of the consideration or value received by us and/or our stockholders:
5% of the first $1,000,000;
4% of the next $1,000,000;
3% of the next $1,000,000;
2% of the next $1,000,000; and
1% of all amounts in excess of $4,000,000.
We have agreed to pay to the Representative the aforementioned Finder’s fee during the aforementioned time period, even in situations where the consummation of a Future Transaction at issue culminated not directly from the Finder’s initial introduction but indirectly from a chain of introductions initiated by the Finder’s introduction.
84
Other
From time to time, certain of the underwriters and/or its affiliates may in the future provide, various investment banking and other financial services for us for which they may receive customary fees. In the course of their businesses, the underwriters and their affiliates may actively trade our securities or loans for their own account or for the accounts of customers, and, accordingly, the underwriters and their affiliates may at any time hold long or short positions in such securities or loans. Except for services provided in connection with this offering, the underwriters have not provided any investment banking or other financial services to us during the 180-day period preceding the date of this prospectus and we do not expect to retain any underwriter to perform any investment banking or other financial services for at least 90 days after the date of this prospectus.
Price Stabilization, Short Positions and Penalty Bids
In connection with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our Common Stock. Specifically, the underwriters may over-allot in connection with this offering by selling more shares than are set forth on the cover page of this prospectus. This creates a short position in our Common Stock for its own account. The short position may be either a covered short position or a naked short position.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for distributing common stock in this offering because the underwriter repurchases the Common Stock in stabilizing or short covering transactions.
Finally, the underwriters may bid for, and purchase, shares of our Common Stock in market making transactions, including “passive” market making transactions as described below.
These activities may stabilize or maintain the market price of our ordinary at a price that is higher than the price that might otherwise exist in the absence of these activities. The underwriter are not required to engage in these activities and may discontinue any of these activities at any time without notice. These transactions may be effected on the national securities exchange on which our Common Stock are traded, in the over-the-counter market, or otherwise.
Indemnification
We have agreed to indemnify the underwriters against liabilities relating to this offering arising under the Securities Act and the Exchange Act, liabilities arising from breaches of some or all of the representations and warranties contained in the underwriting agreement, and to contribute to the aggregate losses, claims, damages, liabilities and expenses of such indemnification.
Electronic Offer, Sale, and Distribution of Common Stock
A prospectus in electronic format may be made available on the websites maintained by the underwriters or selling group members, if any, participating in this offering and the underwriters may distribute prospectuses electronically. The underwriters may agree to allocate a number of our Common Stock to selling group members for sale to their online brokerage account holders. The Common Stock to be sold pursuant to internet distributions will be allocated on the same basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part of, nor incorporated by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or the underwriters, and should not be relied upon by investors.
Passive Market Making
In connection with this offering, the underwriters may engage in passive market making transactions in our Common Stock on the NASDAQ Capital Market in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the Common stock and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker’s bid, then that bid must then be lowered when specified purchase limits are exceeded.
85
Potential Conflicts of Interest
The underwriters and their affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their customers and such investment and securities activities may involve securities and/or instruments of our Company. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Other Relationships
The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment research, principal investment, hedging, financing, and brokerage activities. Some of the underwriters and certain of their affiliates may in the future engage in investment banking and other commercial dealings in the ordinary course of business with us and our affiliates, for which they may in the future receive customary fees, commissions, and expenses.
In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long, and/or short positions in such securities and instruments.
86
Other than in the United Stares of America, no action has been taken by us or the underwriters that would permit a public offering of the Common Stock offered by this prospectus in any jurisdiction where action for that purpose is required. The Common Stock offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such shares be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any Common Stock offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
Australia
This prospectus is not a product disclosure statement, prospectus or other type of disclosure document for the purposes of Corporations Act 2001 (Commonwealth of Australia) (the “Act”) and does not purport to include the information required of a product disclosure statement, prospectus or other disclosure document under Chapter 6D.2 of the Act. No product disclosure statement, prospectus, disclosure document, offering material or advertisement in relation to the offer of the Common Stock has been or will be lodged with the Australian Securities and Investments Commission or the Australian Securities Exchange.
Accordingly, (1) the offer of the Common Stock under this prospectus may only be made to persons: (i) to whom it is lawful to offer the Common Stock without disclosure to investors under Chapter 6D.2 of the Act under one or more exemptions set out in Section 708 of the Act, and (ii) who are “wholesale clients” as that term is defined in section 761G of the Act, (2) this prospectus may only be made available in Australia to persons as set forth in clause (1) above, and (3) by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (1) above, and the offeree agrees not to sell or offer for sale any of the Common Stock sold to the offeree within 12 months after their issue except as otherwise permitted under the Act.
British Virgin Islands
No invitation, whether directly or indirectly, may be made to the public in the BVI to subscribe for our Common Stock. This prospectus does not constitute a public offer of Common Stock, whether by way of sale or subscription, in the BVI. Each underwriter has represented and agreed that it has not offered or sold, and will not offer or sell, directly or indirectly, any Common Stock to any member of the public in the BVI.
Canada
The Common Stock may not be offered, sold or distributed, directly or indirectly, in any province or territory of Canada other than the provinces of Ontario and Quebec or to or for the benefit of any resident of any province or territory of Canada other than the provinces of Ontario and Quebec, and only on a basis that is pursuant to an exemption from the requirement to file a prospectus in such province, and only through a dealer duly registered under the applicable securities laws of such province or in accordance with an exemption from the applicable registered dealer requirements.
European Economic Area
In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive, or a Relevant Member State, from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, or the Relevant Implementation Date, an offer of the Common Stock to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to the Common Stock that has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and the competent authority in that Relevant Member State has been notified, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Common Stock to the public in that Relevant Member State at any time,
87
| • | to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; |
|
|
|
| • | to any legal entity that has two or more of (1) an average of at least 250 employees during the last financial year, (2) a total balance sheet of more than €43,000,000, and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or combined accounts; |
|
|
|
| • | to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or |
|
|
|
| • | in any other circumstances that do not require the publication by the company of a prospectus pursuant to Article 3 of the Prospectus Directive; |
provided that no such offer of Common Stock shall result in a requirement for the publication by the company of a prospectus pursuant to Article 3 of the Prospectus Directive.
For purposes of the above provision, the expression “an offer of Common Stock to the public” in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Common Stock to be offered so as to enable an investor to decide to purchase or subscribe the Common Stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
United Kingdom
An offer of the Common Stock may not be made to the public in the United Kingdom within the meaning of Section 102B of the Financial Services and Markets Act 2000, as amended (“FSMA”), except to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities or otherwise in circumstances that do not require the publication by the company of a prospectus pursuant to the Prospectus Rules of the Financial Services Authority, (“FSA”). An invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) may only be communicated to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which Section 21 of FSMA does not apply to the Company. All applicable provisions of the FSMA with respect to anything done by the underwriters in relation to the Common Stock must be complied with in, from or otherwise involving the United Kingdom.
Hong Kong
The Common Stock may not be offered or sold by means of this document or any other document other than (i) in circumstances that do not constitute an offer or invitation to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) (“Companies (WUMP) Ordinance”) or the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (“SFO”), or (ii) to “professional investors” within the meaning of the SFO and any rules made thereunder, or (iii) in other circumstances that do not result in the document being a “prospectus” within the meaning of the Companies (WUMP) Ordinance, and no advertisement, invitation or document relating to the Common Stock may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), that is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Common Stock which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the SFO and any rules made thereunder.
88
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our Common Stock may not be circulated or distributed, nor may our Common Stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”)) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to conditions set forth in the SFA.
People’s Republic of China
This prospectus may not be circulated or distributed in the PRC and the Common Stock may not be offered or sold, and will not offer or sell, to any person for re-offering or resale directly or indirectly to any resident of the PRC except pursuant to applicable laws and regulations of the PRC. For the purpose of this paragraph, PRC does not include Taiwan and the special administrative regions of Hong Kong and Macau.
89
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on accounting or financial disclosure matters.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the Common Stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
The validity of the issuance of the Shares hereby will be passed upon for us by Law Office of Clifford J. Hunt, P.A. (“Hunt Law”), Seminole, Florida. Hunt Law principal, Clifford J. Hunt, Esquire is the holder of 64,000 shares of our Common Stock. Certain legal matters related to the offering will be passed upon for the underwriter by Lucosky Brookman LLP, Woodbridge, New Jersey.
Our consolidated balance sheets as of December 31, 2025 and 2024, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2025, have been audited by Salberg & Company, PA, an independent registered public accounting firm, as set forth in its report appearing herein and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are an SEC non-reporting company and file annual, quarterly and special reports, and other information with OTC Markets. Copies of the reports and other information may be read and copied at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. You can request copies of such documents by writing to the SEC and paying a fee for the copying cost. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.
This prospectus is part of a registration statement on Form S-1 that we filed with the SEC. Certain information in the registration statement has been omitted from this prospectus in accordance with the rules and regulations of the SEC. We have also filed exhibits and schedules with the registration statement that are excluded from this prospectus. For further information you may:
| · | read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC’s Public Reference Room; or |
|
|
|
| · | obtain a copy from the SEC upon payment of the fees prescribed by the SEC. |
90
VERI MEDTECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2025 and 2024
Audited Consolidated Financial Statements
Unaudited Consolidated Financial Statements
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of:
Veri Medtech Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Veri Medtech Holdings, Inc. and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows, for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, 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 3 to the consolidated financial statements, the Company has a stockholders’ deficit, accumulated deficit and working capital deficit, of approximately $2,346,000, $4,842,000 and $2,045,000 respectively, at December 31, 2025 and had a net loss for the year ended December 31, 2025 of approximately $2,320,000. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s Plan in regard to these matters is also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 audits to obtain reasonable assurance about whether the consolidated 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 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.
F-2
Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Salberg & Company, P.A.
SALBERG & COMPANY, P.A.
We have served as the Company’s auditor since 2025.
Boca Raton, Florida
May 7, 2026 (except for the reverse stock split discussed in Note 11 as to which the date is September 9, 2026)
2295 NW Corporate Blvd., Suite 240 • Boca Raton, FL 33431
Phone: (561) 995-8270 • Toll Free: (866) CPA-8500 • Fax: (561) 995-1920
www.salbergco.com • info@salbergco.com
Member National Association of Certified Valuation Analysts • Registered with the PCAOB
Member CPAConnect with Affiliated Offices Worldwide • Member Center for Public Company Audit Firms
F-3
F-4
VERI MEDTECH HOLDINGS, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| For the years ended December 31, | ||
|
|
|
|
| 2025 |
| 2024 |
|
|
|
|
|
|
|
|
Revenues, net |
|
|
| $10,848,200 |
| $16,653,261 | |
Cost of revenues |
|
|
| 2,681,437 |
| 4,264,677 | |
Gross profit |
|
|
| 8,166,763 |
| 12,388,584 | |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
| |
| General and administrative expenses |
|
|
| 289,052 |
| 439,738 |
| Rent and occupancy expenses |
|
|
| 248,415 |
| 310,191 |
| Compensation and related taxes |
|
|
| 6,319,206 |
| 4,855,312 |
| Professional, consulting and contractor fees |
|
|
| 2,198,466 |
| 2,221,818 |
| Technology cost |
|
|
| 470,518 |
| 407,557 |
| Sales and marketing costs |
|
|
| 888,056 |
| 4,456,270 |
Total operating expenses |
|
|
| 10,413,713 |
| 12,690,886 | |
Loss from operations |
|
|
| (2,246,950) |
| (302,302) | |
Other income (expense) |
|
|
|
|
|
| |
| Other income |
|
|
| 217 |
| 31 |
| Interest expense and other finance charges |
|
|
| (72,228) |
| (105,138) |
| Other expenses |
|
|
| (1,170) |
| (1,400) |
Other expense, net |
|
|
| (73,181) |
| (106,507) | |
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
|
|
| (2,320,131) |
| (408,809) | |
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
| - |
| - | |
Net loss |
|
|
| $(2,320,131) |
| $(408,809) | |
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted |
|
|
| $(0.29) |
| $(0.09) | |
Weighted average common shares |
|
|
|
|
|
| |
outstanding - basic and diluted |
|
|
| 7,987,465 |
| 4,600,002 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. | |||||||
F-5
VERI MEDTECH HOLDINGS, INC. AND SUBSIDIARIES |
| ||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT |
| ||||||||||||||
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock |
| Series A Preferred Stock |
|
|
|
|
| Total |
| ||||
|
| $0.0001 Par Value |
| $0.0001 Par Value |
| Additional |
| Accumulated |
| Stockholders' |
| ||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2023 |
| 4,600,002 |
| $460 |
| - |
| $- |
| $ 116,100 |
| $ (2,662,096) |
| $ (2,545,536) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contribution by principal stockholders |
| - |
| - |
| - |
| - |
| - |
| 549,498 |
| 549,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| - |
| - |
| - |
| - |
| - |
| (408,809) |
| (408,809) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2024 |
| 4,600,002 |
| 460 |
| - |
| - |
| 116,100 |
| (2,521,407) |
| (2,404,847) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services and accretion of stock-based compensation in connection with restricted common stock award grants |
| 2,287,876 |
| 229 |
| - |
| - |
| 2,379,069 |
| - |
| 2,379,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares deemed issued in connection with the recapitalization |
| 1,112,126 |
| 111 |
| 100 |
| - |
| (111) |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| - |
| - |
| - |
| - |
| - |
| (2,320,131) |
| (2,320,131) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2025 |
| 8,000,004 |
| $800 |
| 100 |
| $- |
| $ 2,495,058 |
| $ (4,841,538) |
| $ (2,345,680) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. |
| ||||||||||||||
F-6
VERI MEDTECH HOLDINGS, INC. AND SUBSIDIARIES | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
|
|
|
|
|
|
|
|
|
|
|
|
| For the years ended December 31, | ||
| 2025 |
| 2024 |
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net loss | $(2,320,131) |
| $(408,809) |
Adjustments to reconcile net loss to net cash provided by operations: |
|
|
|
Stock based expenses | 2,379,298 |
| - |
Depreciation | 7,486 |
| 6,057 |
Provision for credit losses | 600 |
| - |
Amortization of right-of-use asset | 106,381 |
| 96,743 |
Non-cash interest expense | 4,135 |
| - |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable | 14,567 |
| 5,883 |
Prepaid expenses and other current assets | (9,180) |
| 79,582 |
Accounts payable and accrued liabilities | 128,795 |
| 365,839 |
Unearned revenues | 28,311 |
| (41,402) |
Operating lease liability | (106,709) |
| (96,414) |
Due to related party | 85,763 |
| 47,937 |
Net cash provided by operating activities | 319,316 |
| 55,416 |
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Purchase of computer equipment | (3,103) |
| (2,286) |
Net cash used in investing activities | (3,103) |
| (2,286) |
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Proceeds received from lines of credit | 7,172 |
| 95,541 |
Advances from officers | 782,173 |
| - |
Repayments to officers | (461,025) |
| - |
Repayments on note payable | (588,595) |
| (615,724) |
Repayments on line of credit | (74,581) |
| (95,199) |
(Distributions to) and contributions from principal stockholders, net | - |
| 549,498 |
Net cash used in financing activities | (334,856) |
| (65,884) |
Net cash decrease for year | (18,643) |
| (12,754) |
Cash and cash equivalents at beginning of year | 63,752 |
| 76,506 |
Cash and cash equivalents at end of year | $45,109 |
| $63,752 |
|
|
|
|
Supplemental Disclosure of Cash Flow Information |
|
|
|
Cash paid for: |
|
|
|
Interest | $68,093 |
| $105,138 |
Income Tax | $- |
| $- |
|
|
|
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities |
|
|
|
Derecognition of the carrying amounts of the operating right of use asset and operating lease liability associated with the terminated portion pursuant to ASC 842 - related party | $1,045,514 |
| $- |
Operating lease right of use asset and operating lease liability due to modification pursuant to ASC 842 - related party | $44,333 |
| $- |
Outstanding balance of a line of credit converted into a note payable | $437,228 |
| $- |
Debt discount upon issuance of a note payable (related to conversion of line of credit) | $4,772 |
| $- |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. | |||
F-7
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Note 1 - Organization and Nature of Operations
Effective on January 1, 2025, Veri Holdings, Inc. (“Veri Holdings’’) merged with and into Veri Medtech Holdings, Inc. (the “Company”) in a transaction treated as a reverse merger and recapitalization of Veri Holdings (see Note 9). Veri Holdings was incorporated in August 2023 and acquired Alternative Medical Clinic LLC (“AMC”) and Dosepop Inc. (“DosePop” and fka Verinew Inc,) in 2023. Veriheal Inc. (“Veriheal”), was incorporated in November 2017 and is the primary operating entity which operates as a digital healthcare company with a fully technology-enabled service model via its healthcare technology platform which provides accessible consultations for alternative medicine and medical cannabis and offers on-demand virtual consultations via video and chat, allowing patients to discuss sensitive health issues confidentially and receive personalized treatment plans. On December 31, 2024, Veri Holdings acquired Veriheal. All entities were under common control during year 2024 and became consolidated on December 31, 2024. Therefore, the accompanying financial statements are presented on a retrospective basis as consolidated financial statements for all periods presented.
The Company, through its wholly owned subsidiary, Alternative Medical Clinic LLC, contracts physicians to facilitate the delivery of telehealth services to its patients. The Company through its wholly owned subsidiary, DosePop, provides a one-stop healthcare technology platform for mental and physical health designed to connect patients with healthcare professionals and provide various treatment options and services ranging from weight loss programs to anti-aging treatments.
On July 24, 2026, the Company filed a certificate of amendment to its certificate of incorporation, as amended, to effect a one-for-two-and-one-half (1:2.5) Reverse Stock Split (the “Reverse Stock Split”), effective as of September 2, 2026 (see Note 11). All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the consolidated financial statements to reflect the Reverse Stock Split.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). The accompanying consolidated financial statements include the accounts of Veri Medtech Holdings, Inc. and its wholly-owned subsidiaries, Veriheal, Dosepop, and AMC. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from estimates. Significant estimates made by management include, but are not limited to, the allowance for credit losses, the estimates of useful lives for depreciation, valuation of the lease liabilities and related right of use assets, valuation of stock-based compensation and valuation allowance associated with deferred tax assets.
Cash and Cash Equivalents
Cash equivalents are comprised of certain highly liquid instruments with a maturity of three months or less when purchased. The Company did not have any cash equivalents on hand at December 31, 2025 and 2024. The Company places its cash with high credit quality financial institutions. The Company’s accounts at these institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. To reduce its risk associated with the failure of such financial institutions, the Company evaluates, at least annually, the rating of the financial institutions in which it holds deposits. At December 31, 2025 and 2024, the Company’s had no cash in excess of the FDIC limit.
Accounts Receivable
Trade receivables are recorded at net realizable value consisting of the carrying amount less the allowance for credit losses, as needed. Factors used to establish an allowance include the credit quality of the customer and whether the balance is significant. The Company may also use the direct write-off method to account for uncollectible accounts that are not received. Using the direct write-off method, trade receivable balances are written off to credit loss when an account balance is deemed to be uncollectible. The Company maintains an allowance for credit losses primarily for estimated losses resulting from the inability or failure of individual customers to make the required payments.
F-8
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
The Company estimates its allowance for credit losses using the Current Expected Credit Loss (CECL) model under Accounting Standards Codification (“ASC”) 326 based on historical losses, changes in payment history, customer-specific information, current economic conditions, and reasonable and supportable forecasts of future economic conditions. The allowance under ASC 326 is updated as additional losses are incurred or information becomes available related to the customer or economic conditions. As of December 31, 2025 and 2024, the allowance for credit losses was $0 for both periods. During the years ended December 31, 2025 and 2024, the Company recorded a direct write-off of accounts receivable into provision for credit losses amounting to $600 and $0, respectively.
Effective December 1, 2025, the Company early adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient that permits entities to assume that economic conditions existing as of the balance sheet date will remain unchanged when estimating expected credit losses on current trade receivables and contract assets. The Company elected this practical expedient and applied the guidance prospectively. The adoption of ASU 2025-05 did not have a material impact on the Company’s consolidated financial statements.
Fair Value Measurements and Fair Value of Financial Instruments
The Company follows the FASB Fair Value Measurements standard, as it applies to its financial instruments on a recurring basis. This standard defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The standard establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. Level 1 inputs include quoted market prices for identical assets or liabilities in an active market that the Company has the ability to access at the measurement date. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data. The standard requires the utilization of the lowest possible level of input to determine fair value and carrying amounts of current liabilities approximate fair value due to their short-term nature.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
The Company’s non-financial assets, such as ROU assets, and property and equipment, are adjusted to fair value only when an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606 Revenue from Contracts with Customers, which requires revenue to be recognized in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration which the entity expects to be entitled in exchange for those goods or services. In accordance with ASU Topic 606 - Revenue from Contracts with Customers, the Company recognizes revenue in accordance with that core principle by applying the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
F-9
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
The Company through its wholly owned subsidiary, Veriheal, generates revenue from service processing fees by facilitating patient consultations with licensed physicians for the purpose of medical marijuana (“MMJ”) card evaluations. Revenue is recognized at a point in time upon completion of both the consultation service and the licensed physicians providing a medical decision. This is when the performance obligation is satisfied. The Company acts as the principal in these transactions and recognizes the full transaction price as revenue when its performance obligation is satisfied. The service processing fees are paid in advance and are non-refundable, however, the Company may reserve the right to refund the fees under limited circumstances at its discretion. Payments received before the completion of the consultation service are recorded as unearned revenue to be recognized upon completion of both the consultation service and conveyance of the medical decision which generally occurs within two months but can take up to six months from the date of payment.
The Company through its wholly owned subsidiary, Veriheal, also engages in business-to-business activities whereby the Company provides services by collaborating with licensed medical professionals and clinics and offering digital marketing services to connect them with the Company’s patients. Additionally, the Company provides research services for certain universities and organizations. The Company recognizes revenues from marketing and research services for the agreed upon price when such services are completed, which satisfies the performance obligation.
The Company through its wholly owned subsidiary, Dosepop, offers a comprehensive healthcare platform for both mental and physical health. The platform provides various treatments options by licensed professionals, addressing issues ranging from weight loss to anti-aging treatments. Revenue is recognized upon completion of both the consultation service and the licensed physicians providing the treatment option, which is when the performance obligation is satisfied.
The following table presents the Company’s revenue disaggregated by revenue stream for the following periods:
|
| For the Years Ended December 31, | ||||||
|
| 2025 |
|
| 2024 |
| ||
Consultation service - MMJ evaluations |
| $ | 10,783,337 |
|
| $ | 16,544,492 |
|
Consultation service - various treatment options |
|
| 9,029 |
|
|
| 22,519 |
|
Business-to-business - digital infrastructure service |
|
| 834 |
|
|
| 34,250 |
|
Research service |
|
| 55,000 |
|
|
| 52,000 |
|
|
|
|
|
|
|
|
|
|
Total revenues, net |
| $ | 10,848,200 |
|
| $ | 16,653,261 |
|
Cost of Revenues
Cost of revenues primarily includes fees paid to contracted physicians for consultation services and merchant processing fees related to patient payments. These costs are directly attributable to revenue-generating activities and are expensed as incurred.
Sales and Marketing
The Company applies ASC 720 “Other Expenses” to account for marketing costs. Pursuant to ASC 720-35-25-1, the Company expenses marketing costs as incurred. Marketing costs include advertising through social media, digital marketing, influencer marketing and promotional campaigns. Marketing costs were $888,056 and $4,456,270 for the years ended December 31, 2025 and 2024, respectively, were included in sales and marketing costs on the consolidated statement of operations.
Prepaid expenses and other current assets
Prepaid expenses and other current assets of $84,742 and $75,562 at December 31, 2025 and 2024, respectively, consist primarily of costs paid for future services which will occur within a year. Prepaid expenses principally include prepayments in cash for insurance, rent, and technology services which are being amortized over the terms of their respective agreements. Other current assets primarily include credit card merchant receivable generally collected within two to three days from date of sale.
F-10
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Property and Equipment
Property is carried at cost. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the terms of their respective leases. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets ranging from three to ten years.
Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment is determined by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from use of the assets and their ultimate disposition. In instances where impairment is determined to exist, the Company writes down the asset to its fair value based on the present value of estimated future cash flows. There was no impairment during the years ended December 31, 2025 and 2024.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, Income Taxes. Income tax expense is the total of the current-year income tax due or refundable and the change in the deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of the tax benefit that is greater than fifty percent (50%) likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Management is not aware of any issues that could result in significant payments, accruals, or material deviation from its positions.
The Company files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. In general, the statute of limitations of the Company’s U.S. federal tax returns remains open three years after a tax return is filed. The statutes of limitations on the Company’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.
Management has concluded that there are no uncertain tax positions that would require recognition in the financial statements. If the Company were to incur an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax liability would be reported as income taxes. Management’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis or tax laws, regulations and interpretations thereof as well as other factors.
The Company currently has no federal or state tax examinations in progress. As of December 31, 2025, the Company’s tax returns for the tax years 2025, 2024 and 2023 remain subject to audit, primarily by the Internal Revenue Service. The Company did not have material unrecognized tax benefits as of December 31, 2025 and does not expect this to change significantly over the next 12 months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of the provision for income taxes.
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 - “Compensation -Stock Compensation”, which requires recognition in the financial statements of the cost of employee and director services along with non-employee services received in exchange for an award of equity instruments over the period the employee, director or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director or non-employee services received in exchange for an award based on the grant-date fair value of the award.
F-11
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Lease Accounting
The Company follows ASC Topic 842, Leases (Topic 842) and applies the package of practical expedients, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less. Operating lease right of use assets (“ROU”) represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses. An amendment to a lease is assessed to determine if it represents a lease modification or a separate contract. Lease modifications are reassessed as of the effective date of the modification. For modified leases, the Company also reassesses the lease classification as of the modification’s effective date.
Segment Reporting
The Company uses “the management approach” in determining reportable operating segments. Operating segments are defined as components of an entity where discrete financial information is evaluated regularly by the chief operating decision maker (“CODM”). The management approach considers the internal organization and reporting used by the Company’s CODM for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s CODM is the chief executive officer of the Company, who reviews operating results to make decisions about operating decisions, allocating resources and assessing performance for the entire Company. The CODM reviews and utilizes consolidated financial information, including revenue, gross profit, operating income (loss) and net income (loss) as reported on the consolidated statements of operations, to assess performance and allocate resources to support strategic priorities. Consolidated net income (loss) is our segment's primary measure of profit or loss. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. The single segment constitutes all the consolidated entity, and the accompanying consolidated financial statements and the notes to the accompanying consolidated financial statements are representative of such amounts. For the years ended December 31, 2025 and 2024, the Company operates in one operating segment.
The table below provides information about the Company’s revenue, significant segment expenses and other segment expenses for the following periods.
|
| For the Years Ended December 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Revenues |
| $ | 10,848,200 |
|
| $ | 16,653,261 |
|
Cost of revenues |
|
| 2,681,437 |
|
|
| 4,264,677 |
|
Gross profit |
|
| 8,166,763 |
|
|
| 12,388,584 |
|
Less segment expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
| 289,052 |
|
|
| 439,738 |
|
Rent and occupancy expenses |
|
| 248,415 |
|
|
| 310,191 |
|
Compensation and related taxes |
|
| 6,319,206 |
|
|
| 407,557 |
|
Professional, consulting and contractor |
|
| 2,198,466 |
|
|
| 4,855,312 |
|
Technology expense |
|
| 470,518 |
|
|
| 2,221,818 |
|
Sales and marketing expenses |
|
| 888,056 |
|
|
| 4,456,270 |
|
Loss from operations |
| $ | (2,246,950) |
|
| $ | (302,302) |
|
Less: |
|
|
|
|
|
|
|
|
Other expense, net |
|
| (73,181) |
|
|
| (106,507) |
|
Segment net loss |
| $ | (2,320,131) |
|
| $ | (408,809) |
|
Depreciation |
| $ | 7,486 |
|
| $ | 6,057 |
|
|
|
|
| |||||
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
Segment Assets |
| $ | 196,196 |
|
| $ | 1,332,771 |
|
F-12
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Concentrations
With respect to customer concentration, no customer accounted for more than 10% of total revenues for the years ended December 31, 2025 and 2024. All revenues were generated in United States during the for the years ended December 31, 2025 and 2024.
With respect to revenue concentration by revenue stream, consultation service - MMJ evaluations accounted for 99.4% of total revenues for both periods for the years ended December 31, 2025 and 2024.
With respect to accounts receivable concentration, one customer accounted for 100% of total accounts receivable at December 31, 2025. With respect to accounts receivable concentration, two customers accounted for 50% and 50% of total accounts receivable at December 31, 2024.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances annual income tax disclosure requirements, including additional disaggregation in the effective tax rate reconciliation and income taxes paid by jurisdiction. The Company adopted ASU 2023-09 effective January 1, 2024 and applied the guidance retrospectively to the periods presented. The adoption did not have a material impact on the Company’s recognition or measurement of income taxes, but it resulted in expanded income tax disclosures in the notes to the consolidated financial statements.
On November 4, 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) requiring additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. This standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 applies to all public business entities (PBEs) and is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2024-03 may have on the Company’s consolidated financial statements.
On December 8, 2025, the FASB issued ASU 2025-11 - Interim Reporting (“ASU 2025-11”) which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2025-11 may have on the Company’s consolidated financial statements.
On December 17, 2025, the FASB issued ASU 2025-12, Codification Improvements. The amendments in this update are to make other incremental improvements to GAAP and facilitate codification updates for a broad range of Topics arising from technical corrections, unintended application of the codification, clarifications, and other minor improvements. The resulting amendments are collectively referred to as Codification improvements. ASU 2025-12 is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact the adoption of ASU 2025-12 may have on the Company’s consolidated financial statements.
Note 3 - Going Concern
The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
F-13
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
In accordance with ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. As reflected in the consolidated financial statements, the Company had stockholders’ deficit, accumulated deficit and working capital deficit of approximately $2,346,000, $4,842,000 and $2,045,000, respectively, at December 31, 2025.
The Company reported a net loss of approximately $2,320,000 for the year ended December 31, 2025. Notwithstanding this result, the Company continues to generate revenue and maintain active operations across its core business segment. Based on current forecasts and available cash as of December 31, 2025, the Company may require additional capital to fully support its planned growth initiatives and capital expenditures over the next twelve months.
Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern for at least the twelve months following the issuance of these consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon management’s ability to further implement its business plan, generate sufficient revenues and raise additional capital resources as needed.
Note 4 - Property and Equipment
As of the dates presented, property and equipment consisted of the following:
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
Leasehold improvements (10-year useful life) |
| $ | 57,759 |
|
| $ | 57,759 |
|
Computer equipment (3-year useful life) |
|
| 5,389 |
|
|
| 2,286 |
|
Less: accumulated depreciation |
|
| (14,223) |
|
|
| (6,737) |
|
Total |
| $ | 48,925 |
|
| $ | 53,308 |
|
For the years ended December 31, 2025 and 2024, depreciation expense amounted to $7,486 and $6,057.
Note 5 - Lines of credit - Banks
The Company had a revolving line of credit with a financial institution, which balance was due on demand. This revolving line of credit was in the amount of $500,000. The revolving line of credit was secured by all the assets of Veriheal and personally guaranteed by the principal stockholders of the Company. The line bore a variable interest rate of 7.50% per annum in December 2025 (8.50% per annum as of December 31, 2024). In April 2025, this credit line has been cancelled. Consequently, upon cancellation, there was no available credit to borrow, however, the outstanding balance was still subject to variable interest rate charges. On December 29, 2025, the outstanding balance of line of credit amounting to $437,228 was converted into a promissory note with a 5-year term and principal balance of $442,000 (see Note 6). As of December 31, 2025 and 2024, respectively, the balance of the line of credit was $0 and $499,089, with $0, available at December 31, 2025.
The Company has another revolving line of credit with a financial institution, which balance is due on demand. This revolving line of credit is in the amount of $25,000 and is personally guaranteed by the principal stockholders of the Company. The maturity date is on January 7, 2027 and renews annually unless cancelled. The line bears a variable interest rate of 13.00% per annum as December 31, 2025 (13.75% per annum as of December 31, 2024). The interest rate will vary with the market based on the prime rate and the Company’s credit worthiness, overall business relationship and line amount and will be adjusted on a monthly basis. As of December 31, 2025 and 2024, respectively, the balance of the line of credit was $23,542 and $24,955, with $1,458, available at December 31, 2025.
During the years ended December 31, 2025 and 2024, the Company received total proceeds from line of credits of $7,172 and $95,541.
F-14
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Note 6 - Notes Payable
The note balances consisted of the following at:
|
| December 31, |
|
| December 31, | ||
|
| 2025 |
|
| 2024 | ||
Principal amount of notes |
| $ | 496,463 |
|
| $ | 643,058 |
Unamortized discount |
|
| (4,772) |
|
|
| (-) |
Less: Current portion, net |
|
| (130,805) |
|
|
| (593,123) |
Long-term portion, net |
| $ | 360,886 |
|
| $ | 49,935 |
Minimum installment payments under the notes payable are as follows:
Year ended December 31, 2026 |
|
| $158,891 |
|
Year ended December 31, 2027 |
|
| 104,428 |
|
Year ended December 31, 2028 |
|
| 104,428 |
|
Year ended December 31, 2029 |
|
| 104,428 |
|
Year ended December 31, 2030 |
|
| 104,428 |
|
Total installment payments |
|
| 576,603 |
|
Less: interest portion |
|
| (80,140) |
|
Total principal amount of notes |
|
| $496,463 |
|
Promissory Note Agreement Dated January 20, 2022
On January 20, 2022, the Company through its wholly owned subsidiary, Veriheal, entered into a Promissory Note Agreement with a certain bank (“Lender”), pursuant to which the Company issued a promissory note (the “Note”) to the Lender in the principal amount of $2,250,000 subject to default as defined, negative covenants as defined and right of set-off of Company’s balances held, and default interest rate of 5% . The maturity date of this Note is the payment due date on January 20, 2026 (see below). The Note bears interest at 3.27% per annum. The first installment payment date shall be the payment due date in the month of January 2022. The Note is secured by all the assets of Veriheal and personally guaranteed by the principal stockholders of the Company.
The Company shall pay to the Lender the principal amount and interest owing pursuant to this Note in installments as follows:
(i)Forty Seven (47) consecutive level monthly installments consisting of both principal and interest, each in the amount of $50,071, due and payable on the first installment payment date and each payment due date thereafter, and
(ii)And one final installment, due and payable on the maturity date, in an amount equal to the outstanding principal amount, together with all other amounts outstanding hereunder, including, without limitation, accrued interest, costs and expenses.
During the term of this Note, the Company shall have the option of paying the unpaid principal amount to the Lender in advance of the maturity date, in whole or in part, at any time and from time to time upon written notice received by the Lender at least three (3) days prior to making such payment. With any prepayment in full of the principal amount balance, the Company shall also pay to the Lender all accrued interest and expenses owing pursuant to this Note.
Upon the occurrence of any event of default, the Lender without demand of performance or other demand to or upon the Company or any other person, may exercise all rights and remedies under the Company’s agreements with the Lender or its affiliates, may declare all or any part of any amounts due hereunder not payable on demand to be immediately due and payable without demand or notice of any kind and terminate any obligation it may have to grant any additional loan, credit or other financial accommodation to the Company. All or any part of any amounts due hereunder whether or not payable on demand, shall be immediately due and payable automatically upon the occurrence of an event of default as defined in the Note Agreement. The Lender shall have the right to set off against the amounts owing under this Note any property held in a deposit or other account with the Lender or any affiliates or otherwise owing by the Lender or any affiliates in any capacity to the Company or any guarantor or endorser of this Note. Such setoff shall be deemed to have been exercised immediately at the time the Lender elects to do so.
F-15
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
As of December 31, 2025 and 2024, the principal balance of this Note was $54,463 and $643,058, respectively. The Company fully repaid the January 2022 note in January 2026.
For the years ended December 31, 2025 and, 2024, the Company paid principal amounts of $588,595 and $615,724, respectively.
For the years ended December 31, 2025 and 2024, interest expense incurred on the above notes amounted to $12,258 and $35,202, respectively.
Promissory Note Agreement Dated December 29, 2025
On December 29, 2025, the Company through its wholly owned subsidiary, Veriheal, entered into a Promissory Note Agreement with a certain bank (“Lender”), pursuant to which the Company issued a promissory note (the “December 2025 Note”) to the Lender in the principal amount of $442,000 subject to default as defined, and negative covenants as defined, and default interest rate equal to the aggregate of 5.0% plus the rate provided in the note agreement. If any payment due under this December 2025 Note is unpaid for 10 days or more, the Company shall pay, in addition to any other sums due under this December 2025 Note (and without limiting the Bank or Lender's other remedies on account thereof), a late charge equal to the greater of $50 or 5.0% of such unpaid amount, or the Lender's then current late charge as announced from time to time. The December 2025 Note will mature on December 29, 2030. The December 2025 Note bears interest at 6.66625% per annum. The first installment payment date shall be on January 29, 2026. The December 2025 Note is secured by all the assets of Veriheal and personally guaranteed by the principal stockholders of the Company.
The Company shall pay to the Lender the principal amount and interest owing pursuant to the December 2025 Note in sixty consecutive level monthly installments consisting of both principal and interest, each in the amount of $8,702, due and payable on the first installment payment date and each payment due date thereafter.
During the term of this December 2025 Note, the Company shall have the option of paying the unpaid principal amount to the Lender in advance of the maturity date, in whole or in part, at any time and from time to time upon written notice received by the Lender at least three (3) days prior to making such payment; provided, however, as consideration for the privilege of making such prepayment, the Company shall pay a fee (the "Premium") equal to the product of: (a) the principal amount prepaid and (b) the percentage ranging from 1% to 3% as set forth in the note agreement for any prepayment made during the indicated period.
Upon the occurrence of any event of default, at the election of the Lender, all obligations shall become immediately due and payable without notice or demand. All of the Lender’s rights and remedies not only under the provisions of this note agreement but also under any other agreement or transaction shall be cumulative and not alternative or exclusive, and may be exercised by the Lender at such time and in such order of preference as the Lender in its sole discretion may determine. The Company hereby grants to the Lender a continuing lien and security interest in any deposits or other sums at any time credited by or due from the Lender or any Lender’s Affiliate. The Lender shall have the right to set off against the amounts owing under this note any property held in a deposit or other account with the Lender or any affiliates or otherwise owing by the Lender or any affiliates in any capacity to the Company or any guarantor or endorser of this Note.
As of December 31, 2025, the principal balance of the December 2025 Note was $442,000. During the year ended December 31, 2025, there were no principal payments made and zero interest expense incurred related to the December 2025 Note.
Note 7 - Related Party Transactions
Due to Related Party
As of December 31, 2025 and 2024, $140,200 and $54,437, respectively, were payable to an affiliated company owned by the principal stockholders of the Company and primarily consisted of unpaid rent related to a ten-year lease agreement (see Note 8). This amount is unsecured and non-interest bearing.
Due to Officers
During the years ended December 31, 2025, the Company’s officers advanced an aggregate of $782,173 for working capital purposes and the Company repaid back an aggregate of $461,025. These loan advances bear no interest and are payable on demand. As of December 31, 2025 and 2024, respectively, due to officers was $321,148 and $0, respectively.
F-16
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Note 8 - Commitments and Contingencies
Legal Proceedings
From time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation will not have a material adverse effect on its business, financial condition, results of operations, or cash flows. Contingent liabilities arising from potential litigation are assessed by management based on the individual analysis of these proceedings and on the opinion of the Company’s lawyers and legal consultants. There have been no provisions recorded for the years ended December 31, 2025 and 2024.
Regulated Industry
The U.S. healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments. Comprehensive statutes and regulations govern the manner in which the Company provides, bills for services and collects reimbursement from governmental programs and private payors, the contractual relationships with the Company’s providers, vendors and customers, marketing activities and other aspects of the Company’s operations.
In a regulatory climate that is uncertain, the Company’s operations may be subject to direct and indirect adoption, expansion or reinterpretation of various laws and regulations. This risk is especially acute in the healthcare industry given the level of government spending, oversight and control over the industry as a whole. Compliance with these evolving laws, regulations and interpretations may require us to change the Company’s practices at an undeterminable and possibly significant initial monetary and annual expense. These additional monetary expenditures may increase future overhead, which could have a material adverse effect on the Company’s results of operations. There could be laws and regulations applicable to the Company’s business that the Company have not identified or that, if changed, may be costly to the Company, and cannot predict all the ways in which implementation of such laws and regulations may affect the Company.
Employment Agreements
Effective September 14, 2023, the Company entered into Employment Agreements (the “Agreements”) with the CEO of the Company, Josh Green and the President of the Company, Samuel Adetunji (the “Officers”). The Agreements shall continue in full force and effect, until such time as the Officers and the Company mutually agree to its termination. The Company shall pay each Officer an annual salary equal to $1,200,000 and shall also pay bonus compensation of up to 20% of their annual salary for attaining annual company goals and objectives. On September 4, 2025, the Company entered into amended employment agreements (“First Amendment”) with the Officers whereby the annual salary was amended from $1,200,000 to $1,058,333. Except as expressly amended hereby, all of the other terms and conditions of the Agreements shall remain unchanged and in full force and effect in accordance with their original terms.
Each Officer is entitled to be issued up to 12,000,000 shares of common stock, subject to the terms of Employer’s Stock Incentive Plan (the “Plan”), upon the successful execution of an initial public offering (IPO) of the Company (the “Earn-Out Shares”) as incentive compensation for continual attainment and achievement of goals (see below). The Officers shall also participate in any bonus or incentive compensation programs. In the event of any merger, acquisition or change of control of the Company following an IPO, all of Earn-Out Shares shall immediately vest, and the Officer’s salary and benefits shall continue for a period of thirty- six (36) months thereafter, including annual bonus compensation. Earn-Out Shares shall be eligible to the Officers as follows:
(a)if the dollar volume-weighted average price (“VWAP”) of the Company’s common stock equals or exceeds $6.00 per share for any 20-trading days within any 30-trading day period during the period beginning on the effective date of the Company’s listing on the NASDAQ Capital Market, and ending on the 18-month anniversary thereof, the Company shall issue to each Officer an aggregate of 4,000,000 Earnout Shares.
(b)if the VWAP of the Company’s common stock equals or exceeds $7.00 per share for any 20 trading days within any 30-trading day period during the period beginning on the effective date of the 18-month of the anniversary of the Company’s listing on the NASDAQ Capital Market, and ending on the second anniversary thereof, the Company shall issue to each Officer an additional aggregate of 4,000,000 Earnout Shares.
F-17
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
(c)if the VWAP of the Company’s common stock equals or exceeds $8.00 per share for any 20 trading days within any 30-trading day period during the period beginning on the effective date of the second anniversary of the Company’s listing on the NASDAQ Capital Market, and ending on the third anniversary thereof, the Company shall issue to each Officer an additional aggregate of 4,000,000 Earnout Shares.
As of December 31, 2025 and 2024, the Company recorded unpaid salaries and related taxes to the Officers of approximately $601,000 and $0, respectively, which has been included in accounts payable and accrued liabilities as reflected in the consolidated balance sheets.
Since the share grants include both a performance condition and market conditions, the Company will measure and recognize the value of the grants when the performance condition (i.e. completion of an IPO) is met and the market conditions will effect the valuation of the grants. The Company valued the grants on the grant date of September 14, 2023 based on contemporaneous cash sales of common stock at $0.00025 per share for a total of $2,400.
Operating Lease - Related Party
In October 2023, the Company, through its wholly owned subsidiary, Veriheal, entered into a ten-year lease agreement with G&A Real Estate Investment Group, LLC, (“G&A”) a related party company owned by the principal stockholders, for a monthly rent of $15,000. The lease premises is located in Denver, Colorado. In October 2023, the Company recorded ROU assets and total lease liabilities of $1,184,125 based on an incremental borrowing rate of 9%.
On July 1, 2025, the Company entered into an amended lease agreement with G&A whereby the end of the lease term was amended from October 2033 to October 2025 unless otherwise terminated in accordance with the provisions of the lease or extended for an additional term, upon written mutual agreement, within 90 days prior to the end of the amended term. Upon the end of the amended term, the lease shall continue from month-to-month and be terminated upon giving 30-days prior written notice by either by Landlord or the Company. Except as expressly amended hereby, all of the other terms and conditions of the lease agreement shall remain unchanged and in full force and effect in accordance with their original terms. Under ASC 842, a lease qualifies for the short-term lease exemption only if the noncancellable term is 12 months or less and the Company is not reasonably certain to exercise any renewal options. Although, the arrangement provides for monthly renewals, management evaluates the use of the premises on a month-to-month basis and, based on current operational plans and intention to relocate to a more suitable office facility, is not reasonably certain to extend the arrangement beyond the current monthly term. Accordingly, the lease qualifies as a short-term lease.
The July 2025 amendment qualifies as a lease modification because it alters the contractual terms and does not create a separate lease since no new right of use was granted and lease payments did not increase to reflect a new right. This represents a modification of the existing lease, constituting a partial termination as defined in ASC 842-10-25-13.
Accordingly, the Company recalculated the lease liability for the shortened term (from October 2023 to October 2025) using the incremental borrowing rate as of July 1, 2025 of 9%, derecognized the carrying amounts of the ROU asset and lease liability of $1,045,514 associated with the terminated portion and recognized a new ROU asset and lease liability for the remaining term of $44,333.
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
| $ | 1,228,458 |
|
| $ | 1,184,125 |
| |
Less: accumulated amortization |
|
| (182,944) |
|
|
| (96,765) |
|
Less: derecognition associated with terminated options |
|
| (1,045,514) |
|
|
| - |
|
Operating lease right of use asset, net - related party |
| $ | - |
|
| $ | 1,087,360 |
|
F-18
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Operating Lease liabilities are summarized below:
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
| $ | 1,228,458 |
|
| $ | 1,184,125 |
| |
|
| (182,944) |
|
|
| (96,765) |
| |
Less: office lease, current portion - related party |
|
| - |
|
|
| (85,612) |
|
Less: derecognition associated with terminated options |
|
| (1,045,514) |
|
|
| - |
|
Long term portion of lease liability - related party |
| $ | - |
|
| $ | 1,001,748 |
|
The weighted average remaining lease term for the related party operating lease is zero as of December 31, 2025.
Operating Lease
In July 2023, the Company, through its wholly owned subsidiary, Alternative Medical Clinic, LLC, entered into a three-year lease agreement. The initial year (commencing on July 1, 2023) monthly lease payment was $1,798, in years two and three the monthly lease payments are $1,852 and $1,907 respectively. The lease premises is located in Tampa, Florida. In July 2023, the Company recorded ROU assets and total lease liabilities of $58,147 based on an incremental borrowing rate of 9%.
ROU is summarized below:
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
Office lease |
| $ | 58,147 |
|
| $ | 58,147 |
|
Less: accumulated amortization |
|
| (47,327) |
|
|
| (27,125) |
|
Operating lease right of use asset, net |
| $ | 10,820 |
|
| $ | 31,022 |
|
Operating Lease liabilities are summarized below:
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
Office lease |
| $ | 58,147 |
|
| $ | 58,147 |
|
Reduction of lease liability |
|
| (46,999) |
|
|
| (26,469) |
|
Less: office lease, current portion |
|
| (11,148) |
|
|
| (20,530) |
|
Long term portion of lease liability |
| $ | - |
|
| $ | 11,148 |
|
Remaining future minimum lease payments under non-cancelable related party operating lease at December 31, 2025 are as follows:
Year ended December 31, 2026 |
| $ | 11,443 |
Imputed interest |
|
| (295) |
Total operating lease liability |
| $ | 11,148 |
The weighted average remaining lease term for the operating lease is 0.50 year as of December 31, 2025.
Other Operating Leases
The Company periodically rents other spaces on a month-to-month basis including its corporate headquarters located in McLean, VA.
Total rent expense amounted $235,781 and $264,700 (including rent expense - related party of $180,000 for both periods) during the years ended December 31, 2025 and 2024, respectively.
F-19
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Note 9 - Stockholders’ Deficit
Equity Incentive Plan
In September 2025, the Company’s board of directors approved and adopted the Company’s Amended and Restated Stock Incentive 2025 Plan (the “Amended and Restated 2025 Plan”), which reserves a total of 50,000,000 shares of Common Stock. The Amended and Restated 2025 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, performance units, performance shares, restricted stock units, and other stock-based awards to our employees, directors, and consultants. As of the date of this report, the Company has not issued any awards or grants under the plan.
Contributed Capital
For the year ended December 31, 2024, the principal stockholders of the Company contributed capital of $549,498 as compared to none during the year ended December 31, 2025.
Common Stock
As of December 31, 2025 and 2024, there were 8,000,004 and 4,600,002 shares of common stock outstanding, respectively.
Common Stock Deemed Issued in Connection with the Recapitalization
Effective on January 1, 2025 (the “Closing Date”), Veri Holdings, Inc. merged (the “Merger”) with and into Veri Medtech Holdings, Inc. (“Veri Medtech”), an inactive public company, in a transaction treated as a reverse merger and recapitalization of Veri Holdings. The shareholders of Veri Holdings received 4,600,002 shares of common stock of Veri Medtech representing approximately 81% of the total common stock outstanding just after the completion of the Merger. Consequently, the business of Veri Holdings became the business of Veri Medtech. The Merger has constituted a change of control or change in control with the consummation of the Merger.
The Merger is being accounted for as a reverse merger, and Veri Holdings is deemed to be the acquirer for accounting purposes under ASC 805, Business Combinations, since the stockholders of Veri Holdings obtained voting control of the combined entity post-merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Merger will be those of Veri Holdings and its subsidiaries, and the financial statements after completion of the Merger will include the assets and liabilities of Veri Holdings and its subsidiaries and Veri Medtech, and the historical operations of Veri Holdings and its subsidiaries and the operations of Veri Medtech from the Closing Date of the Merger. The name of the Company has been retroactively changed in the accompanying consolidated financial statements and footnotes to reflect the new name of the public entity post-merger. Consequently, there were 1,112,126 shares of common stock and 100 shares of Series A preferred stock with super voting rights which were deemed issued in connection with this recapitalization.
F-20
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Of the total preferred stock authorized, 100 shares had been designated as Series A Preferred Stock (“Series A Preferred Stock”), par value $0.0001 per share, pursuant to the Certificate of Designation for the Series A Preferred Stock filed with the Secretary of State of the State of Delaware in December 2009. The Series A Preferred Stock shall have a stated value of $1.00 per share and liquidation value of $1.00 per share. The holder of Series A Preferred Stock shall not be entitled to receive any dividends. Each outstanding share of the Series A Preferred Stock shall represent 80% of all votes entitled to be voted at any annual or special meeting of stockholders of the Company or action by written consent of the stockholders. The Series A Preferred Stock shall, with respect to distribution rights on liquidation, winding up and dissolution, (i) rank senior to any of the shares of common stock of the Company, and any other class or series of stock of the Company which by its terms shall rank junior to the Series A Preferred Stock, and (ii) rank junior to any other series or class of preferred stock of the Company and any other class or series of stock of the Company which by its term shall rank senior to the Series A Preferred Stock.
Common Stock Issued for Services
On January 16, 2025, the Company granted an aggregate of 2,287,876 restricted common stock shares to certain officers and consultants for services. The aggregate of 2,287,876 restricted common stock had a fair value of $2,488,365 or approximately $1.09 per share of common stock based on the quoted trading price on the date of grant. The restricted common stock shall cliff vest in one year and the total value will be recognized as expense pro rata over the vesting period. Total stock-based compensation expense for awards issued for services was $2,379,298 for the year ended December 31, 2025. As of December 31,2025, there were 2,287,876 unvested restricted common stock outstanding, with a total unvested compensation expense of $109,067 at December 31, 2025 remains to be expensed.
A summary of the changes in unvested restricted common stock outstanding during the year ended December 31, 2025 is as follows:
|
| Restricted Common Stock |
|
| Weighted |
| ||
Balance at December 31, 2024 - unvested |
|
| - |
|
| $ | - |
|
Granted |
|
| 2,287,876 |
|
|
| 1.09 |
|
Vested |
|
| - |
|
|
| - |
|
Balance at December 31, 2025 - unvested |
|
| 2,287,876 |
|
| $ | 1.09 |
|
Stock-based compensation expense for awards issued for services above were recorded in the following amounts as reflected in the consolidated statements of operations:
|
|
|
|
|
For the year ended December 31, 2025 |
| ||
Compensation and related taxes |
|
|
|
|
| $ | 2,192,963 |
|
Professional, consulting and contractor fees |
|
|
|
|
|
| 186,335 |
|
|
|
|
|
| $ | 2,379,298 |
| |
Note 10 - Income Taxes
The Company’s combined pre-tax loss for the years ended December 31, 2025 and 2024 was approximately $(2,320,131) and $(409,000), respectively. For the year ended December 31, 2025, the loss of $2,320,131 was entirely attributable to the Company’s C corporation entities. For the year ended December 31, 2024, the combined results included a pre-tax loss of approximately $(900,000) from the Company’s C corporation entities and pre-tax income of approximately $486,000 from its S corporation entity.
Effective January 1, 2025, the Company’s S-Corporation entity terminated it's S corporation election and became subject to U.S. federal and applicable state income taxes as a C corporation. As a result, the Company recognized deferred tax assets and liabilities for temporary differences existing for that subsidiary as of that date. The impact of establishing these opening deferred tax balances is reflected as a discrete item in the Company’s effective tax rate reconciliation for the year ended December 31, 2025.
F-21
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
The C-Corporation is subject to U.S. federal and state corporate income taxes, whereas the S-Corporation is treated as a pass-through entity for U.S. tax purposes, and its income is taxed directly to its shareholders. Therefore, the income tax provision presented below reflects only the tax effects associated with the C-Corporation.
The Company recognizes deferred tax assets and liabilities for the tax effects of differences between the financial statements and tax basis of assets and liabilities. The C-Corporation’s current year loss results in the generation of a deferred tax asset (DTA) for the federal Net Operating Loss (NOL). However, due to uncertainty regarding the C-Corporation's ability to generate sufficient taxable income in the foreseeable future, management has concluded that it is more likely than not that this deferred tax asset will not be realized. Accordingly, a full valuation allowance has been recorded against the deferred tax asset.
For the year ended December 31, 2025 the Company increased its valuation allowance by $1,190,807, consisting of $979,388 related to federal deferred tax assets and $211,419 related to deferred tax assets for the State. For the year ended December 31, 2024 the Company increased its valuation allowance by $187,832, consisting of $187,832 related to federal deferred tax assets and $0 related to deferred tax assets for State. This total increase in the valuation allowance is reflected in the effective tax rate reconciliation within both the “Effect of changes in valuation allowances” category, which includes the federal portion of the change, and the “State and local income taxes, net of federal income tax effect” category, which includes the state portion of the change.
The income tax provision (benefit) consists of the following:
| For the Year Ended | ||
| December 31, | ||
| 2025 |
| 2024 |
Current: |
|
|
|
Federal | $- |
| $- |
State | - |
| - |
Deferred: |
|
|
|
Federal | 979,389 |
| 187,832 |
State | 211,419 |
| - |
| 1,190,808 |
| 187,832 |
Change in valuation allowance | (1,190,808) |
| (187,832) |
Income tax provision (benefit) | $- |
| $- |
Deferred tax assets and liabilities consist of the effects of temporary differences attributable to the following:
| December 31, | ||
| 2025 |
| 2024 |
Deferred tax assets: |
|
|
|
Net Operating Loss Carryover | $221,826 |
| $187,852 |
Intangible Assets - Domain Name | 561,731 |
| - |
Stock Based Compensation | 607,512 |
| - |
Other | 83 |
| - |
Total deferred tax assets | $1,391,152 |
| $187,852 |
|
|
|
|
Deferred tax liabilities: |
|
|
|
Fixed Assets | (12,492) |
| - |
Total deferred tax liabilities | (12,492) |
| - |
|
|
|
|
Valuation allowance | $(1,378,660) |
| $(187,852) |
Total Deferred Tax Assets (liabilities) | - |
| - |
F-22
Veri Medtech Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Reconciliation of expected tax expense (benefit) based on statutory rate with actual expense are as follows:
| For the Year Ended |
| For the Year Ended | ||||
| December 31, |
| December 31, | ||||
| 2025 |
| 2025 |
| 2024 |
| 2024 |
Income tax at US federal statutory rate | $(487,228) |
| 21.00% |
| $(85,850) |
| 21.00% |
State and local taxes, net of federal effect (1) | 106,411 |
| (4.59%) |
| - |
| - |
Non-taxable or non-deductible items : |
|
|
|
|
|
|
|
Other permanent differences | 783 |
| (0.03%) |
| - |
| - |
Other reconciling items: |
|
|
|
|
|
|
|
Recognition of opening deferred tax assets and liabilities of former S corporation | (599,354) |
| 25.83% |
| - |
| - |
Effect of S-Corporation income not taxed at entity level | - |
| - |
| (101,982) |
| 24.95% |
|
|
|
|
|
|
|
|
Change in valuation allowance | 979,388 |
| (42.21)% |
| 187,832 |
| (45.95)% |
|
|
|
|
|
|
|
|
Income tax provision (benefit) | $(0) |
| 0% |
| $(0) |
| 0% |
Effective January 1, 2024, the Company adopted Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The adoption of ASU 2023-09 did not affect the recognition or measurement of income taxes but resulted in expanded disclosures, including additional disaggregation of the effective tax rate reconciliation and income taxes paid by jurisdiction. The Company elected to apply the provisions of ASU 2023-09 retrospectively to the periods presented, and, accordingly, the income tax disclosures for the years ended December 31, 2025 and 2024 have been prepared in accordance with ASU 2023-09.
Note (1) - taxes in Pennsylvania make up the majority of the state and local tax category.
As of December 31, 2025 and 2024, the Company had U.S. federal net operating loss carryforwards of approximately $1,028,000 and $900,000 respectively all of which do not expire, but are instead limited to 80% of taxable income in the year utilized. These net operating loss carryforwards may be used to offset future taxable income and thereby reduce the Company’s U.S. federal income taxes. Section 382 of the Internal Revenue Code of 1986 (the “Code”) imposes an annual limit on the ability of a corporation that undergoes a greater than 50% ownership change to use its net operating loss carry forwards to reduce its tax liability. If in the future the Company issues common stock or additional equity instruments convertible in common shares which result in an ownership change exceeding the 50% limitation threshold imposed by Section 382 of the Code, the Company’s net operating loss carryforwards may be significantly limited as to the amount of use in a particular year. As of December 31, 2025 and 2024 the Company had net operating loss carryforwards for state income tax purposes of approximately $133,000 and $0 respectively most of which do not expire and are limited to 80% of taxable income in the year utilized.
Note 11 - Subsequent Events
Reverse Stock Split
In July 2026, the Company received written consent in lieu of a meeting by the holders of a majority of the voting power of the Company’s outstanding capital stock as of July 2026 and the Company’s Board of Directors approving such actions as are necessary for the Company to proceed to, and the Company accordingly intends to, effectuate and execute a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of one post-split share per two and one-half pre-split shares (1:2.5). The Reverse Stock Split became effective as of September 2, 2026. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the consolidated financial statements to reflect the Reverse Stock Split.
In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through May 7, 2026 (and has evaluated the Reverse Stock Split which occurred on September 2, 2026), the date the consolidated financial statements were available to be issued.
F-23
VERI MEDTECH HOLDINGS, INC. AND SUBSIDIARIES | |||||
CONSOLIDATED BALANCE SHEETS | |||||
|
|
|
|
|
|
|
|
| June 30, |
| December 31, |
|
|
| (Unaudited) |
|
|
ASSETS |
|
|
|
| |
CURRENT ASSETS: |
|
|
|
| |
| Cash and cash equivalents |
| $6,146 |
| $45,109 |
| Accounts receivable |
| - |
| 6,600 |
| Prepaid expenses and other current assets |
| 119,621 |
| 84,742 |
TOTAL CURRENT ASSETS |
| 125,767 |
| 136,451 | |
|
|
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
| |
| Property and equipment, net |
| 45,225 |
| 48,925 |
| Operating lease right of use assets, net |
| - |
| 10,820 |
TOTAL NON-CURRENT ASSETS |
| 45,225 |
| 59,745 | |
TOTAL ASSETS |
| $170,992 |
| $196,196 | |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
| |
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
| |
| Accounts payable |
| 298,050 |
| 316,906 |
| Accrued liabilities |
| 448,944 |
| 510,741 |
| Accrued compensation and related taxes - officers |
| 1,094,700 |
| 601,000 |
| Unearned revenues |
| 126,498 |
| 125,500 |
| Lines of credit |
| 22,436 |
| 23,542 |
| Note payable - current portion, net of debt discount |
| 78,955 |
| 130,805 |
| Due to officers |
| 341,724 |
| 321,148 |
| Due to related party |
| 171,814 |
| 140,200 |
| Operating lease liabilities- current portion |
| - |
| 11,148 |
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES |
| 2,583,121 |
| 2,180,990 | |
|
|
|
|
|
|
NON-CURRENT LIABILITIES: |
|
|
|
| |
| Note payable - long term, net of debt discount |
| 320,745 |
| 360,886 |
TOTAL NON-CURRENT LIABILITIES |
| 320,745 |
| 360,886 | |
TOTAL LIABILITIES |
| 2,903,866 |
| 2,541,876 | |
|
|
|
|
|
|
Commitments and Contingencies (Note 8) |
|
|
|
| |
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT: |
|
|
|
| |
| Preferred stock, 5,000,000 shares authorized, $0.0001 par value: |
|
|
|
|
| Series A preferred stock, $0.0001 par value; 100 shares (liquidation value of $100) and 0 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively |
| $- |
| $- |
| Common stock - $0.0001 par value, 100,000,000 shares authorized, 8,000,004 and 8,000,004 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively |
| 800 |
| 800 |
| Additional paid-in capital |
| 2,604,124 |
| 2,495,058 |
| Accumulated deficit |
| (5,337,798) |
| (4,841,538) |
TOTAL STOCKHOLDERS' DEFICIT |
| (2,732,874) |
| (2,345,680) | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $170,992 |
| $196,196 | |
|
|
|
|
|
|
The accompanying unaudited condensed notes are an integral part of these unaudited consolidated financial statements. | |||||
F-24
VERI MEDTECH HOLDINGS, INC. AND SUBSIDIARIES | |||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| For the Six Months Ended | ||||
|
|
| 2026 |
| 2025 |
| 2026 |
| 2025 |
|
|
|
|
|
|
|
|
|
|
Revenues, net |
| $2,043,220 |
| $2,843,707 |
| $4,480,172 |
| 6,115,313 | |
Cost of revenues |
| 545,570 |
| 705,683 |
| 1,122,899 |
| 1,527,883 | |
Gross profit |
| 1,497,650 |
| 2,138,024 |
| 3,357,273 |
| 4,587,430 | |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
| |
| General and administrative expenses |
| 67,107 |
| 77,012 |
| 121,351 |
| 143,901 |
| Rent and occupancy expenses |
| 70,187 |
| 60,298 |
| 139,061 |
| 124,191 |
| Compensation and related taxes |
| 836,728 |
| 1,636,817 |
| 1,908,245 |
| 3,207,235 |
| Professional, consulting and contractor fees |
| 517,663 |
| 611,469 |
| 1,025,804 |
| 1,114,766 |
| Technology cost |
| 110,612 |
| 124,704 |
| 222,638 |
| 238,596 |
| Sales and marketing costs |
| 198,030 |
| 276,623 |
| 389,375 |
| 469,870 |
Total operating expenses |
| 1,800,327 |
| 2,786,923 |
| 3,806,474 |
| 5,298,559 | |
Loss from operations |
| (302,677) |
| (648,899) |
| (449,201) |
| (711,129) | |
Other income (expense) |
|
|
|
|
|
|
|
| |
| Gain from extinguishment of debt |
| 20,925 |
| - |
| 20,925 |
| - |
| Other income |
| - |
| 87 |
| 327 |
| 87 |
| Interest expense and other finance charges |
| (14,474) |
| (20,500) |
| (28,760) |
| (32,324) |
Other income (expense), net |
| 6,451 |
| (20,413) |
| (7,508) |
| (32,237) | |
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
| (296,226) |
| (669,312) |
| (456,709) |
| (743,366) | |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
| - |
| - |
| (39,551) |
| - | |
Net loss |
| $(296,226) |
| $(669,312) |
| $(496,260) |
| (743,366) | |
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted |
| $(0.04) |
| $(0.08) |
| $(0.06) |
| (0.09) | |
Weighted average common shares |
|
|
|
|
|
|
|
| |
outstanding - basic and diluted |
| 8,000,004 |
| 8,000,004 |
| 8,000,004 |
| 7,968,576 | |
|
|
|
|
|
|
|
|
|
|
The accompanying unaudited condensed notes are an integral part of these unaudited consolidated financial statements. | |||||||||
F-25
VERI MEDTECH HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT | ||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock | Series A Preferred Stock |
|
|
|
| Total | ||||
|
| $0.0001 Par Value | $0.0001 Par Value | Additional |
| Accumulated |
| Stockholders' | ||||
|
| Shares |
| Amount | Shares |
| Amount | Paid-in Capital |
| Deficit |
| Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2024 |
| 4,600,002 |
| $460 | - |
| $- | $ 116,100 |
| $ (2,521,407) |
| $ (2,404,847) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation in connection with restricted common stock award grants | 2,287,876 |
| 229 | - |
| - | 504,502 |
| - |
| 504,731 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares deemed issued in connection with the recapitalization | 1,112,126 |
| 111 | 100 |
| - | (111) |
| - |
| - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| - |
| - | - |
| - | - |
| (74,054) |
| (74,054) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2025 |
| 8,000,004 |
| 800 | 100 |
| - | 620,491 |
| (2,595,461) |
| (1,974,170) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion of stock-based compensation in connection with restricted common stock award grants |
| - |
| - | - |
| - | 620,310 |
| - |
| 620,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| - |
| - | - |
| - | - |
| (669,312) |
| (669,312) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2025 |
| 8,000,004 |
| $800 | 100 |
| $- | $ 1,240,801 |
| $ (3,264,773) |
| $ (2,023,172) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock | Series A Preferred Stock |
|
|
|
| Total | ||||
|
| $0.0001 Par Value | $0.0001 Par Value | Additional |
| Accumulated |
| Stockholders' | ||||
|
| Shares |
| Amount | Shares |
| Amount | Paid-in Capital |
| Deficit |
| Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2025 |
| 8,000,004 |
| 800 | 100 |
| $- | $ 2,495,058 |
| $ (4,841,538) |
| $ (2,345,680) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion of stock-based compensation in connection with restricted common stock award grants |
| - |
| - | - |
| - | 109,066 |
| - |
| 109,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| - |
| - | - |
| - | - |
| (200,034) |
| (200,034) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2026 |
| 8,000,004 |
| 800 | 100 |
| - | 2,604,124 |
| (5,041,572) |
| (2,436,648) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| - |
| - | - |
| - | - |
| (296,226) |
| (296,226) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2026 |
| 8,000,004 |
| $800 | 100 |
| $- | $ 2,604,124 |
| $ (5,337,798) |
| $ (2,732,874) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying unaudited condensed notes are an integral part of these unaudited consolidated financial statements. | ||||||||||||
F-26
VERI MEDTECH HOLDINGS, INC. AND SUBSIDIARIES | |||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
|
|
|
|
| For the Six Months Ended June 30, | ||
| 2026 |
| 2025 |
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net loss | $(496,260) |
| (743,366) |
Adjustments to reconcile net loss to net cash provided by operations: |
|
|
|
Stock based expenses | 109,066 |
| 1,125,041 |
Depreciation | 3,700 |
| 3,700 |
Amortization of debt discount | 477 |
| - |
Amortization of right-of-use asset | 10,820 |
| 51,718 |
Non-cash financing charges | 1,653 |
| - |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable | 6,600 |
| 21,767 |
Prepaid expenses and other current assets | (34,879) |
| (9,549) |
Accounts payable | (18,856) |
| 124,826 |
Accrued liabilities | (61,797) |
| (368,880) |
Accrued compensation and related taxes to officers | 493,700 |
| (115,058) |
Unearned revenues | 998 |
| 40,340 |
Operating lease liability | (11,148) |
| (51,717) |
Due to related party | 31,614 |
| 39,848 |
Net cash provided by operating activities | 35,688 |
| 118,670 |
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Purchase of computer equipment | - |
| (3,102) |
Net cash used in investing activities | - |
| (3,102) |
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Proceeds received from line of credit | 912 |
| 3,565 |
Advances from officers | 36,251 |
| 139,500 |
Repayments on note payable | (92,468) |
| (291,895) |
Repayments on line of credit | (3,671) |
| (19,831) |
Repayments to officers | (15,675) |
| - |
Net cash used in financing activities | (74,651) |
| (168,661) |
Net cash decrease for period | (38,963) |
| (53,093) |
Cash at beginning of period | 45,109 |
| 63,751 |
Cash at end of period | $6,146 |
| $10,658 |
|
|
|
|
Supplemental Disclosure of Cash Flow Information |
|
|
|
Cash paid for: |
|
|
|
Interest | $27,994 |
| 32,324 |
Income Tax | $- |
| - |
|
|
|
|
The accompanying unaudited condensed notes are an integral part of these unaudited consolidated financial statements. | |||
F-27
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
Note 1 – Organization and Nature of Operations
Effective on January 1, 2025, Veri Holdings, Inc. (“Veri Holdings’’) merged with and into Veri Medtech Holdings, Inc. (the “Company”) in a transaction treated as a reverse merger and recapitalization of Veri Holdings (see Note 9). Veri Holdings was incorporated in August 2023 and acquired Alternative Medical Clinic LLC (“AMC”) and Dosepop Inc. ( “DosePop” and fka Verinew Inc,) in 2023. Veriheal Inc. (“Veriheal”), was incorporated in November 2017 and is the primary operating entity which operates as a digital healthcare company with a fully technology-enabled service model via its healthcare technology platform which provides accessible consultations for alternative medicine and medical cannabis and offers on-demand virtual consultations via video and chat, allowing patients to discuss sensitive health issues confidentially and receive personalized treatment plans. On December 31, 2024, Veri Holdings acquired Veriheal. All entities were under common control during year 2024 and became consolidated on December 31, 2024. Therefore, the accompanying financial statements are presented on a retrospective basis as consolidated financial statements for all periods presented.
The Company, through its wholly owned subsidiary, Alternative Medical Clinic LLC, contracts physicians to facilitate the delivery of telehealth services to its patients. The Company through its wholly owned subsidiary, DosePop, provides a one-stop healthcare technology platform for mental and physical health designed to connect patients with healthcare professionals and provide various treatment options and services ranging from weight loss programs to anti-aging treatments.
In January 2026, the Company formed, a new wholly-owned subsidiary, Sky Clinics, LLC (“Sky Clinics”). The goal for Sky Clinics is to provide a technology-enabled clinical infrastructure platform. To date, Sky Clinics has no revenues and has minimal operations and expenses.
On July 24, 2026, the Company filed a certificate of amendment to its certificate of incorporation, as amended, to effect a one-for-two-and-one-half (1:2.5) Reverse Stock Split (the “Reverse Stock Split”), effective as of September 2, 2026 (see Note 10). All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the consolidated financial statements to reflect the Reverse Stock Split.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The Company’s interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly our consolidated results of operations for the three and six months ended June 30, 2026 and 2025 and cash flows for the six months ended June 30, 2026 and 2025 and our consolidated financial position at June 30, 2026 have been made. The Company’s results of operations for the six months ended June 30, 2026 are not necessarily indicative of the operating results to be expected for the full fiscal year ending December 31, 2026.
Certain information and disclosures normally included in the notes to the Company’s annual audited consolidated financial statements have been condensed or omitted from the Company’s interim unaudited condensed consolidated financial statements. Accordingly, these interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2025. The December 31, 2025 consolidated balance sheet is derived from those statements.
F-28
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Veri Medtech Holdings Inc. and its wholly-owned subsidiaries, Veriheal, Dosepop, AMC and Sky Clinics. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from estimates. Significant estimates made by management include, but are not limited to, the allowance for credit losses, the estimates of useful lives for depreciation, valuation of the lease liabilities and related right of use assets, valuation of stock-based compensation and valuation allowance associated with deferred tax assets.
Cash and Cash Equivalents
Cash equivalents are comprised of certain highly liquid instruments with a maturity of three months or less when purchased. The Company did not have any cash equivalents on hand at June 30, 2026 and December 31, 2025. The Company places its cash with high credit quality financial institutions. The Company’s accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC”) up to $250,000. To reduce its risk associated with the failure of such financial institutions, the Company evaluates, at least annually, the rating of the financial institutions in which it holds deposits. At June 30, 2026 and December 31, 2025, the Company’s had no cash in excess of the FDIC limit.
Accounts Receivable
Trade receivables are recorded at net realizable value consisting of the carrying amount less the allowance for credit losses, as needed. Factors used to establish an allowance include the credit quality of the customer and whether the balance is significant. The Company may also use the direct write-off method to account for uncollectible accounts that are not received. Using the direct write-off method, trade receivable balances are written off to credit loss when an account balance is deemed to be uncollectible. The Company maintains an allowance for credit losses primarily for estimated losses resulting from the inability or failure of individual customers to make the required payments. The Company estimates its allowance for credit losses using the Current Expected Credit Loss (CECL) model under Accounting Standards Codification (“ASC”) 326 based on historical losses, changes in payment history, customer-specific information, current economic conditions, and reasonable and supportable forecasts of future economic conditions. The allowance under ASC 326 is updated as additional losses are incurred or information becomes available related to the customer or economic conditions. As of June 30, 2026 and December 31, 2025, the allowance for credit losses was $0 for both periods. During the six months ended June 30, 2026 and 2025, the Company recorded a direct write-off of accounts receivable into provision for credit losses amounting to $0 and $600, respectively.
Effective December 1, 2025, the Company early adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient that permits entities to assume that economic conditions existing as of the balance sheet date will remain unchanged when estimating expected credit losses on current trade receivables and contract assets. The Company elected this practical expedient and applied the guidance prospectively. The adoption of ASU 2025-05 did not have a material impact on the Company’s consolidated financial statements.
Fair Value Measurements and Fair Value of Financial Instruments
The Company follows the FASB Fair Value Measurements standard, as it applies to its financial instruments on a recurring basis. This standard defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements.
F-29
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The standard establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. Level 1 inputs include quoted market prices for identical assets or liabilities in an active market that the Company has the ability to access at the measurement date. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data. The standard requires the utilization of the lowest possible level of input to determine fair value and carrying amounts of current liabilities approximate fair value due to their short-term nature.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
The Company’s non-financial assets, such as ROU assets, and property and equipment, are adjusted to fair value only when an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606 Revenue from Contracts with Customers, which requires revenue to be recognized in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration which the entity expects to be entitled in exchange for those goods or services. In accordance with ASU Topic 606 - Revenue from Contracts with Customers, the Company recognizes revenue in accordance with that core principle by applying the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Company through its wholly owned subsidiary, Veriheal, generates revenue from service processing fees by facilitating patient consultations with licensed physicians for the purpose of medical marijuana (“MMJ”) card evaluations. Revenue is recognized at a point in time upon completion of both the consultation service and the licensed physicians providing a medical decision. This is when the performance obligation is satisfied. The Company acts as the principal in these transactions and recognizes the full transaction price as revenue when its performance obligation is satisfied. The service processing fees are paid in advance and are non-refundable, however, the Company may reserve the right to refund the fees under limited circumstances at its discretion. Payments received before the completion of the consultation service are recorded as unearned revenue to be recognized upon completion of both the consultation service and conveyance of the medical decision which generally occurs within two months but can take up to six months from the date of payment.
The Company, through its wholly owned subsidiary, Veriheal, also engages in business-to-business activities whereby the Company provides services by collaborating with licensed medical professionals and clinics and offering digital marketing services to connect them with the Company’s patients. Additionally, the Company provides research services for certain universities and organizations. The Company recognizes revenues from marketing and research services for the agreed upon price when such services are completed, which satisfies the performance obligation.
The Company, through its wholly owned subsidiary, Dosepop, offers a comprehensive healthcare platform for both mental and physical health. The platform provides various treatments options by licensed professionals, addressing issues ranging from weight loss to anti-aging treatments. Revenue is recognized upon completion of both the consultation service and the licensed physicians providing the treatment option, which is when the performance obligation is satisfied.
F-30
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
The following table presents the Company’s revenue disaggregated by revenue stream for the following periods:
|
| For the Three Months Ended June 30, |
| ||||||
|
| 2026 |
|
| 2025 |
| |||
Consultation service – MMJ evaluations |
| $ | 2,043,220 |
|
| $ | 2,842,201 |
| |
Consultation service – various treatment options |
|
| - |
|
|
| 1,506 |
| |
Business-to-business - digital infrastructure service |
|
| - |
|
|
| - |
| |
Research service |
|
| - |
|
|
| - |
| |
|
|
|
|
|
|
|
|
| |
Total revenues, net |
| $ | 2,043,220 |
|
| $ | 2,843,707 |
| |
|
| For the Six Months Ended June 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Consultation service – MMJ evaluations |
| $ | 4,479,972 |
|
| $ | 6,084,704 |
|
Consultation service – various treatment options |
|
| 200 |
|
|
| 7,775 |
|
Business-to-business - digital infrastructure service |
|
| - |
|
|
| 834 |
|
Research service |
|
| - |
|
|
| 22,000 |
|
|
|
|
|
|
|
|
|
|
Total revenue |
| $ | 4,480,172 |
|
| $ | 6,115,313 |
|
Unearned revenues are summarized below:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Unearned revenues, beginning |
| $ | 125,500 |
|
| $ | 97,189 |
|
Additions |
|
| 164,722 |
|
|
| 419,744 |
|
Less: earned revenues |
|
| (163,724) |
|
|
| (391,433) |
|
Unearned revenues, end |
| $ | 126,498 |
|
| $ | 125,500 |
|
Cost of Revenues
Cost of revenues primarily includes fees paid to contracted physicians for consultation services and merchant processing fees related to patient payments. These costs are directly attributable to revenue-generating activities and are expensed as incurred.
Sales and Marketing
The Company applies ASC 720 “Other Expenses” to account for marketing costs. Pursuant to ASC 720-35-25-1, the Company expenses marketing costs as incurred. Marketing costs include advertising through social media, digital marketing, influencer marketing and promotional campaigns. Marketing costs were $198,030 and $276,623 for the three months ended June 30, 2026 and 2025, respectively, and $389,375 and $469,870 for the six months ended June 30, 2026 and 2025, respectively, were included in sales and marketing costs on the consolidated statement of operations.
Prepaid expenses and other current assets
Prepaid expenses and other current assets of $119,621 and $84,742 at June 30, 2026 and December 31 2025, respectively, consist primarily of costs paid for future services which will occur within a year. Prepaid expenses principally include prepayments in cash for insurance, rent, and technology services which are being amortized over the terms of their respective agreements. Other current assets primarily include credit card merchant receivable generally collected within two to three days from date of sale.
F-31
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
Property and Equipment
Property is carried at cost. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the terms of their respective leases. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets ranging from three to ten years.
Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment is determined by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from use of the assets and their ultimate disposition. In instances where impairment is determined to exist, the Company writes down the asset to its fair value based on the present value of estimated future cash flows. There was no impairment as of June 30, 2026 and December 31, 2025.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, Income Taxes. Income tax expense is the total of the current-year income tax due or refundable and the change in the deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of the tax benefit that is greater than fifty percent (50%) likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Management is not aware of any issues that could result in significant payments, accruals, or material deviation from its positions.
The Company files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. In general, the statute of limitations of the Company’s U.S. federal tax returns remains open three years after a tax return is filed. The statutes of limitations on the Company’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.
Management has concluded that there are no uncertain tax positions that would require recognition in the financial statements. If the Company were to incur an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax liability would be reported as income taxes. Management’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis or tax laws, regulations and interpretations thereof as well as other factors.
The Company currently has no federal or state tax examinations in progress. As of June 30, 2026, the Company’s tax returns for the tax years 2025, 2024 and 2023 remain subject to audit, primarily by the Internal Revenue Service. The Company did not have material unrecognized tax benefits as of June 30, 2026 and does not expect this to change significantly over the next 12 months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of the provision for income taxes.
F-32
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation –Stock Compensation”, which requires recognition in the financial statements of the cost of employee and director services along with non-employee services received in exchange for an award of equity instruments over the period the employee, director or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director or non-employee services received in exchange for an award based on the grant-date fair value of the award.
Lease Accounting
The Company follows ASC Topic 842, Leases (Topic 842) and applies the package of practical expedients, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less. Operating lease right of use assets (“ROU”) represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses. An amendment to a lease is assessed to determine if it represents a lease modification or a separate contract. Lease modifications are reassessed as of the effective date of the modification. For modified leases, the Company also reassesses the lease classification as of the modification’s effective date.
Segment Reporting
The Company uses “the management approach” in determining reportable operating segments. Operating segments are defined as components of an entity where discrete financial information is evaluated regularly by the chief operating decision maker (“CODM”). The management approach considers the internal organization and reporting used by the Company’s CODM for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s CODM is the chief executive officer of the Company, who reviews operating results to make decisions about operating decisions, allocating resources and assessing performance for the entire Company. The CODM reviews and utilizes consolidated financial information, including revenue, gross profit, operating income (loss) and net income (loss) as reported on the consolidated statements of operations, to assess performance and allocate resources to support strategic priorities. Consolidated net income (loss) is our segment's primary measure of profit or loss. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. The single segment constitutes all the consolidated entities, and the accompanying consolidated financial statements and the notes to the accompanying consolidated financial statements are representative of such amounts. For the six months ended June 30, 2026 and 2025, the Company operates in one operating segment.
F-33
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
The table below provides information about the Company’s revenue, significant segment expenses and other segment expenses for the following periods.
|
| For the Three Months Ended June 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Revenues |
| $ | 2,043,220 |
|
| $ | 2,843,707 |
|
Cost of revenues |
|
| 545,570 |
|
|
| 705,.683 |
|
Gross profit |
|
| 1,497,650 |
|
|
| 2,138,024 |
|
Less segment expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
| 67,107 |
|
|
| 77,012 |
|
Rent and occupancy expenses |
|
| 70,187 |
|
|
| 60,298 |
|
Compensation and related taxes |
|
| 836,728 |
|
|
| 1,636,817 |
|
Professional, consulting and contractor |
|
| 517,663 |
|
|
| 611,469 |
|
Technology expense |
|
| 110,612 |
|
|
| 124,704 |
|
Sales and marketing expenses |
|
| 198,030 |
|
|
| 276,623 |
|
Loss from operations |
| $ | (302,677) |
|
| $ | (648,899) |
|
Less: |
|
|
|
|
|
|
|
|
Other expense, net |
|
| 6,451 |
|
|
| (20,413 | ) |
Provision for income taxes |
|
| - |
|
|
| - |
|
Segment net loss |
| $ | (296,226) |
|
| $ | (669,312) |
|
Depreciation |
| $ | 1,807 |
|
| $ | 1,893 |
|
|
| For the Six Months Ended June 30, |
| ||||||||
|
| 2026 |
|
| 2025 |
| |||||
Revenues |
| $ | 4,480,172 |
|
| $ | 6,115,313 |
| |||
Cost of revenues |
|
| 1,122,899 |
|
|
| 1,527,883 |
| |||
Gross profit |
|
| 3,357,273 |
|
|
| 4,587,430 |
| |||
Less segment expenses: |
|
|
|
|
|
|
|
| |||
General and administrative |
|
| 121,351 |
|
|
| 143,901 |
| |||
Rent and occupancy expenses |
|
| 139,061 |
|
|
| 124,191 |
| |||
Compensation and related taxes |
|
| 1,908,245 |
|
|
| 3,207,235 |
| |||
Professional, consulting and contractor |
|
| 1,025,804 |
|
|
| 1,114,766 |
| |||
Technology expense |
|
| 222,638 |
|
|
| 238,596 |
| |||
Sales and marketing expenses |
|
| 389,375 |
|
|
| 469,870 |
| |||
Loss from operations |
| $ | (449,201) |
|
|
| (711,129) |
| |||
Less: |
|
|
|
|
|
|
|
| |||
Other expense, net |
|
| (7,508) |
|
|
| (32,237 | ) | |||
Provision for income taxes |
|
| (39,551) |
|
|
| - |
| |||
Segment net loss |
| $ | (496,260) |
|
| $ | (743,366) |
| |||
Depreciation |
| $ | 3,700 |
|
| $ | 3,700 |
| |||
|
|
|
| ||||||||
|
| June 30, 2026 |
|
| December 31, 2025 |
| |||||
Segment Assets |
| $ | 170,992 |
|
| $ | 196,196 |
| |||
Concentrations
With respect to customer concentration, no customer accounted for more than 10% of total revenues for the three and six months ended June 30, 2026 and 2025. All revenues were generated in the United States during the three and six months ended June 30, 2026 and 2025.
With respect to revenue concentration by revenue stream, consultation services – MMJ evaluations accounted for 100% and 99.95% of total revenues for the three months ended June 30, 2026 and 2025, respectively, and MMJ evaluations accounted for 99.99% and 99.5% of total revenues for the six months ended June 30, 2026 and 2025, respectively.
There were no accounts receivable balances outstanding as of June 30, 2026. With respect to accounts receivable concentration, one customer accounted for 100% of total accounts receivable as of December 31, 2025.
F-34
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. The reclassified amounts have no impact on the Company’s previously reported financial position or results of operations and relates to the presentation of accounts payable, accrued liabilities, and accrued compensation and related payroll taxes, separately on the condensed consolidated balance sheets previously included in accounts payable and accrued liabilities.
Recently Issued Accounting Pronouncements
In December 2023, FASB issued ASU Topic 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025. Early adoption is permitted. Management does not believe the adoption of ASU 2023-09 will have a material impact on the consolidated financial statements and disclosures.
On November 4, 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) requiring additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. This standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 applies to all public business entities (PBEs) and is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2024-03 may have on the Company’s consolidated financial statements.
In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer, which clarifies the accounting for share-based payment awards granted by an entity as consideration payable to its customer. The amendments revise the definition of a "performance condition" to include vesting conditions based on the volume, monetary amount, or timing of a customer's purchases of goods or services from the grantor, as well as purchases made by parties that acquire the grantor's goods or services from its customers. The amendments also clarify that such awards are measured in accordance with Topic 718 both before and after the grant date, that the guidance in Topic 606 on constraining estimates of variable consideration does not apply to share-based consideration payable to a customer, and that the policy election to account for forfeitures as they occur is not available for such awards. This pronouncement is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. Entities may adopt the amendments on either a modified retrospective or a fully retrospective basis. The Company does not currently have share-based consideration payable to customers and does not expect the adoption of this new guidance to have a material impact on the Company’s consolidated financial statements.
On December 8, 2025, the FASB issued ASU 2025-11 – Interim Reporting (“ASU 2025-11”) which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2025-11 may have on the Company’s consolidated financial statements.
F-35
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
On December 17, 2025, the FASB issued ASU 2025-12, Codification Improvements. The amendments in this update are to make other incremental improvements to GAAP and facilitate codification updates for a broad range of Topics arising from technical corrections, unintended application of the codification, clarifications, and other minor improvements. The resulting amendments are collectively referred to as Codification improvements. ASU 2025-12 is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact the adoption of ASU 2025-12 may have on the Company’s consolidated financial statements.
Note 3 – Going Concern
The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
In accordance with ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. As reflected in the consolidated financial statements, the Company had a stockholders’ deficit of $2,732,874, an accumulated deficit of $5,337,798 and a working capital deficit of $2,457,354 as of June 30, 2026.
The Company reported a net loss of $496,260 for the six months ended June 30, 2026. Notwithstanding this result, the Company continues to generate revenue and maintain active operations across its core business segment. Based on current forecasts and available cash as of June 30, 2026, the Company may require additional capital to fully support its planned growth initiatives and capital expenditures over the next twelve months.
Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern for at least the twelve months following the issuance of these consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon management’s ability to further implement its business plan, generate sufficient revenues and raise additional capital resources as needed.
Note 4 — Property and Equipment
As of the dates presented, property and equipment consisted of the following:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Leasehold improvements (10-year useful life) |
| $ | 57,759 |
|
| $ | 57,759 |
|
Computer equipment (3-year useful life) |
|
| 5,389 |
|
|
| 5,389 |
|
Less: accumulated depreciation |
|
| (17,923 | ) |
|
| (14,223 | ) |
Total |
| $ | 45,225 |
|
| $ | 48,925 |
|
For the three months ended June 30, 2026 and 2025, depreciation expense amounted to $1,807 and $1,893, respectively, and depreciation expense amounted to $3,700 and $3,700 for the six months ended June 30, 2026 and 2025, respectively.
F-36
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
Note 5 – Lines of credit - Banks
The Company has a revolving line of credit with a financial institution, which balance is due on demand. This revolving line of credit is in the amount of $25,000 and is personally guaranteed by the principal stockholders of the Company. The maturity date is on January 7, 2027 and renews annually unless cancelled. The line bears a variable interest rate of 13.00% per annum as of June 30, 2026 and December 31, 2025 for both periods. The interest rate will vary with the market based on the prime rate and the Company’s credit worthiness, overall business relationship and line amount and will be adjusted on a monthly basis. During the six months ended June 30, 2026, the Company received total proceeds from lines of credit of $912 and incurred financing charges of $1,653. As of June 30, 2026 and December 31, 2025, respectively, the balance of the line of credit was $22,436 and $23,542, with $2,564 and $1,458 available under the line of credit, respectively.
Note 6 – Notes Payable
The note balances consisted of the following at:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Principal amount of notes |
| $ | 403,994 |
|
| $ | 496,463 |
|
Unamortized discount |
|
| (4,294) |
|
|
| (4,772) |
|
|
|
|
|
|
|
|
|
|
Less: Current portion, net |
|
| (78,955) |
|
|
| (130,805) |
|
Long-term portion, net |
| $ | 320,745 |
|
| $ | 360,886 |
|
Minimum installment payments under the notes payable are as follows:
Remainder - Year ended December 31, 2026 |
| $ | 52,214 |
|
Year ended December 31, 2027 |
|
| 104,428 |
|
Year ended December 31, 2028 |
|
| 104,428 |
|
Year ended December 31, 2029 |
|
| 104,428 |
|
Year ended December 31, 2030 |
|
| 104,428 |
|
Total installment payments |
|
| 469,926 |
|
Less: interest portion |
|
| (65,932) |
|
Total principal amount of notes |
| $ | 403,994 |
|
Promissory Note Agreement Dated January 20, 2022
On January 20, 2022, the Company through its wholly owned subsidiary, Veriheal, entered into a Promissory Note Agreement with a certain bank (“Lender”), pursuant to which the Company issued a promissory note (the “Note”) to the Lender in the principal amount of $2,250,000 subject to default as defined, negative covenants as defined and right of set-off of Company’s balances held, and default interest rate of 5%. The maturity date of this Note was on January 20, 2026. The Note bore interest at 3.27% per annum. The first installment payment date was on January 20, 2022. The Note was secured by all the assets of Veriheal and personally guaranteed by the principal stockholders of the Company.
The Company had to pay to the Lender the principal amount and interest owing pursuant to this Note in installments as follows:
(i)Forty Seven (47) consecutive level monthly installments consisted of both principal and interest, each in the amount of $50,071, due and payable on the first installment payment date and each payment due date thereafter, and
(ii)And one final installment, due and payable on the maturity date, in an amount equal to the outstanding principal amount, together with all other amounts outstanding hereunder, including, without limitation, accrued interest, costs and expenses.
F-37
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
During the term of this Note, the Company had the option of paying the unpaid principal amount to the Lender in advance of the maturity date, in whole or in part, at any time and from time to time upon written notice received by the Lender at least three (3) days prior to making such payment. With any prepayment in full of the principal amount balance, the Company had to pay to the Lender all accrued interest and expenses owed pursuant to this Note.
Upon the occurrence of any event of default, the Lender without demand of performance or other demand to or upon the Company or any other person, may exercise all rights and remedies under the Company’s agreements with the Lender or its affiliates, may declare all or any part of any amounts due hereunder not payable on demand to be immediately due and payable without demand or notice of any kind and terminate any obligation it may have to grant any additional loan, credit or other financial accommodation to the Company. All or any part of any amounts due hereunder whether or not payable on demand, was immediately due and payable automatically upon the occurrence of an event of default as defined in the Note Agreement. The Lender had the right to set off against the amounts owing under this Note any property held in a deposit or other account with the Lender or any affiliates or otherwise owing by the Lender or any affiliates in any capacity to the Company or any guarantor or endorser of this Note. Such setoff was deemed exercised immediately at the time the Lender elects to do so.
The Company fully repaid the January 2022 note in January 2026. As of June 30, 2026 and December 31, 2025, the principal balance of this Note was $0 and $54,463, respectively.
Promissory Note Agreement Dated December 29, 2025
On December 29, 2025, the Company through its wholly owned subsidiary, Veriheal, entered into a Promissory Note Agreement with a certain bank (“Lender”), pursuant to which the Company issued a promissory note (the “December 2025 Note”) to the Lender in the principal amount of $442,000 subject to default as defined, and negative covenants as defined, and default interest rate equal to the aggregate of 5.0% plus the rate provided in the note agreement. If any payment due under this December 2025 Note is unpaid for 10 days or more, the Company shall pay, in addition to any other sums due under this December 2025 Note (and without limiting the Bank or Lender's other remedies on account thereof), a late charge equal to the greater of $50 or 5.0% of such unpaid amount, or the Lender's then current late charge as announced from time to time. The December 2025 Note will mature on December 29, 2030. The December 2025 Note bears interest at 6.66625% per annum. The first installment payment due date was on January 29, 2026. The December 2025 Note is secured by all the assets of Veriheal and personally guaranteed by the principal stockholders of the Company. The Company paid original issue discount and debt cost of $4,772 upon issuance of the December 2025 Note.
The Company shall pay to the Lender the principal amount and interest owing pursuant to the December 2025 Note in sixty consecutive level monthly installments consisting of both principal and interest, each in the amount of $8,702, due and payable on the first installment payment date and each payment due date thereafter.
During the term of this December 2025 Note, the Company has the option of paying the unpaid principal amount to the Lender in advance of the maturity date, in whole or in part, at any time and from time to time upon written notice received by the Lender at least three (3) days prior to making such payment; provided, however, as consideration for the privilege of making such prepayment, the Company shall pay a fee (the "Premium") equal to the product of: (a) the principal amount prepaid and (b) the percentage ranging from 1% to 3% as set forth in the note agreement for any prepayment made during the indicated period.
Upon the occurrence of any event of default, at the election of the Lender, all obligations shall become immediately due and payable without notice or demand. All of the Lender’s rights and remedies not only under the provisions of this note agreement but also under any other agreement or transaction shall be cumulative and not alternative or exclusive, and may be exercised by the Lender at such time and in such order of preference as the Lender in its sole discretion may determine. The Company hereby grants to the Lender a continuing lien and security interest in any deposits or other sums at any time credited by or due from the Lender or any Lender’s Affiliate. The Lender shall have the right to set off against the amounts owing under this note any property held in a deposit or other account with the Lender or any affiliates or otherwise owing by the Lender or any affiliates in any capacity to the Company or any guarantor or endorser of this Note.
F-38
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
For the six months ended June 30, 2026, the Company paid principal amount of $38,005 and $14,208 interest expense incurred related to the December 2025 Note. During the three and six months ended June 30, 2026, the Company amortized debt discount of $238 and $477, respectively. As of June 30, 2026 and December 31, 2025, the principal balance of the December 2025 Note was $403,994 and $442,000 respectively.
Note 7 – Related Party Transactions
Due to Related Party
As of June 30, 2026 and December 31, 2025, $171,814 and $140,200, respectively, were payable to an affiliated company owned by the principal stockholders of the Company and primarily consisted of unpaid rent related to a ten-year lease agreement (see Note 8). This amount is unsecured and non-interest bearing.
Due to Officers
During the six months ended June 30, 2026, the Company’s officers advanced an aggregate of $36,251 for working capital purposes and the Company repaid an aggregate of $15,675. These loan advances bear no interest and are payable on demand. As of June 30, 2026 and December 31, 2025, respectively, amounts due to officers were $341,724 and $321,148, respectively.
Note 8 - Commitments and Contingencies
Legal Proceedings
From time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation will not have a material adverse effect on its business, financial condition, results of operations, or cash flows. Contingent liabilities arising from potential litigation are assessed by management based on the individual analysis of these proceedings and on the opinion of the Company’s lawyers and legal consultants. There were no provisions recorded as of June 30, 2026 and December 31, 2025.
Regulated Industry
The U.S. healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments. Comprehensive statutes and regulations govern the manner in which the Company provides, bills for services and collects reimbursement from governmental programs and private payors, the contractual relationships with the Company’s providers, vendors and customers, marketing activities and other aspects of the Company’s operations.
In a regulatory climate that is uncertain, the Company’s operations may be subject to direct and indirect adoption, expansion or reinterpretation of various laws and regulations. This risk is especially acute in the healthcare industry given the level of government spending, oversight and control over the industry. Compliance with these evolving laws, regulations and interpretations may require us to change the Company’s practices at an undeterminable and possibly significant initial monetary and annual expense. These additional monetary expenditures may increase future overhead, which could have a material adverse effect on the Company’s results of operations. There could be laws and regulations applicable to the Company’s business that the Company have not identified or that, if changed, may be costly to the Company, and cannot predict all the ways in which implementation of such laws and regulations may affect the Company.
F-39
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
Employment Agreements
Effective September 14, 2023, the Company entered into Employment Agreements (the “Agreements”) with the CEO of the Company, Josh Green and the President of the Company, Samuel Adetunji (the “Officers”). The Agreements shall continue in full force and effect, until such time as the Officers and the Company mutually agree to its termination. The Company shall pay each Officer an annual salary equal to $1,200,000 and shall also pay bonus compensation of up to 20% of their annual salary for attaining annual company goals and objectives. On September 4, 2025, the Company entered into amended employment agreements (“First Amendment”) with the Officers whereby the annual salary was amended from $1,200,000 to $1,058,333. Except as expressly amended hereby, all of the other terms and conditions of the Agreements shall remain unchanged and in full force and effect in accordance with their original terms.
Each Officer is entitled to be issued up to 12,000,000 shares of common stock, subject to the terms of Employer’s Stock Incentive Plan (the “Plan”), upon the successful execution of an initial public offering (IPO) of the Company (the “Earn-Out Shares”) as incentive compensation for continual attainment and achievement of goals (see below). The Officers shall also participate in any bonus or incentive compensation programs. In the event of any merger, acquisition or change of control of the Company following an IPO, all of Earn-Out Shares shall immediately vest, and the Officer’s salary and benefits shall continue for a period of thirty- six (36) months thereafter, including annual bonus compensation. Earn-Out Shares shall be eligible to the Officers as follows:
(a)if the dollar volume-weighted average price (“VWAP”) of the Company’s common stock equals or exceeds $6.00 per share for any 20-trading days within any 30-trading day period during the period beginning on the effective date of the Company’s listing on the NASDAQ Capital Market, and ending on the 18-month anniversary thereof, the Company shall issue to each Officer an aggregate of 4,000,000 Earnout Shares.
(b)if the VWAP of the Company’s common stock equals or exceeds $7.00 per share for any 20 trading days within any 30-trading day period during the period beginning on the effective date of the 18-month of the anniversary of the Company’s listing on the NASDAQ Capital Market, and ending on the second anniversary thereof, the Company shall issue to each Officer an additional aggregate of 4,000,000 Earnout Shares.
(c)if the VWAP of the Company’s common stock equals or exceeds $8.00 per share for any 20 trading days within any 30-trading day period during the period beginning on the effective date of the second anniversary of the Company’s listing on the NASDAQ Capital Market, and ending on the third anniversary thereof, the Company shall issue to each Officer an additional aggregate of 4,000,000 Earnout Shares.
As of June 30, 2026 and December 31, 2025, the Company recorded unpaid salaries and related taxes to the Officers of approximately $1,094,700 and $601,000, respectively, which have been included in accounts payable and accrued liabilities as reflected in the consolidated balance sheets.
Since the share grants include both a performance condition and market conditions, the Company will measure and recognize the value of the grants when the performance condition (i.e. completion of an IPO) is met and the market conditions will effect the valuation of the grants. The Company valued the grants on the grant date of September 14, 2023 based on contemporaneous cash sales of common stock at $0.0001 per share.
Operating Lease – Related Party
In October 2023, the Company, through its wholly owned subsidiary, Veriheal, entered into a ten-year lease agreement with G&A Real Estate Investment Group, LLC, (“G&A”) a related party company owned by the principal stockholders, for a monthly rent of $15,000. The lease premises is located in Denver, Colorado. In October 2023, the Company recorded ROU assets and total lease liabilities of $1,184,125 based on an incremental borrowing rate of 9%.
F-40
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
On July 1, 2025, the Company entered into an amended lease agreement with G&A whereby the end of the lease term was amended from October 2033 to October 2025 unless otherwise terminated in accordance with the provisions of the lease or extended for an additional term, upon written mutual agreement, within 90 days prior to the end of the amended term. Upon the end of the amended term, the lease shall continue from month-to-month and be terminated upon giving 30-days prior written notice by either by Landlord or the Company. Except as expressly amended hereby, all of the other terms and conditions of the lease agreement shall remain unchanged and in full force and effect in accordance with their original terms. Under ASC 842, a lease qualifies for the short-term lease exemption only if the noncancellable term is 12 months or less and the Company is not reasonably certain to exercise any renewal options. Although, the arrangement provides for monthly renewals, management evaluates the use of the premises on a month-to-month basis and, based on current operational plans and intention to relocate to a more suitable office facility, is not reasonably certain to extend the arrangement beyond the current monthly term. Accordingly, the lease qualifies as a short-term lease.
The July 2025 amendment qualifies as a lease modification because it alters the contractual terms and does not create a separate lease since no new right of use was granted and lease payments did not increase to reflect a new right. This represents a modification of the existing lease, constituting a partial termination as defined in ASC 842-10-25-13.
Accordingly, the Company recalculated the lease liability for the shortened term (from October 2023 to October 2025) using the incremental borrowing rate as of July 1, 2025 of 9%, derecognized the carrying amounts of the ROU asset and lease liability of $1,045,514 associated with the terminated portion and recognized a new ROU asset and lease liability for the remaining term of $44,333.
Operating Lease
In July 2023, the Company, through its wholly owned subsidiary, Alternative Medical Clinic, LLC, entered into a three-year lease agreement. The initial year (commencing on July 1, 2023) monthly lease payment was $1,798, in years two and three the monthly lease payments are $1,852 and $1,907 respectively. The lease premises is located in Tampa, Florida. In July 2023, the Company recorded ROU assets and total lease liabilities of $58,147 based on an incremental borrowing rate of 9%.
ROU is summarized below:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Office lease |
| $ | 58,147 |
|
| $ | 58,147 |
|
Less: accumulated amortization |
|
| (58,147) |
|
| $ | (47,237) |
|
Operating lease right of use asset, net |
| $ | - |
|
| $ | 10,820 |
|
Operating Lease liabilities are summarized below:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Office lease |
| $ | 58,147 |
|
| $ | 58,147 |
|
Reduction of lease liability |
|
| (58,147) |
|
|
| (46,999) |
|
Less: office lease, current portion |
|
| - |
|
| $ | (11,148) |
|
Long term portion of lease liability |
| $ | - |
|
| $ | - |
|
The weighted average remaining lease term for the operating lease is 0 year as of June 30, 2026.
Other Operating Leases
The Company periodically rents other spaces on a month-to-month basis including its corporate headquarters located in McLean, VA.
Total rent expense amounted to $62,463 and $59,426 (including related party rent expense of $45,000 for both periods) during the three months ended June 30, 2026 and 2025, respectively, and $120,808 and $124,191 (including related party rent expense of $90,000 for both periods) during the six months ended June 30, 2026 and 2025, respectively.
F-41
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
Note 9 – Stockholders’ Deficit
Equity Incentive Plan
On September 12, 2026, the Company’s board of directors approved and adopted the Company’s Amended and Restated Stock Incentive 2025 Plan (the “Amended and Restated 2025 Plan”), which reserves a total of 50,000,000 shares of Common Stock. The Amended and Restated 2025 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, performance units, performance shares, restricted stock units, and other stock-based awards to our employees, directors, and consultants. As of the date of this report, the Company has not issued any awards or grants under the plan.
Common Stock
As of June 30, 2026 and December 31 2025, there were 8,000,004 shares of common stock outstanding.
Common Stock Deemed Issued in Connection with the Recapitalization
Effective on January 1, 2025 (the “Closing Date”), Veri Holdings, Inc. merged (the “Merger”) with and into Veri Medtech Holdings, Inc. (“Veri Medtech”), an inactive public company, in a transaction treated as a reverse merger and recapitalization of Veri Holdings. The shareholders of Veri Holdings received 4,600,002 shares of common stock of Veri Medtech representing approximately 81% of the total common stock outstanding just after the completion of the Merger. Consequently, the business of Veri Holdings became the business of Veri Medtech. The Merger has constituted a change of control or change in control with the consummation of the Merger.
The Merger is being accounted for as a reverse merger, and Veri Holdings is deemed to be the acquirer for accounting purposes under ASC 805, Business Combinations, since the stockholders of Veri Holdings obtained voting control of the combined entity post-merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Merger will be those of Veri Holdings and its subsidiaries, and the financial statements after completion of the Merger will include the assets and liabilities of Veri Holdings and its subsidiaries and Veri Medtech, and the historical operations of Veri Holdings and its subsidiaries and the operations of Veri Medtech from the Closing Date of the Merger. The name of the Company has been retroactively changed in the accompanying consolidated financial statements and footnotes to reflect the new name of the public entity post-merger. Consequently, there were 1,112,126 shares of common stock and 100 shares of Series A preferred stock with super voting rights which were deemed issued in connection with this recapitalization.
Of the total preferred stock authorized, 100 shares had been designated as Series A Preferred Stock (“Series A Preferred Stock”), par value $0.0001 per share, pursuant to the Certificate of Designation for the Series A Preferred Stock filed with the Secretary of State of the State of Delaware in December 2009. The Series A Preferred Stock shall have a stated value of $1.00 per share and liquidation value of $1.00 per share. The holder of Series A Preferred Stock shall not be entitled to receive any dividends. Each outstanding share of the Series A Preferred Stock shall represent 80% of all votes entitled to be voted at any annual or special meeting of stockholders of the Company or action by written consent of the stockholders. The Series A Preferred Stock shall, with respect to distribution rights on liquidation, winding up and dissolution, (i) rank senior to any of the shares of common stock of the Company, and any other class or series of stock of the Company which by its terms shall rank junior to the Series A Preferred Stock, and (ii) rank junior to any other series or class of preferred stock of the Company and any other class or series of stock of the Company which by its term shall rank senior to the Series A Preferred Stock.
Common Stock Issued for Services
In January 2025, the Company granted an aggregate of 2,287,876 restricted common stock shares to certain officers and consultants for services. The aggregate of 2,287,876 restricted common stock had a fair value of $2,488,365 or approximately $1.09 per share of common stock based on the quoted trading price on the date of grant. The restricted common stock shall vest for one year and the total value will be recognized as expense pro rata over the vesting period.
F-42
Veri Medtech Holdings, Inc. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
June 30, 2026 and 2025
(Unaudited)
As of June 30, 2026, there were no unvested restricted common stock shares outstanding and no remaining unrecognized compensation expense related to these awards.
A summary of the changes in unvested restricted common stock outstanding during the six months ended June 30, 2026 is as follows:
|
| Restricted Common Stock |
|
| Weighted |
| ||
Balance at December 31, 2025 - unvested |
|
| 2,287,876 |
|
| $ | 1.09 |
|
Granted |
|
| - |
|
|
| - |
|
Vested |
|
| (2,287,876) |
|
|
| 1.09 |
|
Balance at June 30, 2026 - unvested |
|
| - |
|
| $ | - |
|
Stock-based compensation expense for awards issued for services above were recorded in the following amounts as reflected in the consolidated statements of operations:
|
| For the three months ended June 30, 2026 |
|
| For the three months ended June 30, 2025 |
| ||
Compensation and related taxes |
| $ | - |
| $ |
| 571,789 |
|
Professional, consulting and contractor fees |
|
| - |
|
|
| 48,521 |
|
Total |
| $ | - |
| $ |
| 620,310 |
|
|
| For the six months ended June 30, 2026 |
|
| For the six months ended June 30, 2025 |
| ||
Compensation and related taxes |
| $ | 100,534 |
| $ |
| 1,036,819 |
|
Professional, consulting and contractor fees |
|
| 8,532 |
|
|
| 88,222 |
|
Total |
| $ | 109,066 |
| $ |
| 1,125,041 |
|
Note 10 – Subsequent Events
Stock Repurchase Program
In July 2026, the Company authorized a stock repurchase program (the “2026 Program”) pursuant to which the Company may repurchase up to 3,000,000 shares of its common stock. The timing and amount of any repurchases under the 2026 Program will depend on a variety of factors, including market conditions, the market price of the Company’s common stock, alternative investment opportunities and other factors deemed relevant by management. The 2026 Program does not obligate the Company to repurchase any specific number of shares or any specific dollar amount of common stock and may be modified, suspended or terminated at any time at the Company’s discretion.
Reverse Stock Split
In July 2026, the Company received written consent in lieu of a meeting by the holders of a majority of the voting power of the Company’s outstanding capital stock as of July 2026 and the Company’s Board of Directors approving such actions as are necessary for the Company to proceed to, and the Company accordingly intends to, effectuate and execute a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of one post-split share per two and one-half pre-split shares (1:2.5). The Reverse Stock Split became effective as of September 2, 2026. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the consolidated financial statements to reflect the Reverse Stock Split.
In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through September 11, 2026, the date the unaudited consolidated financial statements were available to be issued.
F-43
3,750,000 Shares of Common Stock
Veri Medtech Holdings, Inc.
_______________________________
PRELIMINARY PROSPECTUS
________________________________
N E T W O R K 1 F I N A N C I A L
S E C U R I T I E S, I N C.
, 2026
Until ,_______ 2026 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.
II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than underwriting discounts and commissions and non-accountable expense allowance, paid or to be paid by the Registrant in connection with the issuance and distribution of the securities being registered. All amounts other than the SEC registration fees and FINRA fees are estimates.
|
| Amount to be Paid |
| |
SEC registration fee |
| $ | 2,680 |
|
FINRA filing fee |
|
| 3,411 |
|
NASDAQ initial listing fee |
|
| 50,000 |
|
* Printing and engraving expenses |
|
| 50,000 |
|
* Legal fees and expenses (include $150,000 accountable fee) |
|
| 1,000,000 |
|
* Accounting fees and expenses |
|
| 500,000 |
|
* Transfer agent and registrar fees |
|
| 15,000 |
|
Miscellaneous |
|
| 80,438 |
|
* Total |
| $ | 1,701,529 |
|
* Estimated expenses.
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law (the “DGCL”) permits a corporation to indemnify its directors, officers, employees and agents against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with 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 serving as a director, officer, employee or agent of the corporation, or at the request of the corporation was serving in such capacity for another enterprise, provided that such person acted in good faith and in a manner the person 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 that the person’s conduct was unlawful. The termination of any such action, suit or proceeding by judgment, order, settlement, conviction, plea of nolo contendere or its equivalent does not, by itself, create a presumption that the person failed to satisfy these standards. 8 Del. C. § 145(a).
With respect to an action or suit brought by or in the right of the corporation, the corporation may indemnify a director, officer, employee or agent against expenses, including attorneys’ fees, actually and reasonably incurred in connection with the defense or settlement of such action or suit, provided that the person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation. No indemnification may be made with respect to any claim, issue or matter as to which such person has been adjudged liable to the corporation, except to the extent that the Delaware Court of Chancery or the court in which the action or suit was brought determines, upon application, that the person is fairly and reasonably entitled to indemnification notwithstanding such adjudication of liability. 8 Del. C. § 145(b).
To the extent that a present or former director or officer has been successful on the merits or otherwise in defense of any action, suit or proceeding described in Section 145(a) or (b), or in defense of any claim, issue or matter therein, such person is entitled to
II-2
indemnification for expenses, including attorneys’ fees, actually and reasonably incurred in connection therewith. 8 Del. C. § 145(c).
Unless ordered by a court, indemnification under Section 145(a) or (b) must be authorized in the specific case upon a determination that indemnification is proper because the applicable standard of conduct has been satisfied. Such determination may be made by a majority vote of the directors who are not parties to the proceeding, even if less than a quorum; by a committee of such directors designated by majority vote of such directors; by independent legal counsel in a written opinion if there are no such directors or if such directors so direct; or by the stockholders. 8 Del. C. § 145(d).
The DGCL further permits a corporation to advance expenses, including attorneys’ fees, incurred by a director or officer in defending a civil, criminal, administrative or investigative action, suit or proceeding prior to the final disposition of such proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay the amount advanced if it is ultimately determined that such person is not entitled to indemnification. 8 Del. C. § 145(e).
The rights to indemnification and advancement of expenses provided by Section 145 are not exclusive of any other rights to which a person seeking indemnification or advancement may be entitled under the corporation’s certificate of incorporation, bylaws, an agreement, a vote of stockholders or disinterested directors, or otherwise. 8 Del. C. § 145(f). Accordingly, a corporation’s certificate of incorporation, bylaws or indemnification agreements may provide rights to indemnification and advancement to the fullest extent permitted by Delaware law.
Our bylaws provide for indemnification and advancement of expenses to our directors, officers and employees to the fullest extent permitted by the DGCL, as amended from time to time. In addition, the corporation may purchase and maintain insurance on behalf of its directors, officers, employees and agents against liabilities incurred in such capacities, whether or not the corporation would have the power to indemnify such person against such liability under Section 145. 8 Del. C. § 145(g).
II-3
Insofar as indemnification for liabilities arising under the Securities Act may be provided for directors, officers, employees, agents or persons controlling an issuer pursuant to the foregoing provisions, the opinion of the SEC is that such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
No pending material litigation or proceeding involving our directors, executive officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending or threatened material litigation that may result in claims for indemnification by any of our directors or executive officers.
Item 15. Recent Sales of Unregistered Securities
The following sets forth information regarding all unregistered securities sold by us in transactions that were exempt from the requirements of the Securities Act in the last three years. Except where noted, all of the securities discussed in this Item 15 were all issued in reliance on the exemption under Section 4(a)(2) of the Securities Act. Unless otherwise indicated, all of the share issuances described below were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
Name | Issue Date | Issuance | Number of Shares |
Samuel Adentunji | Jan. 22, 2025 | Founders | 3,054,054 |
Joshua Green | Jan. 22, 2025 | Founders | 3,054,054 |
Mays Nakashima | Jan. 22, 2025 | Services | 40,000 |
Anthony Dutcher | Jan. 22, 2025 | Services | 120,000 |
Anthony Foscolos | Jan. 22, 2025 | Services | 120,000 |
Baiyina Abdas | Jan. 22, 2025 | Services | 40,000 |
Platinum Advisory | Jan. 22, 2025 | Services | 162,968 |
Clifford Hunt | Jan. 22, 2025 | Services | 64,000 |
John Bedeau | Jan. 22, 2025 | Services | 40,000 |
Erik Smith | Jan. 22, 2025 | Services | 80,000 |
Deirdre Phillips | Jan. 22, 2025 | Services | 40,000 |
Danny Wilson | Jan. 22, 2025 | Services | 40,000 |
Grant Guthrie | Jan. 22, 2025 | Services | 9,000 |
Hayley Steiner | Jan. 22, 2025 | Services | 9,000 |
Celeste Mittman | Jan. 22, 2025 | Services | 5,000 |
Lauren Dumale | Jan. 22, 2025 | Services | 10,000 |
II-4
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits.
The following documents are filed as part of this registration statement:
1.1*** |
| |
| ||
| ||
| ||
| ||
| ||
4.2*** |
| |
5.1* |
| Opinion of Clifford J. Hunt, P.A as to the legality of the securities being registered |
| Form of Employment Agreement, by and between the registrant and its Executive Officers. | |
| Form of Independent Director Agreement by and between the registrant and its Independent Directors. | |
| ||
| ||
| ||
| ||
| ||
| ||
| ||
23.1*** |
| |
| ||
24.1** |
| Power of Attorney (included on the signature page of this Registration Statement on Form S-1 filed on December 10, 2025) |
| ||
| ||
| Charter of the Nominating and Corporate Governance Committee | |
| ||
| ||
| ||
| ||
| ||
107** |
|
* | To be filed by amendment. |
** | Previously filed. |
*** | Filed herewith. |
(b) Financial Statement Schedules
None.
II-5
Item 17. 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: |
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
|
|
|
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth 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 Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
|
|
|
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
| (2) | That for the purpose of determining any liability under the Securities Act of 1933 each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed 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 which remain unsold at the termination of the offering. |
|
|
|
| (4) | That, for the purpose of determining liability under the Securities Act of 1933 to 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. |
|
|
|
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes 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: |
II-6
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
|
|
|
| (ii) | 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; |
|
|
|
| (iii) | 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 |
|
|
|
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (6) | The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. |
|
|
|
| (7) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 14 above, or otherwise, the Registrant has 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 the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant 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 by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
|
|
|
| (8) | The undersigned Registrant hereby undertakes: |
| (1) | That for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
|
|
|
| (2) | That for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of McLean, VA, on September 14, 2026.
Veri Medtech Holdings, Inc. |
|
By: /s/ Joshua Green |
Name: Joshua Green |
Title: President |
|
|
By: /s/ Faisal Malik |
Name: Faisal Malik |
Title: Principal Financial and Accounting Officer |
Pursuant to the requirements of the Securities Act, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature |
| Title |
| Date |
|
|
|
|
|
/s/ Samuel Adetunji |
| (Chief Executive |
| September 14, 2026 |
Samuel Adetunji |
| Officer), Secretary, Director |
|
|
|
|
|
|
|
/s/ Faisal Malik |
| (Chief Financial |
| September 14, 2026 |
Faisal Malik |
| Officer) |
|
|
|
|
|
|
|
/s/ Joshua Green |
| President, Treasurer, Director |
| September 14, 2026 |
Joshua Green |
| Treasurer, Director |
|
|
|
|
|
|
|
/s/ Scott H. Dunnagan |
| Director |
| September 14, 2026 |
Scott H. Dunnagan |
|
|
|
|
|
|
|
|
|
/s/ Vijay Viswanathan |
| Director |
| September 14, 2026 |
Vijay Viswanathan |
|
|
|
|
|
|
|
|
|
/s/ Todd Jones |
| Director |
| September 14, 2026 |
Todd Jones |
|
|
|
|
II-8
Ex. 1.01
between
VERI MEDTECH HOLDINGS, INC.
and
NETWORK 1 FINANCIAL SECURITIES, INC.
as Representative of the Several Underwriters
UNDERWRITING AGREEMENT
[·], 2026
Network 1 Financial Securities, Inc.
2 Bridge Ave., Suite 241
Red Bank, NJ 07701
As Representative of the several Underwriters named on Schedule 1 attached hereto
Ladies and Gentlemen:
The undersigned, Veri Medtech Holdings, Inc., a company incorporated under the laws of the State of Delaware (the “Company”), hereby confirms its agreement (this “Agreement”) with Network 1 Financial Securities, Inc. (“you”, “your”, or the “Representative”) and with the other underwriters named on Schedule 1 hereto for which the Representative is acting as representative (the Representative and such other underwriters being collectively called the “Underwriters” or, individually, an “Underwriter”) as follows:
1.Purchase and Sale of Shares.
1.1Firm Shares.
1.1.1.Nature and Purchase of Firm Shares.
(i)On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the several Underwriters, an aggregate of [·] shares (the “Firm Shares”) of common stock of the Company, par value $0.0001 per share (the “Common Stock”).
(ii)The Firm Shares are to be offered initially to the public at a price of $[·] per share as set forth on the cover page of the Prospectus (as defined in Section 2.1.1 hereof) (the “Firm Offering Price”). The Underwriters agree, severally and not jointly, to purchase from the Company the number of Firm Shares set forth opposite their respective names on Schedule 1 attached hereto and made a part hereof at a purchase price of $[·] per share (93% of the Firm Offering Price).
1.1.2.Shares Payment and Delivery.
(i)Delivery and payment for the Firm Shares shall be made at 10:00 a.m., Eastern time, on the first (1st) Business Day (as defined below) following the effective date (the “Effective Date”) of the Registration Statement (as defined in Section 2.1.1 below) (or the second (2nd) Business Day following the Effective Date if the Registration Statement is declared effective after 4:01 p.m., Eastern time) or at such other time as shall be agreed upon by the Representative and the Company, at the offices of Lucosky Brookman LLP, 101 Wood Avenue South, Woodbridge, New Jersey 08830 (“Representative Counsel”), or at such other place (or remotely by facsimile or other electronic transmission) as shall be agreed upon by the Representative and the Company. The hour and date of delivery and payment for the Firm Shares is called the “Closing Date.”
(ii)Payment for the Firm Shares shall be made on the Closing Date by wire transfer in Federal (same-day) funds, payable to the order of the Company upon delivery of the Firm Shares through the facilities of the Depository Trust Company (“DTC”) for the account of the Underwriters. The Firm Shares shall be registered in such name or names and in such authorized denominations as the Representative may request in writing at least two (2) full Business Days prior to the Closing Date. The Company shall not be obligated to sell or deliver the Firm Shares except upon tender of payment by the Representative for all of the Firm Shares. The term “Business Day” means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions are authorized or obligated by law to close in New York, New York.
1.2Over-allotment Option.
1.2.1.Option Shares. For the purposes of covering any over-allotments in connection with the distribution and sale of the Firm Shares, the Company hereby grants to the Underwriters an option to purchase up to [·] additional shares of Common Stock, representing 15% of the Firm Shares sold in the offering, from the Company (the “Over-allotment Option”). Such [·] additional shares of Common Stock, the net proceeds of which will be deposited with the Company’s account, are hereinafter referred to as “Option Shares.” The purchase price to be paid per Option Share shall be equal to the price per Firm Share set forth in Section 1.1.1 hereof. The Firm Shares and the Option Shares are hereinafter referred to together as the “Public Securities.” The offering and sale of the Public Securities is hereinafter referred to as the “Offering.”
1.2.2.Exercise of Option. The Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised by the Representative as to all (at any time) or any part (from time to time) of the Option Shares within 45 days after the Closing Date. The Underwriters shall not be under any obligation to purchase any Option Shares prior to the exercise of the Over-allotment Option. The Over-allotment Option granted hereby may be exercised by the giving of written notice to the Company from the Representative, setting forth the number of Option Shares to be purchased and the date and time for delivery of and payment for the Option Shares (the “Option Closing Date”), which shall not be later than five (5) Business Days after the date of the notice or such other time as shall be agreed upon by the Company and the Representative, at the offices of Representative Counsel, or at such other place (including remotely by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Representative. If such delivery and payment for the Option Shares does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment Option with respect to all or any portion of the Option Shares, subject to the terms and conditions set forth herein: (i) the Company shall become obligated to sell to the Underwriters the number of Option Shares specified in such notice; and (ii) each of the Underwriters, acting severally and not jointly, shall purchase its pro rata portion of the total number of Option Shares then being purchased based on the number of Option Shares set forth in Schedule 1 opposite the name of such Underwriter.
1.2.3.Payment and Delivery. Payment for the Option Shares shall be made on the Option Closing Date by wire transfer in Federal (same-day) funds, payable to the order of the Company upon delivery of the Option Shares through the facilities of DTC for the account of the Underwriters. The Option Shares shall be registered in such name or names and in such authorized denominations as the Representative may request in writing at least two (2) Business Days prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Option Shares except upon tender of payment by the Representative for the applicable Option Shares.
1.3Representative’s Warrant.
1.3.1.Purchase Warrants. The Company hereby agrees to issue to the Representative (and/or its designees) on the Closing Date and Option Closing Date, as and if applicable, a warrant (a “Representative’s Warrant”) for the purchase of an aggregate number of shares of Common Stock representing five percent (5%) of the Public Securities issued on such Closing Date or Option Closing Date. The Representative’s Warrant, in the form attached hereto as Exhibit A, shall be exercisable, in whole or in part, commencing upon issuance and expiring on the five-year anniversary of the Closing Date at an initial exercise price per share of Common Stock of $[·], which is equal to 120% of the Firm Offering Price. The Representative’s Warrant and the shares of Common Stock issuable upon exercise thereof are hereinafter referred to together as the “Representative’s Securities.” The Representative understands and agrees that there are significant restrictions pursuant to FINRA (as defined below) Rule 5110 against transferring the Representative’s Warrant and the underlying shares of Common Stock during the 180 days immediately following the date of commencement of sales in the Offering and by its acceptance thereof shall agree that it will not sell, transfer, assign, pledge or hypothecate the Representative’s Warrant or the underlying shares of Common Stock, or any portion thereof, or cause the Representative’s Warrant or the underlying shares of Common Stock, or any portion thereof, to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities for a period of 180 days after the commencement date of sales in the Offering except as expressly permitted by FINRA Rule 5110(e), and only if any such transferee agrees to the foregoing lock-up restrictions.
1.3.2.Delivery. Delivery of the Representative’s Warrant shall be made on the Closing Date and Option Closing Date, as and if applicable, and shall be issued in the name or names and in such authorized denominations as the Representative may request.
2.Representations and Warranties of the Company. The Company represents and warrants to the Underwriters as of the Applicable Time (as defined below), as of the Closing Date and as of the Option Closing Date, if any, as follows:
2.1Filing of Registration Statement.
2.1.1.Pursuant to the Securities Act. The Company has filed with the U.S. Securities and Exchange Commission (the “Commission”) a registration statement, and any amendment or amendments thereto, on Form S-1 (File No. 333-291560), including any related prospectus or prospectuses, for the registration of the Public Securities and the Representative’s Securities under the Securities Act of 1933, as amended (the “Securities Act”), which registration statement and any amendment or amendments have been prepared by the Company in all material respects in conformity with the requirements of the Securities Act and the rules and regulations of the Commission under the Securities Act (the “Securities Act Regulations”) and will contain all material statements that are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations. Except as the context may otherwise require, such registration statement, as amended, on file with the Commission at the time the registration statement became effective (including the Preliminary Prospectus (as defined below) included in the registration statement, financial statements, schedules, exhibits and all other documents filed as a part thereof or incorporated therein and all information deemed to be a part thereof as of the Effective Date pursuant to paragraph (b) of Rule 430A of the Securities Act Regulations (the “Rule 430A Information”)), is referred to herein as the “Registration Statement.” If the Company files any registration statement pursuant to Rule 462(b) of the Securities Act Regulations, then after such filing, the term “Registration Statement” shall include such registration statement filed pursuant to Rule 462(b). The Registration Statement has been declared effective by the Commission on the date hereof.
Each prospectus used prior to the effectiveness of the Registration Statement, and each prospectus that omitted the Rule 430A Information that was used after such effectiveness and prior to the execution
and delivery of this Agreement, is herein called a “Preliminary Prospectus.” The Preliminary Prospectus, subject to completion, dated [·], 2026, that was included in the Registration Statement immediately prior to the Applicable Time is hereinafter called the “Pricing Prospectus.” The final prospectus in the form first furnished to the Underwriters for use in the Offering is hereinafter called the “Prospectus.” Any reference to the “most recent Preliminary Prospectus” shall be deemed to refer to the latest Preliminary Prospectus included in the Registration Statement.
“Applicable Time” means [TIME], Eastern time, on the date of this Agreement.
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 of the Securities Act Regulations (“Rule 433”), including, without limitation, any “free writing prospectus” (as defined in Rule 405 of the Securities Act Regulations) relating to the Public Securities that is: (i) required to be filed with the Commission by the Company; (ii) a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission; or (iii) exempt from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the Public Securities or of the Offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).
“Issuer General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a “bona fide electronic road show,” as defined in Rule 433 (the “Bona Fide Electronic Road Show”)).
“Issuer Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.
“Pricing Disclosure Package” means any Issuer General Use Free Writing Prospectus issued at or prior to the Applicable Time, the Pricing Prospectus and the information included on Schedule 2-A hereto, all considered together.
2.1.2.Pursuant to the Exchange Act. The Company has filed with the Commission a Form 8-A (File Number 001-[·]) providing for the registration pursuant to Section 12(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the Common Stock. The registration of the Common Stock under the Exchange Act has been declared effective by the Commission on or prior to the date hereof. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company received any notification that the Commission is contemplating terminating such registration.
2.2Stock Exchange Listing. The Common Stock has been approved for listing on the Nasdaq Capital Market (the “Exchange”), subject to official notice of issuance, under the symbol “VRHI”, and the Company has taken no action designed to, or likely to have the effect of, delisting the Common Stock from the Exchange, nor has the Company received any notification that the Exchange is contemplating terminating such listing except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
2.3No Stop Orders, etc. Neither the Commission nor, to the Company’s knowledge, any state regulatory authority has issued any order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted or, to the Company’s knowledge, threatened to institute, any proceedings with respect to such an order. The Company has complied with each request (if any) from the Commission for additional information.
2.4Disclosures in Registration Statement.
2.4.1.Compliance with Securities Act and 10b-5 Representation.
(i)Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus, including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto, and the Prospectus, at the time each was filed with the Commission, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus delivered to the Underwriters for use in connection with this Offering and the Prospectus was or will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii)Neither the Registration Statement nor any amendment thereto, at its effective time, as of the Applicable Time, at the Closing Date or at any Option Closing Date (if any), contained, contains or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading, provided, however, that this representation and warranty shall not apply to statements made or statements omitted in reliance upon and in conformity with the Underwriter’s Information (as defined below).
(iii)The Pricing Disclosure Package, as of the Applicable Time, at the Closing Date or at any Option Closing Date (if any), did not, does not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; and each Issuer Limited Use Free Writing Prospectus hereto does not conflict in any material respect with the information contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, and each such Issuer Limited Use Free Writing Prospectus, as supplemented by and taken together with the Pricing Prospectus as of the Applicable Time, did not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements made or statements omitted in reliance upon and in conformity with written information furnished to the Company with respect to the Underwriters by the Representative expressly for use in the Registration Statement, the Pricing Disclosure Package or the Prospectus or any amendment thereof or supplement thereto. The parties acknowledge and agree that such information provided by or on behalf of any Underwriter consists solely of the disclosure contained in the “Underwriting” section of the Prospectus (the “Underwriters’ Information”); and
(iv)Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b), at the Closing Date or at any Option Closing Date, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to the Underwriters’ Information.
2.4.2.Disclosure of Agreements. The agreements and documents described in the Registration Statement, the Pricing Disclosure Package and the Prospectus conform in all material respects to the descriptions thereof contained therein and there are no agreements or other documents required by the Securities Act and the Securities Act Regulations to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus or to be filed with the Commission as exhibits to the
Registration Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which it is or may be bound or affected and: (i) that is referred to in the Registration Statement, the Pricing Disclosure Package and the Prospectus; or (ii) that is material to the Company’s business, has been duly authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company’s knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. None of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the Company’s knowledge, any other party is in default thereunder and, to the Company’s knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder except for a default or event which would not reasonably be expected to result in a Material Adverse Change (as defined in Section 2.5.1 below) or as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus. To the Company’s knowledge, performance by the Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses (each, a “Governmental Entity”), including, without limitation, those relating to environmental laws and regulations, except for any violation that would not reasonably be expected to result in a Material Adverse Change.
2.4.3.Prior Securities Transactions. During the past three (3) years from the date of this Agreement, no securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Preliminary Prospectus.
2.4.4.Regulations. The disclosures in the Registration Statement, the Pricing Disclosure Package and the Prospectus concerning the effects of federal, state, local and all material foreign regulation on the Offering and the Company’s business as currently conducted are correct in all material respects and no other such material regulations are required to be disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus which are not so disclosed.
2.5Changes After Dates in Registration Statement.
2.5.1.No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material adverse change in the financial position or results of operations of the Company, nor any change or development that, singularly or in the aggregate, would involve a material adverse change in or affecting the condition (financial or otherwise), results of operations, business, or assets of the Company (a “Material Adverse Change”); (ii) other than in the ordinary course of business, there have been no material transactions entered into by the Company, other than as contemplated pursuant to this Agreement; and (iii) no executive officer or director of the Company has resigned from any position with the Company.
2.5.2.Recent Securities Transactions, etc. Subsequent to the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and except for the sales of the Public Securities pursuant to this Agreement and as may otherwise be indicated or contemplated herein or disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not: (i) issued any securities or incurred any material liability or obligation,
direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its capital stock.
2.6Independent Accountants. To the knowledge of the Company, Salberg & Company, P.A. (the “Auditor”), whose report is filed with the Commission as part of the Registration Statement, the Pricing Disclosure Package and the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Securities Act Regulations and the Public Company Accounting Oversight Board. The Auditor has not, during the periods covered by the financial statements included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act, except for any permitted non-audit services.
2.7Financial Statements, etc. The financial statements, including the notes thereto and supporting schedules, if any, included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, fairly present, in all material respects, the financial position and the results of operations of the Company at the dates and for the periods to which they apply; and such financial statements have been prepared in conformity with the U.S. generally accepted accounting principles (“GAAP”), consistently applied throughout the periods involved (provided that unaudited interim financial statements are subject to any normal year-end audit adjustments); and the supporting schedules, if any, included in the Registration Statement present fairly, in all material respects, the information required to be stated therein. Except as included therein, no historical or pro forma financial statements are required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus under the Securities Act or the Securities Act Regulations. The pro forma and pro forma as adjusted financial information and the related notes, if any, included in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been properly compiled and prepared in accordance with the applicable requirements of the Securities Act and the Securities Act Regulations and present fairly, in all material respects, the information shown therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. All disclosures contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission), if any, comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus: (a) neither the Company nor any of its direct and indirect subsidiaries, including each entity disclosed or described in the Registration Statement, the Pricing Disclosure Package and the Prospectus as being a subsidiary of the Company, if any (each, a “Subsidiary” and, collectively, the “Subsidiaries”), has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions other than in the ordinary course of business; (b) the Company has not declared or paid any dividends or made any distribution of any kind with respect to its capital stock; (c) there has not been any change in the capital stock of the Company or any of its Subsidiaries, or, other than in the ordinary course of business or pursuant to any grants under any stock compensation plan; and (d) there has not been any Material Adverse Change in the Company’s long-term or short-term debt, as of the date of this Agreement.
2.8Authorized Capital; Options, etc. The Company had, at the date or dates indicated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the duly authorized, issued and outstanding capitalization as set forth therein. Based on the assumptions stated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company will have on the Closing Date the adjusted stock capitalization set forth therein. Except as set forth in, or contemplated by, the Registration Statement, the Pricing Disclosure Package and the Prospectus, on the Effective Date, as of the Applicable Time and on the Closing Date and any Option Closing Date, there will be no stock options, warrants, or other rights to purchase or otherwise acquire any authorized, but unissued Common Stock or any security
convertible or exercisable into Common Stock, or any contracts or commitments to issue or sell Common Stock or any such options, warrants, rights or convertible securities.
2.9Valid Issuance of Securities, etc.
2.9.1.Outstanding Securities. All issued and outstanding securities of the Company issued prior to the transactions contemplated by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have no rights of rescission with respect thereto, and are not subject to personal liability by reason of being such holders; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company. The authorized Common Stock conform in all material respects to all statements relating thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The offers and sales of the outstanding Common Stock were at all relevant times either registered under the Securities Act and the applicable state securities or “blue sky” laws or, based in part on the representations and warranties of the purchasers of such shares, exempt from such registration requirements.
2.9.2.Securities Sold Pursuant to this Agreement. The Public Securities have been duly authorized for issuance and sale and, when issued and paid for, will be validly issued, fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders; the Representative’s Warrants have been duly authorized for issuance and, when issued in accordance with their terms and the terms of this Agreement, will be valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought; the Public Securities and Representative’s Securities are not and will not be subject to any preemptive rights of any holders of any security of the Company that have not been waived or similar contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance and sale of the Public Securities and Representative’s Securities has been duly and validly taken. The Public Securities conform in all material respects to all statements with respect thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. All corporate action required to be taken for the authorization, issuance and sale of the Representative’s Warrants has been duly and validly taken; the Common Stock issuable upon exercise of the Representative’s Warrant have been duly authorized and reserved for issuance by all necessary corporate action on the part of the Company and when paid for and issued in accordance with the Representative’s Warrant upon due exercise thereof, such Common Stock will be validly issued, fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders; and such Common Stock are not and will not be subject to the preemptive rights of any holders of any security of the Company that have not been waived or similar contractual rights granted by the Company.
2.10Registration Rights of Third Parties. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no holders of any securities of the Company or any rights exercisable for or convertible or exchangeable into securities of the Company have the right to require the Company to register any such securities of the Company under the Securities Act or to include any such securities in a registration statement to be filed by the Company (except for any such rights that have been waived).
2.11Validity and Binding Effect of Agreements. This Agreement and the Representative’s Warrant have been duly and validly authorized by the Company, and, when executed and delivered, will
constitute the valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms, except: (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally; (ii) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
2.12No Conflicts, etc. The execution, delivery and performance by the Company of this Agreement, the Representative’s Warrant and all ancillary documents, the consummation by the Company of the transactions herein and therein contemplated and the compliance by the Company with the terms hereof and thereof do not and will not, with or without the giving of notice or the lapse of time or both: (i) result in a material breach of, or conflict with any of the terms and provisions of, or constitute a material default under, or result in the creation, modification, termination or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any agreement or instrument to which the Company is a party; (ii) result in any violation of the provisions of the Company’s Certificate of Incorporation (as the same may be amended or restated from time to time, the “Charter”) or bylaws (as the same may be amended or restated from time to time, the “Bylaws”); or (iii) violate any existing applicable law, rule, regulation, judgment, order or decree of any Governmental Entity as of the date hereof except in the case of clauses (i) and (iii) for any such breach, conflict, violation, default, lien, charge or encumbrance that would not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Change.
2.13No Defaults; Violations. No material default exists in the due performance and observance of any term, covenant or condition of any material license, contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is a party or by which the Company may be bound or to which any of the properties or assets of the Company is subject. The Company is not: (i) in violation of any term or provision of its Charter and Bylaws; (ii) in violation of any license or permit; or (iii) in any violation of applicable law, rule, regulation, judgment or decree of any Governmental Entity except, in the case of clause (ii) and (iii), for any such violation that would not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Change.
2.14Corporate Power; Licenses; Consents.
2.14.1.Conduct of Business. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has all requisite corporate power and authority, and has all necessary authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies that it needs as of the date hereof to conduct its business as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except for the absence of which would not reasonably be expected to result in a Material Adverse Change.
2.14.2.Transactions Contemplated Herein. The Company has all corporate power and authority to enter into this Agreement and to carry out the provisions and conditions hereof. No consent, authorization or order of, and no filing with, any court, government agency or other body is required for the valid issuance, sale and delivery of the Public Securities and the consummation of the transactions and agreements contemplated by this Agreement and the Representative’s Warrant and as contemplated by the Registration Statement, the Pricing Disclosure Package and the Prospectus, except for: (i) the registration of the Public Securities under the Securities Act and applicable state securities laws; (ii) such consents, approvals, authorizations, orders, filings, registrations or qualifications that have already been obtained or made; and (iii) such filings or qualifications as may be required under applicable federal and state securities
laws and the rules and regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Exchange in connection with the Offering and the listing of the Public Securities on the Exchange.
2.15D&O Questionnaires. To the Company’s knowledge, all information contained in the questionnaires (the “Questionnaires”) completed by each of the Company’s directors and officers immediately prior to the Offering (the “Insiders”) as supplemented by all information concerning the Company’s directors, officers and principal stockholders as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Underwriters, is true and correct in all material respects and the Company has not become aware of any information which would cause the information disclosed in the Questionnaires to become materially inaccurate or incorrect.
2.16Litigation; Governmental Proceedings. There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental proceeding pending or, to the Company’s knowledge, threatened against, or involving the Company or, to the Company’s knowledge, any executive officer or director that, if determined adversely to the Company, would reasonably be expected to result in a Material Adverse Change, which is required to be disclosed and has not been disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus or in connection with the Company’s listing application for the listing of the Public Securities on the Exchange.
2.17Good Standing. Each of the Company and its Subsidiaries has been duly incorporated and is validly existing as a corporation under the laws of the State of Delaware and as of the date hereof is in good standing in each other jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to be so qualified, singularly or in the aggregate, would not reasonably be expected to result in a Material Adverse Change.
2.18Insurance. The Company carries or is entitled to the benefits of insurance, with reputable insurers, in such amounts and covering such risks which the Company believes are adequate, including, but not limited to, directors and officers insurance coverage at least equal to $5,000,000 and all such insurance is in full force and effect. The Company has no reason to believe that it will not be able: (i) to renew its existing insurance coverage as and when such policies expire; or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not reasonably be expected to result in a Material Adverse Change.
2.19Transactions Affecting Disclosure to FINRA.
2.19.1.Finder’s Fees. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder’s, consulting or origination fee by the Company or any Insider with respect to the sale of the Public Securities hereunder or any other arrangements, agreements or understandings of the Company or, to the Company’s knowledge, any of its stockholders that may affect the Underwriters’ compensation, as determined by FINRA.
2.19.2.Certain Payments. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not made and has no agreements, arrangements or understanding to make any direct or indirect payments (in cash, securities or otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member participating in the Offering (as defined in FINRA Rule 5110(j)(15), “Participating Member”); or (iii) any person or entity that has any direct or indirect affiliation or association with any Participating Member, within the 180 day period immediately preceding the initial filing of the Registration Statement through the 60 day period after the Effective Date, other than the payment to the Underwriters as provided hereunder in connection with the Offering.
2.19.3.Use of Proceeds. None of the net proceeds of the Offering will be paid by the Company to any Participating Member or its affiliates, except as specifically authorized herein.
2.19.4.FINRA Affiliation. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there is no: (i) officer or director of the Company; (ii) beneficial owner of 10% or more of any class of the Company's securities; or (iii) beneficial owner of the Company's unregistered equity securities which were acquired during the 180 day period immediately preceding the filing of the Registration Statement that, in each case and to the Company’s knowledge, is an affiliate or associated person of a Participating Member (as determined in accordance with the rules and regulations of FINRA).
2.19.5.Information. All information provided by the Company in its FINRA questionnaire to Representative Counsel specifically for use by Representative Counsel in connection with its Public Offering System filings (and related disclosure) with FINRA under FINRA Rule 5110 is true, correct and complete in all material respects.
2.20Foreign Corrupt Practices Act. None of the Company and its Subsidiaries or, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, in their capacity as such, has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction) that would reasonably be expected to: (i) subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding; (ii) if not given in the past, have had a Material Adverse Change; or (iii) if not continued in the future, adversely affect the assets, business, or operations of the Company. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with the Foreign Corrupt Practices Act of 1977, as amended.
2.21Compliance with OFAC. None of the Company and its Subsidiaries or, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), and the Company will not, directly or indirectly, use the proceeds of the Offering hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
2.22Anti-Money Laundering Laws. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the anti-money laundering statutes of all applicable jurisdictions where the Company conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Anti-Money Laundering Laws”); and no action, suit or proceeding by or before any Governmental Entity involving the Company with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
2.23Officers’ Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to you or to Representative Counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.
2.24Lock-Up Agreements. Schedule 3 hereto contains a complete and accurate list of the Company’s officers and directors and each holder of 5% or more of the Company’s issued and outstanding shares of Common Stock (or securities convertible or exercisable into shares of Common Stock, other than options, warrants, and restricted stock units) (collectively, the “Lock-Up Parties”). The Company has caused each of the Lock-Up Parties to deliver to the Representative an executed Lock-Up Agreement, in the form attached hereto as Exhibit B (the “Lock-Up Agreement”), prior to the execution of this Agreement.
2.25Subsidiaries. All direct and indirect Subsidiaries of the Company are duly organized and in good standing (to the extent the concept of good standing is applicable in such jurisdiction) under the laws of the place of organization or incorporation, and each Subsidiary is in good standing (to the extent the concept of good standing is applicable in such jurisdiction) in each jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to qualify would not result in a Material Adverse Change. The Company’s ownership and control of each Subsidiary is as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
2.26Related Party Transactions. There are no business relationships or related party transactions involving the Company or any other person required to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus that have not been described as required by the Securities Act or the Securities Act Regulations.
2.27Board of Directors. The Board of Directors of the Company is comprised of the persons set forth under the heading of the Pricing Prospectus and the Prospectus captioned “Management.” The qualifications of the persons serving as board members and the overall composition of the board comply with the Exchange Act, the rules and regulations of the Commission under the Exchange Act (the “Exchange Act Regulations”), the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder (the “Sarbanes-Oxley Act”) applicable to the Company and the listing rules of the Exchange. At least one member of the Audit Committee of the Board of Directors of the Company qualifies as an “audit committee financial expert,” as such term is defined under Regulation S-K and the listing rules of the Exchange. In addition, at least a majority of the persons serving on the Board of Directors qualify as “independent,” as defined under the listing rules of the Exchange.
2.28Sarbanes-Oxley Compliance.
2.28.1.Disclosure Controls. The Company has taken all necessary actions to ensure that, in the time periods required, the Company will comply with Rule 13a-15 or 15d-15 under the Exchange Act Regulations applicable to the Company, and such controls and procedures are effective to ensure that all material information concerning the Company will be made known on a timely basis to the individuals responsible for the preparation of the Company’s Exchange Act filings and other public disclosure documents.
2.28.2.Compliance. The Company is, or at the Applicable Time and on the Closing Date will be, in material compliance with the provisions of the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such programs and has taken reasonable steps to ensure the Company’s future compliance (not later than the relevant statutory and regulatory deadlines therefor) with all of the material provisions of the Sarbanes-Oxley Act then applicable to it.
2.29Accounting Controls. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company and its Subsidiaries maintain systems of “internal control over financial reporting” (as defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) that comply in all material respects with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company is not aware of any material weaknesses in its internal controls. The Company’s auditors and the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are known to the Company’s management and that have adversely and materially affected or are reasonably likely to adversely and materially affect the Company’s ability to record, process, summarize and report financial information; and (ii) any fraud known to the Company’s management, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
2.30No Investment Company Status. The Company is not and, after giving effect to the Offering and the application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be, required to register as an “investment company,” as defined in the Investment Company Act of 1940, as amended.
2.31No Labor Disputes. No material labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is imminent.
2.32Intellectual Property Rights. The Company and each of its Subsidiaries owns or possesses or has valid rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets and similar rights (“Intellectual Property Rights”) necessary for the conduct of the business of the Company and its Subsidiaries as currently carried on and as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus. To the knowledge of the Company, no action or use by the Company or any of its Subsidiaries necessary for the conduct of its business as currently carried on and as described in the Registration Statement and the Prospectus will involve or give rise to any infringement of, or license or similar fees for, any Intellectual Property Rights of others which has not been subsequently rectified. Neither the Company nor any of its Subsidiaries has received any pending notice alleging any such infringement, fee or conflict with asserted Intellectual Property Rights of others. Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change: (A) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any of the Intellectual Property Rights owned by the Company; (B) there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim, that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change; (C) the Intellectual Property Rights owned by the Company and, to the knowledge of the Company, the Intellectual Property Rights licensed to the Company have not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole or in part, and there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change; (D) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company infringes, misappropriates or otherwise violates any Intellectual Property Rights or other proprietary rights of others,
the Company has not received any written notice of such claim and the Company is unaware of any other facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change; and (E) to the Company’s knowledge, no employee of the Company is in or has ever been in violation in any material respect of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company or actions undertaken by the employee while employed with the Company and could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change that has not been subsequently rectified or settled. To the Company’s knowledge, all material technical information developed by and belonging to the Company which has not been patented has been kept confidential. The Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus and are not described therein. The Registration Statement, the Pricing Disclosure Package and the Prospectus contain in all material respects the same description of the matters set forth in the preceding sentence. None of the technology employed by the Company has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company’s knowledge, any of its officers, directors or employees, or otherwise in violation of the rights of any persons. Except as would not, singly or in the aggregate, reasonably be expected to have a Material Adverse Change, with respect to generative artificial intelligence models or advanced machine learning models (“AI Tools”), the Company and its subsidiaries, (i) use AI Tools in compliance with applicable license terms, consents, agreements and laws, (ii) to the knowledge of the Company, have not used AI Tools to create or develop any products, or Intellectual Property in a manner that resulted in a third party having rights in such products or Intellectual Property Rights and (iii) have not included and do not include personally identifiable information, protected health information, consumer information, trade secrets or other confidential information in any prompts or inputs into any AI Tools, for the avoidance of doubt, prongs (ii) and (iii) do not include machine learning functionalities of the Company’s products or product candidates.
2.33Taxes. Each of the Company and its Subsidiaries has: (i) filed all returns (as hereinafter defined) required to be filed with taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof, except in any case in which the failure so to file would not reasonably be expected to cause a Material Adverse Change; and (ii) has paid all taxes (as hereinafter defined) shown as due on such returns that were filed and has paid all taxes imposed on or assessed against the Company or such respective Subsidiary, except as currently being contested in good faith or would not reasonably be expected to cause a Material Adverse Change. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements. Except as disclosed in writing to the Underwriters: (i) no issues have been raised (and are currently pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company or its Subsidiaries; and (ii) no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the Company or its Subsidiaries. The term “taxes” means all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto. The term “returns” means all returns, declarations, reports, statements and other documents required to be filed in respect to taxes.
2.34ERISA Compliance. The Company and any “employee benefit plan” (as defined under the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (collectively, “ERISA”)) established or maintained by the Company or its ERISA
Affiliates (as defined below) are in compliance in all material respects with ERISA. “ERISA Affiliate” means, with respect to the Company, any member of any group of organizations described in Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereunder (the “Code”) of which the Company is a member. No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee benefit plan” established or maintained by the Company or any of its ERISA Affiliates. No “employee benefit plan” established or maintained by the Company or any of its ERISA Affiliates, if such “employee benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company nor any of its ERISA Affiliates has incurred or reasonably expects to incur any material liability under: (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan”; or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan” established or maintained by the Company or any of its ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code is so qualified and, to the knowledge of the Company, nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification.
2.35Compliance with Laws. Except as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus and as would not, individually or in the aggregate, be expected to result in a Material Adverse Change, the Company: (A) is and at all times has been in compliance with all statutes, rules, or regulations applicable to the services provided by the Company (“Applicable Laws”), except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change; (B) has not received any warning letter, untitled letter or other correspondence or notice from any other governmental authority alleging or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws (“Authorizations”); (C) possesses all material Authorizations for conducting its business as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and such material Authorizations are valid and in full force and effect and are not in material violation of any term of any such Authorizations; (D) has not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any governmental authority or third party alleging that any product operation or activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such governmental authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding that, if brought, may result in a Material Adverse Change; (E) has not received written notice that any governmental authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no knowledge that any such governmental authority is considering such action; and (F) has filed, obtained, maintained or submitted or taken reasonably practicable steps to file, obtain, maintain or submit all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct, in all material respects, on the date filed (or were corrected or supplemented by a subsequent submission).
2.36Ineligible Issuer. At the time of filing the Registration Statement and any post-effective amendment thereto, at the time of effectiveness of the Registration Statement and any amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act Regulations) of the Public Securities and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405.
2.37Real Property. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company and its Subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real or personal property which are material to the business of the Company and its Subsidiaries taken as a whole, in each case free and clear of all liens, encumbrances, security interests, claims and defects that do not, singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or its Subsidiaries; and all of the leases and subleases material to the business of the Company and its Subsidiaries, considered as one enterprise, and under which the Company or any of its Subsidiaries holds properties described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, are in full force and effect, and neither the Company nor any Subsidiary has received any written notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such Subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease.
2.38Contracts Affecting Capital. There are no transactions, arrangements or other relationships between and/or among the Company, any of its affiliates (as such term is defined in Rule 405 of the Securities Act Regulations) and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity that could reasonably be expected to materially affect the Company’s or its Subsidiaries’ liquidity or the availability of or requirements for their capital resources required to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus which have not been described as required.
2.39Loans to Directors or Officers. There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees or indebtedness by the Company or its Subsidiaries to or for the benefit of any of the officers or directors of the Company, its Subsidiaries or any of their respective family members, except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
2.40Smaller Reporting Company. As of the time of filing of the Registration Statement, the Company was a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act Regulations.
2.41Industry Data. The statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are reliable and accurate or represent the Company’s good faith estimates that are made on the basis of data derived from such sources.
2.42Emerging Growth Company. From the time of the initial confidential submission of the Registration Statement to the Commission (or, if earlier, the first date on which the Company engaged directly in or through any person authorized to act on its behalf in any Testing-the Waters Communication) through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the Securities Act (an “Emerging Growth Company”). “Testing-the-Waters Communication” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.
2.43Testing-the-Waters Communications. The Company has not: (i) alone engaged in any Testing-the-Waters Communications, other than Testing-the-Waters Communications with the written consent of the Representative and with entities that are qualified institutional buyers within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities Act; and (ii) authorized anyone other than the Representative to engage in Testing-the-Waters Communications. The Company confirms that the Representative has been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters Communications other than those listed on Schedule 2-B hereto. “Written Testing-the-Waters Communication” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act.
2.44Electronic Road Show. The Company has made available a Bona Fide Electronic Road Show in compliance with Rule 433(d)(8)(ii) of the Securities Act Regulations such that no filing of any “road show” (as defined in Rule 433(h) of the Securities Act Regulations) is required in connection with the Offering.
2.45Margin Securities. The Company owns no “margin securities” as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of Offering will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Common Stock to be considered a “purpose credit” within the meanings of Regulation T, U or X of the Federal Reserve Board.
2.46Regulatory Filings. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, neither the Company nor any of its Subsidiaries has failed to file with the applicable Governmental Authority any required filing, declaration, listing, registration, report or submission, except for such failures that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Change; except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, all such filings, declarations, listings, registrations, reports or submissions were in material compliance with applicable laws when filed and no deficiencies have been asserted by any applicable regulatory authority with respect to any such filings, declarations, listings, registrations, reports or submissions, except for any deficiencies that, individually or in the aggregate, would not result in a Material Adverse Change.
2.47Environmental Laws. Except as set forth in the Registration Statement, the Pricing Disclosure Package or the Prospectus, the Company and its Subsidiaries (i) are in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations, decisions and orders relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws ”); (ii) have received and are in compliance with all material permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses as described in the Registration Statement, the Pricing Disclosure Package or the Prospectus; and (iii) have not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except, in the case of any of clauses (i), (ii) or (iii) above, for any such failure to comply or failure to receive required permits, licenses, other approvals or liability as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.
2.48Cybersecurity. The Company and its Subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate and perform in all material respects as required in connection with the operation of the business of the Company and its Subsidiaries as currently conducted, and, to the knowledge of the Company, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants. The Company and its Subsidiaries have implemented commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data, including Personal Data (as defined herein), used in connection with their businesses. “Personal Data” means: (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by General Data Protection Regulation (“GDPR”); and (iv) any other piece of information that allows the identification of such natural person, or
his or her family, or permits the collection or analysis of any data related to an identified person’s health or sexual orientation. Except as disclosed in the Registration Statement, the Pricing Disclosure Package or the Prospectus, there have been no material breaches, violations, outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify any other person, nor any material incidents under internal review or investigations relating to the same. The Company and its Subsidiaries are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation or modification.
2.49Compliance with Data Privacy Laws. The Company and its Subsidiaries are, and at all prior times were, in material compliance with all applicable state, federal and foreign data privacy and security laws and regulations (collectively, the “Privacy Laws”). To ensure compliance with the Privacy Laws, the Company and its Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”). The Company and its Subsidiaries have, to the knowledge of the Company, at all times made all material disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such material disclosures made or contained in any Policy have, to the knowledge of the Company, been materially inaccurate or in violation of any applicable laws and regulatory rules or requirements in any material respect. The Company further certifies that neither it nor any Subsidiary: (i) has received written notice of any actual or potential liability under or relating to, or actual or potential material violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any material investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any material obligation or liability under any Privacy Law.
3.Covenants of the Company. The Company covenants and agrees as follows:
3.1Amendments to Registration Statement. The Company shall deliver to the Representative, prior to filing, any amendment or supplement to the Registration Statement or Prospectus proposed to be filed after the Effective Date and not file any such amendment or supplement to which the Representative shall reasonably object in writing.
3.2Federal Securities Laws.
3.2.1.Compliance. The Company, subject to Section 3.2.2, shall comply with the requirements of Rule 430A of the Securities Act Regulations, and will notify the Representative promptly, and confirm the notice in writing: (i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed; (ii) of the receipt of any comments from the Commission; (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information; (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, or of the suspension of the qualification of the Public Securities for offering or sale in any jurisdiction, or of the initiation or, to the Company’s knowledge, threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(d) or 8(e) of the Securities Act concerning the Registration Statement; and (v) if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the Offering of the Public Securities. The Company shall effect all filings required under Rule 424(b) of the Securities Act
Regulations, in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Company shall use its best efforts to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment.
3.2.2.Continued Compliance. The Company shall comply with the Securities Act, the Securities Act Regulations, the Exchange Act and the Exchange Act Regulations so as to permit the completion of the distribution of the Public Securities as contemplated in this Agreement and in the Registration Statement, the Pricing Disclosure Package and the Prospectus. If at any time when a prospectus relating to the Public Securities is (or, but for the exception afforded by Rule 172 of the Securities Act Regulations (“Rule 172”), would be) required by the Securities Act to be delivered in connection with sales of the Public Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to: (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) amend or supplement the Pricing Disclosure Package or the Prospectus in order that the Pricing Disclosure Package or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances existing at the time it is delivered to a purchaser; or (iii) amend the Registration Statement or amend or supplement the Pricing Disclosure Package or the Prospectus, as the case may be, in order to comply with the requirements of the Securities Act or the Securities Act Regulations, the Company will promptly: (A) give the Representative notice of such event; (B) prepare any amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement, the Pricing Disclosure Package or the Prospectus comply with such requirements and, a reasonable amount of time prior to any proposed filing or use, furnish the Representative with copies of any such amendment or supplement; and (C) file with the Commission any such amendment or supplement; provided that the Company shall not file or use any such amendment or supplement to which the Representative or Representative Counsel shall reasonably object. The Company will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. The Company has given the Representative notice of any filings made pursuant to the Exchange Act or the Exchange Act Regulations within 48 hours prior to the Applicable Time. The Company shall give the Representative notice of its intention to make any such filing from the Applicable Time until the later of the Closing Date and the exercise in full or expiration of the Over-allotment Option specified in Section 1.2 hereof and will furnish the Representative with copies of the related document(s) a reasonable amount of time prior to such proposed filing, as the case may be, and will not file or use any such document to which the Representative or Representative Counsel shall reasonably object.
3.2.3.Exchange Act Registration. For a period of three (3) years after the date of this Agreement, the Company shall use its best reasonable efforts to maintain the registration of the Common Stock under the Exchange Act, unless the Company is taken private in a bona fide acquisition transaction. For the period of twenty-four (24) months after the date of this Agreement, the Company shall not deregister the Common Stock under the Exchange Act without the prior written consent of the Representative, which consent shall not be unreasonably withheld.
3.2.4.Free Writing Prospectuses. The Company agrees that, unless it obtains the prior written consent of the Representative, it shall not make any offer relating to the Public Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus,” or a portion thereof, required to be filed by the Company with the Commission or retained by the Company under Rule 433; provided that the Representative shall be deemed to have consented to each Issuer General Use Free Writing Prospectus hereto and any “road show that is a written communication” within the
meaning of Rule 433(d)(8)(i) that has been reviewed by the Representative. The Company represents that it has treated or agrees that it will treat each such free writing prospectus consented to, or deemed consented to, by the Underwriters as an “issuer free writing prospectus,” as defined in Rule 433, and that it has complied and will comply with the applicable requirements of Rule 433 with respect thereto, including timely filing with the Commission where required, legending and record keeping. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Underwriters and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
3.2.5.Testing-the-Waters Communications. If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at that subsequent time, not misleading, the Company shall promptly notify the Representative and shall promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.
3.3Delivery to the Underwriters of Registration Statements. The Company has delivered or made available or shall deliver or make available to the Representative and Representative Counsel, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates of experts, and upon request, will deliver to the Underwriters, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
3.4Delivery to the Underwriters of Prospectuses. The Company has delivered or made available or will deliver or make available to each Underwriter, without charge, as many copies of each Preliminary Prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the Securities Act. The Company will furnish to each Underwriter, without charge, during the period when a prospectus relating to the Public Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
3.5Effectiveness and Events Requiring Notice to the Representative. The Company shall use its best efforts to cause the Registration Statement to remain effective with a current prospectus for at least nine (9) months after the Applicable Time, and shall notify the Representative immediately and confirm the notice in writing: (i) of the effectiveness of the Registration Statement and any amendment thereto; (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding for that purpose; (iii) of the issuance by any state securities commission of any proceedings for the suspension of the qualification of the Public Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose; (iv) of the mailing and delivery to the Commission for filing of any amendment or supplement to the Registration Statement or Prospectus; (v) of
the receipt of any comments or request for any additional information from the Commission; and (vi) of the happening of any event during the period described in this Section 3.5 that, in the judgment of the Company, makes any statement of a material fact made in the Registration Statement, the Pricing Disclosure Package or the Prospectus untrue or that requires the making of any changes in: (a) the Registration Statement in order to make the statements therein not misleading; or (b) in the Pricing Disclosure Package or the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Commission or any state securities commission shall enter a stop order or suspend such qualification at any time, the Company shall use its best efforts to obtain promptly the lifting of such order.
3.6Review of Financial Statements. For a period of three (3) years after the date of this Agreement, the Company, at its expense, shall cause its regularly engaged independent registered public accounting firm to review (but not audit) the Company’s financial statements for each of the three (3) fiscal quarters immediately preceding the announcement of any quarterly financial information.
3.7Listing. The Company shall use its best reasonable efforts to maintain the listing of the Common Stock (including the Public Securities) on the Exchange for at least three (3) years from the date of this Agreement.
3.8Financial Public Relations Firm. As of the Effective Date, the Company shall have retained a financial public relations firm reasonably acceptable to the Representative and the Company, which firm shall be experienced in assisting issuers in initial public offerings of securities and in their relations with their security holders, and shall retain such firm or another firm reasonably acceptable to the Representative for a period of not less than two (2) years after the Effective Date.
3.9Reports to the Representative.
3.9.1.Periodic Reports, etc. For a period of two (2) years after the date of this Agreement, the Company shall furnish or make available to the Representative copies of such financial statements and other periodic and special reports as the Company from time to time furnishes generally to holders of any class of its securities and also promptly furnish or make available to the Representative: (i) a copy of each periodic report the Company shall be required to file with the Commission under the Exchange Act and the Exchange Act Regulations; (ii) a copy of every press release and every news item and article with respect to the Company or its affairs which was released by the Company; (iii) a copy of each Form 8-K prepared and filed by the Company; (iv) a copy of each registration statement filed by the Company under the Securities Act; and (v) such additional documents and information with respect to the Company and the affairs of any future Subsidiaries of the Company as the Representative may from time to time reasonably request; provided the Representative shall sign, if requested by the Company, a Regulation FD compliant confidentiality agreement which is reasonably acceptable to the Representative and Representative Counsel in connection with the Representative’s receipt of such information. Documents filed with the Commission pursuant to its EDGAR system (or with respect to articles and press releases, posted on the Company’s website) shall be deemed to have been delivered to the Representative pursuant to this Section 3.9.1.
3.9.2.Transfer Agent; Transfer Sheets. For a period of one (1) year after the date of this Agreement, the Company shall retain a transfer agent and registrar acceptable to the Representative (the “Transfer Agent”) and shall furnish to the Representative at the Company’s sole cost and expense such transfer sheets of the Company’s securities as the Representative may reasonably request, including the daily and monthly consolidated transfer sheets of the Transfer Agent and DTC. VStock Transfer, LLC is acceptable to the Representative to act as Transfer Agent for the Common Stock.
3.9.3.Trading Reports. During such time as the Public Securities are listed on the Exchange, the Company shall provide, if available and upon the Representative’s request, to the
Representative, at the Company’s expense, such reports published by the Exchange relating to price trading of the Public Securities, as the Representative shall reasonably request. Documents made freely available by the Exchange through its website shall be deemed to have been delivered to the Representative pursuant to this Section 3.9.3.
3.10Payment of Expenses
3.10.1.General Expenses Related to the Offering. The Company hereby agrees to pay on each of the Closing Date and the Option Closing Date, if any, to the extent not paid at the Closing Date, all expenses incident to the performance of the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and communication expenses relating to the registration of the Public Securities to be sold in the Offering (including the Option Shares) with the Commission; (b) all Public Filing System filing fees associated with the review of the Offering by FINRA; (c) all fees and expenses relating to the listing of such Public Securities on the Exchange; (d) all fees, expenses and disbursements relating to the registration or qualification of the Public Securities under the “blue sky” securities laws of such states and other jurisdictions as the Representative may reasonably designate (including, without limitation, all filing and registration fees); (e) all fees, expenses and disbursements relating to the registration, qualification or exemption of the Public Securities under the securities laws of such foreign jurisdictions as the Representative may reasonably designate; (f) the costs of preparing, printing and delivering certificates representing the Public Securities, if any; (g) fees and expenses of the transfer agent, clearing firm, and registrar for the Common Stock; (h) stock transfer and/or stamp taxes, if any, payable upon the transfer of securities from the Company to the Underwriters; (i) the fees and expenses of the Company’s accountants; (j) the fees and expenses of the Company’s legal counsel and other agents and representatives of the Company; (k) the costs of preparing, printing, mailing and delivering the Registration Statement, the preliminary and final prospectus contained therein and amendments thereto, post-effective amendments and supplements thereto, this Agreement and related documents (all in such quantities as the Representative may reasonably require); (l) reasonable and documented fees and expenses of Representative Counsel; (m) the costs associated with the Underwriter’s use of Ipreo’s book-building, prospectus tracking and compliance software for the Offering; (n) the Underwriters’ actual accountable “road show” expenses for the Offering; (o) the costs of any “due diligence” meetings; (p) the costs of background checks of the Company’s officers and directors; and (q) the costs of preparation of bound volumes and Lucite cube mementos. The expenses to be paid by the Company and reimbursed to the Underwriters (“Accountable Out-of-Pocket Expenses”) under this Section 3.10.1 shall not exceed $150,000 without the prior approval of the Company.
3.10.2.The Company has advanced an amount of $[50,000] (the “Advance”) to the Representative in anticipation of any Accountable Out-of-Pocket Expenses to be incurred by the Representative.
3.10.3.Non-accountable Expenses. The Company further agrees that, in addition to the expenses payable pursuant to Section 3.10.1, on the Closing Date it shall pay to the Representative, by deduction from the net proceeds of the Offering contemplated herein, a non-accountable expense allowance equal to two percent (2.0%) of the gross proceeds received by the Company from the sale of the Firm Shares and Option Shares, less the Advance (as such term is defined in Section 3.10.2 hereof), provided, however, that in the event that the Offering is terminated under Section 8 hereof, the Company agrees to reimburse the Underwriters pursuant to Section 8.3 hereof.
3.11Application of Net Proceeds. The Company shall apply the net proceeds from the Offering received by it in a manner consistent with the application thereof described under the caption “Use of Proceeds” in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
3.12Delivery of Earnings Statements to Security Holders. The Company shall make generally available to its security holders as soon as practicable, but not later than the first day of the 15th full calendar month following the date of this Agreement, an earnings statement (which need not be certified by an independent registered public accounting firm unless required by the Securities Act or the Securities Act Regulations, but which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Securities Act) covering a period of at least 12 consecutive months beginning after the date of this Agreement, provided that the Company will be deemed to have furnished such earnings statement to its security holders by Exchange Act reports that are filed with the Commission and available on the EDGAR system.
3.13Stabilization. Neither the Company nor, to its knowledge, any of its employees, directors or stockholders (without the consent of the Representative) has taken or shall take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected to cause or result in, under Regulation M of the Exchange Act, or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Public Securities.
3.14Internal Controls. Except to the extent disclosed in the Registration Statement, Pricing Disclosure Package and Prospectus, the Company shall maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
3.15Accountants. As of the date of this Agreement, the Company has retained an independent registered public accounting firm reasonably acceptable to the Representative, and the Company shall continue to retain a nationally recognized independent registered public accounting firm for a period of at least three (3) years after the date of this Agreement. The Representative acknowledges that the Auditor is acceptable to the Representative.
3.16FINRA. For a period of 90 days from the later of the Closing Date or any Option Closing Date, the Company shall advise the Representative (who shall make an appropriate filing with FINRA) if it is or becomes aware that: (i) any officer or director of the Company; (ii) any beneficial owner of 10% or more of any class of the Company's securities prior to the Offering; or (iii) any beneficial owner of 10% or more of the Company's unregistered equity securities which were acquired during the 180 days immediately preceding the filing of the Registration Statement is or becomes an affiliate or associated person of a Participating Member in the Offering (as determined in accordance with the rules and regulations of FINRA).
3.17No Fiduciary Duties. The Company acknowledges and agrees that the Underwriters’ responsibility to the Company is solely contractual in nature and that none of the Underwriters or their affiliates or any selling agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement.
3.18Company Lock-Up Agreements.
3.18.1.Restriction on Sales of Capital Stock. The Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Representative, it will not, for a period of 180 days after the Effective Date (the “Lock-Up Period”): (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the
Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the Commission relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company, other than a registration statement on Form S-8 for employee benefit plans described in the Registration Statement, the Pricing Disclosure Package and the Prospectus; or (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company, whether any such transaction described in clause (i), (ii), or (iii) above is to be settled by delivery of shares of capital stock of the Company or such other securities, in cash or otherwise.
The restrictions contained in this Section 3.18.1 shall not apply to: (i) the shares of Common Stock to be sold hereunder and the Representative’s Warrant issuable pursuant to this Agreement; (ii) the issuance by the Company of shares of Common Stock upon the exercise of a stock option or warrant outstanding on the Effective Date, which is disclosed in the Registration Statement, Pricing Disclosure Package and Prospectus, provided that such options and warrants have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price of such securities or to extend the term of such securities; (iii) the issuance by the Company of shares of capital stock of the Company, stock options, or other stock-based awards under any equity compensation plan of the Company in effect on the Effective Date; (iv) issuance of Common Stock in connection with a transaction with an unaffiliated third party that includes a bona fide commercial relationship (including joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property license agreements) or any acquisition of assets or acquisition of not less than a majority or controlling portion of the equity of another entity; or (v) transfers by a stockholder (A) by bona fide gift, (B) by will or intestacy to the spouse, parents, siblings, first cousins or any lineal descendant of such stockholder or such stockholder’s spouse, including step relationships and relationships by adoption (each a, “family member”), (C) to any trust for the benefit of such stockholder or a family member of such stockholder, (D) to the estate of such stockholder, or (E) to any affiliate of such stockholder or by distribution to any partners, members or stockholders of such stockholder, provided (x) the aggregate number of Common Stock issued pursuant to clause (iv) above shall not exceed five percent (5%) of the total number of outstanding Common Stock immediately following the issuance and sale of the Firm Shares pursuant hereto and (y) that the recipient of any such Common Stock or other securities issued or granted pursuant to each of clauses (ii), (iii), and (iv) above during the Lock-Up Period shall enter into an agreement substantially in the form attached hereto as Exhibit B.
3.19Release of D&O Lock-up Period. If the Representative, in its sole discretion, agrees to release or waive the restrictions set forth in the Lock-Up Agreements described in Section 2.24 hereof for an officer or director of the Company and provide the Company with notice of the impending release or waiver at least three (3) Business Days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit C hereto through a major news service at least two (2) Business Days before the effective date of the release or waiver.
3.20Blue Sky Qualifications. The Company shall use its reasonable best efforts, in cooperation with the Underwriters, if necessary, to qualify the Public Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representative may designate with the consent of the Company, and to maintain such qualifications in effect so long as required to complete the distribution of the Public Securities; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.
3.21Reporting Requirements. The Company, during the period when a prospectus relating to the Public Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and Exchange Act Regulations. Additionally, the Company shall report the use of proceeds from the issuance of the Public Securities as may be required under Rule 463 under the Securities Act Regulations.
3.22Emerging Growth Company Status. The Company shall promptly notify the Representative if the Company ceases to be an Emerging Growth Company at any time prior to the later of: (i) completion of the distribution of the Public Securities within the meaning of the Securities Act; or (ii) 15 days following the completion of the Lock-Up Period.
4.Conditions of Underwriters’ Obligations. The obligations of the Underwriters to purchase and pay for the Public Securities, as provided herein, shall be subject to: (i) the continuing accuracy in all material respects of the representations and warranties of the Company as of the Applicable Time and as of each of the Closing Date and the Option Closing Date, if any; (ii) the accuracy of the statements of officers of the Company made pursuant to the provisions hereof; (iii) the performance by the Company of its obligations hereunder; and (iv) the following conditions:
4.1Regulatory Matters.
4.1.1.Effectiveness of Registration Statement; Rule 430A Information. The Registration Statement has become effective not later than 5:30 p.m., Eastern time, on the date of this Agreement or such later date and time as shall be consented to in writing by you, and, at each of the Closing Date and any Option Closing Date, no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of any Preliminary Prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated by the Commission. The Company has complied with each request (if any) from the Commission for additional information. The Prospectus containing the Rule 430A Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) (without reliance on Rule 424(b)(8)) or a post-effective amendment providing such information shall have been filed with, and declared effective by, the Commission in accordance with the requirements of Rule 430A.
4.1.2.FINRA Clearance. On or before the date of this Agreement, the Representative shall have received clearance from FINRA as to the amount of compensation allowable or payable to the Underwriters as described in the Registration Statement.
4.1.3.Exchange Stock Market Clearance. On the Closing Date, the Common Stock shall have been approved for listing on the Exchange, subject only to official notice of issuance. On the first Option Closing Date (if any), the Common Stock, including the Option Shares subject to such Option Closing Date, shall have been approved for listing on the Exchange, subject only to official notice of issuance.
4.2Company Counsel Matters.
4.2.1.Closing Date Opinion of U.S. Securities Counsel. On the Closing Date, the Representative shall have received the opinion and a written statement providing certain “10b-5” negative assurances, in each case, of Law Office of Clifford J. Hunt, P.A., counsel to the Company, with respect to certain legal matters as to U.S. federal securities and New York State law, dated the Closing Date and addressed to the Representative, in form and substance reasonably satisfactory to the Representative.
4.2.2.Option Closing Date Opinions of Counsel. On the Option Closing Date, if any, the Representative shall have received the opinion and a written statement providing certain “10b-5” negative assurances, in each case, of Law Office of Clifford J. Hunt, P.A., dated the Option Closing Date, relating to the Option Shares to be purchased on such date, addressed to the Representative and in form and substance reasonably satisfactory to the Representative, confirming as of the Option Closing Date, the statements made by such counsel in its opinion delivered on the Closing Date in relation to the Option Shares.
4.2.3.Reliance. In rendering such opinions, such counsel may rely: (i) as to matters involving the application of laws other than the laws of the United States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to the Representative) of other counsel reasonably acceptable to the Representative, familiar with the applicable laws; and (ii) as to matters of fact, to the extent they deem proper, on certificates or other written statements of officers of the Company and officers of departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company, provided that copies of any such statements or certificates shall be delivered to Representative Counsel if requested.
4.3Comfort Letters.
4.3.1.Cold Comfort Letter. At the time this Agreement is executed, you shall have received a cold comfort letter from the Auditor containing statements and information of the type customarily included in accountants’ comfort letters with respect to the financial statements and certain financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus, addressed to the Representative and in form and substance satisfactory in all respects to you and to the Auditor, dated as of the date of this Agreement.
4.3.2.Bring-down Comfort Letter. At each of the Closing Date and the Option Closing Date, if any, the Representative shall have received from the Auditor a letter, dated as of the Closing Date or the Option Closing Date, as applicable, to the effect that the Auditor reaffirms the statements made in the letter furnished pursuant to Section 4.3.1, except that the specified date referred to shall be a date not more than three (3) Business Days prior to the Closing Date or the Option Closing Date, as applicable.
4.4Officers’ Certificates.
4.4.1.Officers’ Certificate. The Company shall have furnished to the Representative a certificate, dated the Closing Date and any Option Closing Date (if such date is other than the Closing Date), of its Chief Executive Officer and its Chief Financial Officer stating on behalf of the Company and not in individual capacities that: (i) such officers have carefully examined the Registration Statement, the Pricing Disclosure Package, any Issuer Free Writing Prospectus and the Prospectus and, in their opinion, the Registration Statement and each amendment thereto, as of the Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date) did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading, and the Pricing Disclosure Package, as of the Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), any Issuer Free Writing Prospectus as of its date and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), and the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading; (ii) since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the Pricing
Disclosure Package or the Prospectus; (iii) to the best of their knowledge after reasonable investigation, as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), the representations and warranties of the Company in this Agreement are true and correct in all material respects (except for those representations and warranties which refer to facts existing at a specific date, which shall be true and correct as of such date), and the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date (or any Option Closing Date if such date is other than the Closing Date); and (iv) there has not been, subsequent to the date of the most recent audited financial statements included or incorporated by reference in the Pricing Disclosure Package, any Material Adverse Change, except as set forth in the Prospectus.
4.4.2.Secretary’s Certificate. At each of the Closing Date and the Option Closing Date, if any, the Representative shall have received a certificate of the Company signed by the Secretary of the Company, dated the Closing Date or the Option Date, respectively, certifying on behalf of the Company and not in an individual capacity: (i) that each of the Charter and the Bylaws is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions of the Company’s Board of Directors relating to the Offering are in full force and effect and have not been modified; (iii) as to the accuracy and completeness of all correspondence between the Company or its counsel and the Commission; and (iv) as to the incumbency of the officers of the Company. The documents referred to in such certificate shall be attached to such certificate.
4.5No Material Changes. Prior to and on each of the Closing Date and each Option Closing Date, if any: (i) there shall have been no Material Adverse Change from the latest dates as of which such condition is set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (ii) no action, suit or proceeding, at law or in equity, shall have been pending or threatened against the Company or any Insider before or by any court or federal, state or foreign commission, board or other administrative agency wherein an unfavorable decision, ruling or finding would reasonably be expected to result in a Material Adverse Change, except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (iii) no stop order shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission; and (iv) the Registration Statement, the Pricing Disclosure Package and the Prospectus and any amendments or supplements thereto shall contain all material statements which are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations and shall conform in all material respects to the requirements of the Securities Act and the Securities Act Regulations, and neither the Registration Statement, the Pricing Disclosure Package nor the Prospectus nor any amendment or supplement thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
4.6Delivery of Agreements.
4.6.1.Lock-Up Agreements. On or before the date of this Agreement, the Company shall have delivered to the Representative executed copies of the Lock-Up Agreements from each of the persons listed in Schedule 3 hereto.
4.6.2.Representative’s Warrants. At the Closing Date, the Representative’s Warrants and, as to each Option Closing Date, if any, the additional Representative’s Warrants, in definitive form, in such denominations and registered in such names as the Representative or its designees request, shall have been delivered to the Representative.
4.7Additional Documents. At the Closing Date and at each Option Closing Date (if any), Representative Counsel shall have been furnished with such documents and opinions as it may reasonably require in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the
issuance and sale of the Public Securities and the Representative’s Warrant as herein contemplated shall be satisfactory in form and substance to the Representative and Representative Counsel.
5.Indemnification.
5.1Indemnification of the Underwriters.
5.1.1.General. Subject to the conditions set forth below, the Company agrees to indemnify and hold harmless each Underwriter, its affiliates and each of its and their respective directors, officers, members, employees, representatives, partners, shareholders, affiliates, counsel and agents and each person, if any, who controls any such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively the “Underwriter Indemnified Parties,” and each an “Underwriter Indemnified Party”), against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all legal or other expenses, except as otherwise expressly provided in this Agreement, reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and the Company or between any of the Underwriter Indemnified Parties and any third party, or otherwise) to which they or any of them may become subject under the Securities Act, the Exchange Act or any other statute or at common law or otherwise or under the laws of foreign countries (a “Claim”), arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in: (A) the Registration Statement, the Pricing Disclosure Package, any Preliminary Prospectus, the Prospectus, or in any Issuer Free Writing Prospectus or in any Written Testing-the-Waters Communication (as from time to time each may be amended and supplemented); (B) any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the Offering, including any “road show” or investor presentations made to investors by the Company (whether in person or electronically); or (C) any application or other document or written communication (in this Section 5, collectively called “application”) executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Public Securities and Representative’s Warrant under the securities laws thereof or filed with the Commission, any state securities commission or agency, the Exchange or any other national securities exchange; or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, unless such statement or omission was made in reliance upon, and in conformity with, the Underwriters’ Information. With respect to any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement, Pricing Disclosure Package or Prospectus, the indemnity agreement contained in this Section 5.1.1 shall not inure to the benefit to any Underwriter Indemnified Party to the extent that any loss, liability, claim, damage or expense of such Underwriter Indemnified Party results from the fact that a copy of the Prospectus was not given or sent to the person asserting any such loss, liability, claim or damage at or prior to the written confirmation of sale of the Public Securities to such person as required by the Securities Act and the Securities Act Regulations, and if the untrue statement or omission has been corrected in the Prospectus. The Company also agrees that it will reimburse each Underwriter Indemnified Party for all fees and expenses (including, but not limited to, any and all legal or other expenses, except as otherwise expressly provided in this Agreement, reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and the Company or between any of the Underwriter Indemnified Parties and any third party, or otherwise) (collectively, the “Expenses”), and further agrees wherever and whenever possible to advance payment of Expenses as they are incurred by an Underwriter Indemnified Party in investigating, preparing, pursuing or defending any Claim.
5.1.2.Procedure. If any action is brought against an Underwriter Indemnified Party in respect of which indemnity may be sought against the Company pursuant to Section 5.1.1, such Underwriter Indemnified Party shall promptly notify the Company in writing of the institution of such action and the
Company shall have the right to assume the defense of such action, including the employment and payment of fees of counsel designated by the Company (subject to the reasonable approval of such Underwriter Indemnified Party). Such Underwriter Indemnified Party shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Underwriter Indemnified Party unless (i) the employment of such counsel at the expense of the Company shall have been authorized in writing by the Company in connection with the defense of such action, or (ii) the Company shall not have employed counsel to have charge of the defense of such action, or (iii) such indemnified party or parties shall have been advised that in the reasonable opinion of counsel there may be defenses available to it or them which are different from or additional to those available to the Company (in which case the Company shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events the reasonable fees and expenses of not more than one additional firm of attorneys selected by the Underwriter Indemnified Party (in addition to local counsel) shall be borne by the Company. Notwithstanding anything to the contrary contained herein, if any Underwriter Indemnified Party shall assume the defense of such action as provided above, the Company shall have the right to approve the terms of any settlement of such action, which approval shall not be unreasonably withheld. The Company shall not be liable for any settlement of any action effected without its consent (which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the Underwriters (which shall not be unreasonably withheld), settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action in respect of which advancement, reimbursement, indemnification or contribution may be sought hereunder (whether or not such Underwriter Indemnified Party is a party thereto) unless such settlement, compromise, consent or termination: (i) includes an unconditional release of each Underwriter Indemnified Party, reasonably acceptable to such Underwriter Indemnified Party, from all liabilities, expenses and claims arising out of such action for which indemnification or contribution may be sought; and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Underwriter Indemnified Party.
5.2Indemnification of the Company. Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and persons who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense described in the foregoing indemnity from the Company to the several Underwriters, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Pricing Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication or any amendment or supplement thereto or in any application, in reliance upon, and in strict conformity with, the Underwriters’ Information. In case any action shall be brought against the Company or any other person so indemnified based on any Preliminary Prospectus, the Registration Statement, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or any application, and in respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the several Underwriters by the provisions of Section 5.1.2. The Company agrees promptly to notify the Representative of the commencement of any litigation or proceedings against the Company or any of its officers, directors or any person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in connection with the issuance and sale of the Public Securities or in connection with the Registration Statement, the Pricing Disclosure Package, the Prospectus, or any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication, provided that failure by the Company to so notify the Representative shall not relieve any Underwriter from any obligation or liability which such Underwriter may have on account of this Section 5 or otherwise to the Company, except to the extent such Underwriter is materially prejudiced as a proximate result of such failure.
5.3Contribution.
5.3.1.Contribution Rights. If the indemnification provided for in this Section 5 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 5.1 or 5.2 in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof: (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other, from the Offering of the Public Securities; or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriters, on the other, with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other, with respect to such Offering shall be deemed to be in the same proportion as the total net proceeds from the Offering of the Public Securities purchased under this Agreement (before deducting expenses) received by the Company, as set forth in the table on the cover page of the Prospectus, on the one hand, and the total underwriting discounts and commissions received by the Underwriters with respect to the Public Securities purchased under this Agreement, as set forth in the table on the cover page of the Prospectus, on the other hand. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 5.3.1 were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage, expense, or liability, or action, investigation or proceeding, referred to above in this Section 5.3.1 shall be deemed to include, for purposes of this Section 5.3.1, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing to defend or defending against or appearing as a third party witness in respect of or otherwise incurred in connection with any such loss, claim, damage, expense, liability, action, investigation or proceeding. Notwithstanding the provisions of this Section 5.3.1 in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with respect to the Offering of the Public Securities exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, act or failure to act. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
5.3.2.Contribution Procedure. Within 15 days after receipt by any party to this Agreement (or its representative) of notice of the commencement of any action, suit or proceeding, such party will, if a claim for contribution in respect thereof is to be made against another party (a “contributing party”), notify the contributing party of the commencement thereof, but the failure to so notify the contributing party will not relieve it from any liability which it may have to any other party other than for contribution hereunder. In case any such action, suit or proceeding is brought against any party, and such party notifies a contributing party or its representative of the commencement thereof within the aforesaid 15 days, the contributing party will be entitled to participate therein with the notifying party and any other contributing party similarly notified. Any such contributing party shall not be liable to any party seeking contribution on account of any settlement of any claim, action or proceeding affected by such party seeking contribution without the written consent of such contributing party. The contribution provisions contained in this Section 5.3.2 are intended to supersede, to the extent permitted by law, any right to contribution
under the Securities Act, the Exchange Act or otherwise available. Each Underwriter’s obligations to contribute as provided in this Section 5.3.2 are several and not joint.
6.Default by an Underwriter.
6.1Default Not Exceeding 10% of Firm Shares or Option Shares. If any Underwriter or Underwriters shall default in its or their obligations to purchase the Firm Shares or the Option Shares, if the Over-allotment Option is exercised hereunder, and if the number of the Firm Shares or Option Shares with respect to which such default relates does not exceed in the aggregate ten percent (10%) of the number of Firm Shares or Option Shares that all Underwriters have agreed to purchase hereunder, then such Firm Shares or Option Shares to which the default relates shall be purchased by the non-defaulting Underwriters in proportion to their respective commitments hereunder.
6.2Default Exceeding 10% of Firm Shares or Option Shares. In the event that the default addressed in Section 6.1 relates to more than ten percent (10%) of the Firm Shares or Option Shares, you may in your discretion arrange for yourself or for another party or parties to purchase such Firm Shares or Option Shares to which such default relates on the terms contained herein. If, within one (1) Business Day after such default relating to more than ten percent (10%) of the Firm Shares or Option Shares, you do not arrange for the purchase of such Firm Shares or Option Shares, then the Company shall be entitled to a further period of one (1) Business Day within which to procure another party or parties reasonably satisfactory to you to purchase said Firm Shares or Option Shares on such terms. In the event that neither you nor the Company arrange for the purchase of the Firm Shares or Option Shares to which a default relates as provided in this Section 6, this Agreement will automatically be terminated by you or the Company without liability on the part of the Company (except as provided in Sections 3.10 and 5 hereof) or the several Underwriters (except as provided in Section 5 hereof); provided, however, that if such default occurs with respect to the Option Shares, this Agreement will not terminate as to the Firm Shares; and provided, further, that nothing herein shall relieve a defaulting Underwriter of its liability, if any, to the other Underwriters and to the Company for damages occasioned by its default hereunder.
6.3Postponement of Closing Date. In the event that the Firm Shares or Option Shares to which the default relates are to be purchased by the non-defaulting Underwriters, or are to be purchased by another party or parties as aforesaid, you or the Company shall have the right to postpone the Closing Date or Option Closing Date for a reasonable period, but not in any event exceeding five (5) Business Days, in order to effect whatever changes may thereby be made necessary in the Registration Statement, the Pricing Disclosure Package or the Prospectus or in any other documents and arrangements, and the Company agrees to file promptly any amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus that in the opinion of Representative Counsel may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any party substituted under this Section 6 with like effect as if it had originally been a party to this Agreement with respect to such Firm Shares or Option Shares (if any).
7.Additional Covenants.
7.1Board Composition and Board Designations. The Company shall ensure that: (i) the qualifications of the persons serving as members of the Board of Directors and the overall composition of the Board of Directors comply with the Sarbanes-Oxley Act, with the Exchange Act and with the listing rules of the Exchange or any other national securities exchange, as the case may be, in the event the Company seeks to have its Common Stock listed on another exchange or quoted on an automated quotation system; and (ii) if applicable, at least one (1) member of the Audit Committee of the Board of Directors qualifies as an “audit committee financial expert,” as such term is defined under Regulation S-K and the listing rules of the Exchange.
7.2Tail Financing. In the event that at any time prior to the second (2nd) anniversary of the Closing Date the Company, or any of its affiliates, enters into any transaction (including, without limitation, any merger, consolidation, acquisition, financing, joint venture or other arrangement) with any party introduced, directly or indirectly, to the Company by the Representative, directly or indirectly, during such period, the Representative shall be entitled to a transaction fee, payable at the closing thereof, equal to a percentage of the consideration or value received by the Company and/or its stockholders as follows:
5% of the first $1,000,000,
4% of the next $1,000,000,
3% of the next $1,000,000,
2% of the next $1,000,000, and
1% of all amounts in excess of $4,000,000.
The Company agrees to pay to the Representative the finder’s fee during the aforementioned time period, even in situations where the consummation of the transaction at issue culminated not directly from the finder’s initial introduction but indirectly from a chain of introductions initiated by the finder’s introduction.
8.Effective Date of this Agreement and Termination Thereof.
8.1Effective Date. This Agreement shall become effective when both the Company and the Representative have executed the same and delivered counterparts of such signatures to the other party.
8.2Termination. The Representative shall have the right to terminate this Agreement at any time prior to any Closing Date if: (i) any domestic or international event or act or occurrence has materially disrupted, or in your reasonable judgment will in the immediate future materially disrupt, general securities markets in the United States; (ii) trading on the New York Stock Exchange or the Nasdaq Stock Market LLC shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required by FINRA or by order of the Commission or any other government authority having jurisdiction; (iii) the United States shall have become involved in a new war or an increase in major hostilities; (iv) a banking moratorium has been declared by a New York State or federal authority; (v) a moratorium on foreign exchange trading has been declared which materially adversely impacts the United States securities markets; (vi) the Company shall have sustained a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been insured, will, in your reasonable judgment, make it inadvisable to proceed with the delivery of the Firm Shares or Option Shares; (vii) the Company is in material breach of any of its representations, warranties or covenants hereunder; or (viii) the Representative shall have become aware after the date hereof of a Material Adverse Change or an adverse material change in the securities market that has materially disrupted the securities market, or there shall be such a material adverse change in general financial, political or economic conditions or the effect of international conditions on the financial markets in the United States is such as to make it, in the reasonable judgment of the Representative, impracticable to proceed with the offering, sale and/or delivery of the Public Securities or to enforce contracts made by the Underwriters for the sale of the Public Securities.
8.3Expenses. Notwithstanding anything to the contrary in this Agreement, except in the case of a default by the Underwriters, pursuant to Section 6.2 above, in the event that this Agreement shall be terminated for any reason whatsoever, within the time specified herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Underwriters their actual and accountable out-of-pocket and documented Accountable Out-of-Pocket Expenses related to the transactions contemplated under Section 3.10.1 herein then due and payable (including the reasonable and documented fees and disbursements of Representative Counsel) up to $150,000, less the Advance of $[50,000] already paid to the Representative. Upon demand, the Company shall pay the full amount thereof to the
Representative on behalf of the Underwriters; provided, however, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement. Notwithstanding the foregoing, any advance received by the Representative will be promptly returned to the Company to the extent not actually incurred in compliance with FINRA Rule 5110(g)(4)(A). For the avoidance of any doubt, if this Agreement is terminated pursuant to Section 6 hereof, the Company shall have no obligation to reimburse a defaulting Underwriter for any Accountable Out-of-Pocket Expenses (including the fees and expenses of its counsel) incurred by such defaulting Underwriter in connection with this Agreement and the offering contemplated hereby.
8.4Survival of Indemnification. Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Section 5 shall remain in full force and effect and shall not be in any way affected by, such election or termination or failure to carry out the terms of this Agreement or any part hereof.
8.5Representations, Warranties, Agreements to Survive. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect regardless of: (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its officers or directors or any person controlling the Company; or (ii) delivery of and payment for the Public Securities.
9.Miscellaneous.
9.1Notices. All communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be mailed (registered or certified mail, return receipt requested), personally delivered or sent by electronic transmission and confirmed and shall be deemed given when so delivered or emailed and confirmed (which may be by email) or if mailed, two (2) days after such mailing.
If to the Representative:
Network 1 Financial Securities, Inc.
2 Bridge Ave., Suite 241
Red Bank, NJ 07701
Attn: Keith Testaverde
Email: ktestaverde@Netw1.com
with a copy (which shall not constitute notice) to:
Lucosky Brookman LLP
101 Wood Avenue South, 5th Floor
Woodbridge, NJ 08830
Attn: Joseph M. Lucosky, Esq.
Email: jlucosky@lucbro.com
If to the Company:
Veri Medtech Holdings, Inc.
1660 International Dr., Ste. 600
Mclean, Virginia 22102
Attn: Joshua Green
Email: josh@verimedtech.com
with a copy (which shall not constitute notice) to:
Law Office of Clifford J. Hunt, P.A.
8200 Seminole Boulevard
Seminole, Florida 33772
Attn: Clifford J. Hunt
Email: cjh@huntlawgrp.com
9.2Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.
9.3Amendment. This Agreement may only be amended by a written instrument executed by each of the parties hereto.
9.4Entire Agreement. This Agreement (together with the other agreements and documents being delivered pursuant to or in connection with this Agreement) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
9.5Binding Effect. This Agreement shall inure solely to the benefit of and shall be binding upon the Representative, the Underwriters, the Company and the controlling persons, directors and officers referred to in Section 5 hereof, and their respective successors, legal representatives, heirs and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained. The term “successors and assigns” shall not include a purchaser, in its capacity as such, of securities from any of the Underwriters.
9.6Governing Law; Consent to Jurisdiction; Trial by Jury. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Agreement shall be brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.1 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company agrees that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
9.7Execution in Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Delivery of a signed counterpart of this Agreement by facsimile or email/pdf transmission shall constitute valid and sufficient delivery thereof.
9.8Waiver, etc. The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Agreement or any provision hereof or the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.
[Signature Page Follows]
If the foregoing correctly sets forth the understanding between the Underwriters and the Company, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
VERI MEDTECH HOLDINGS, INC.
By:
Name:Samuel Adetunji
Title: Chief Executive Officer
Confirmed as of the date first written above mentioned, on behalf of itself and as Representative of the several Underwriters named on Schedule 1 hereto:
NETWORK 1 FINANCIAL SECURITIES, INC.
By: |
|
Name: |
|
Title: |
|
SCHEDULE 1
Total Number of Firm Shares to be Purchased |
| Number of Option Shares to be Purchased if the Over-Allotment Option is Fully Exercised | |
Network 1 Financial Securities, Inc. | [·] |
| [·] |
TOTAL | [·] |
| [·] |
SCHEDULE 2-A
Pricing Information
Number of Firm Shares: [_____]
Number of Option Shares: [_____]
Public Offering Price per Firm Share: $[_____]
Public Offering Price per Option Share: $[_____]
Underwriting Discount per Firm Share: $[_____]
Underwriting Discount per Option Share: $[_____]
Proceeds to Company per Firm Share (before expenses): $[_____]
Proceeds to Company per Option Share (before expenses): $[_____]
SCHEDULE 2-B
Written Testing-the-Waters Communications
[None.]
SCHEDULE 3
List of Lock-Up Parties
[●]
Form of Representative’s Warrant
EXHIBIT B
Form of Lock-Up Agreement
(See attached)
EXHIBIT C
Form of Press Release
VERI MEDTECH HOLDINGS, INC.
[Date]
Veri Medtech Holdings, Inc. (the “Company”) announced today that Network 1 Financial Securities, Inc., acting as representative for the underwriters in the Company’s recent public offering of _______ shares of common stock of the Company, is [waiving] [releasing] a lock-up restriction with respect to _________ shares of common stock of the Company held by [certain officers or directors] [an officer or director] of the Company. The [waiver] [release] will take effect on _________, 20___, and the shares of common stock may be sold on or after such date.
This press release is not an offer or sale of the securities in the United States or in any other jurisdiction where such offer or sale is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act of 1933, as amended.
EX. 4.02
THE REGISTERED HOLDER OF THIS PURCHASE WARRANT (“PURCHASE WARRANT”) BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING [ ], 2026, WHICH IS THE COMMENCEMENT DATE OF SALES IN THE OFFERING (THE “EFFECTIVE DATE”) TO ANYONE OTHER THAN (I) NETWORK 1 FINANCIAL SECURITIES, INC., OR AN UNDERWRITER OR SELECTED DEALER IN CONNECTION WITH THE OFFERING (THE “OFFERING”), OR (II) THE BONA FIDE OFFICERS OR PARTNERS, REGISTERED PERSONS OR AFFILIATES OF NETWORK 1 FINANCIAL SECURITIES, INC. OR ANY SUCH AN UNDERWRITER OR SELECTED DEALER.
THIS PURCHASE WARRANT IS EXERCISABLE COMMENCING UPON ISSUANCE1. VOID AFTER 5:00 P.M., EASTERN TIME, [ ], 20312.
VERI MEDTECH HOLDINGS, INC.
FORM OF REPRESENTATIVE’S WARRANT
For the Purchase of [ ]3 Shares of Common Stock
1.Purchase Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of Network 1 Financial Securities, Inc. (“Holder” or “Network 1”), as registered owner of this Purchase Warrant, to Veri Medtech Holdings, Inc., a Delaware corporation (the “Company”), Holder is entitled, at any time or from time to time beginning [ ], 2026 (the “Commencement Date”), and at or before 5:00 p.m., Eastern time, [ ], 2031 (the “Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to [ ] shares (the “Warrant Shares”) of common stock, par value $0.0001 per share (the “Common Stock”) of the Company, subject to adjustment as provided in Section 6 hereof. If the Expiration Date is not a business day, then this Purchase Warrant may be exercised on the next succeeding business day in accordance with the terms herein. During the period commencing on the Commencement Date and ending on the Expiration Date, the Company agrees not to take any action that would terminate this Purchase Warrant. The Exercise Price of this Purchase Warrant is initially $[ ] per Warrant Share, equal to 120% of the initial public offering price per share of the Common Stock sold in the Offering; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Warrant Share and the number of Warrant Shares to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” shall mean the initial exercise price as provided for above or the adjusted exercise price, depending on the context. The term “business day” shall mean a day other than a Saturday, Sunday or any other day which is a federal legal holiday in the United States or any day on which the Federal Reserve Bank of New York is authorized or required by law or other governmental action to close, provided that the Federal Reserve Bank of New York shall not be deemed to be authorized or obligated to be closed due to a “shelter in place,” “non-essential employee” or similar closure of physical location at the direction of any governmental authority if the bank’s electronic funds transfer systems (including for wire transfers) are open for use by customers on such day.
Exercise.
1.1Exercise Form. In order to exercise this Purchase Warrant, the notice of exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Warrant and, unless exercised pursuant to Section 2.2 hereof, payment of the Exercise Price for the Warrant Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. If the Purchase Warrant is not exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire. Each exercise hereof shall be irrevocable Cashless Exercise. In lieu of exercising this Purchase Warrant by payment of cash or check payable to the order of the Company pursuant to
1 Insert the Closing Date.
2 Insert a date that is 5 years from commencement of sales in the initial public offering.
3 5.0% of the sum of the number of Firm Shares and Option Shares issued on the Closing Date and Option Closing Date (if any).
Section 2.1 above, Holder may elect to receive the number of Warrant Shares equal to the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this Purchase Warrant to the Company, together with the exercise form attached hereto, in which event the Company will issue to Holder a number of Warrant Shares in accordance with the following formula:
X | = | Y(A-B) |
|
| A |
Where,
X=The number of Warrant Shares to be issued to Holder;
Y=The number of Warrant Shares that would be issuable upon exercise of this Purchase Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise;
A=as applicable, the “Fair Market Value” of a share of Common Stock determined as follows: (i) the VWAP on the Trading Day immediately preceding the date of the applicable exercise form if such exercise form is
(1) both executed and delivered pursuant to Section 2.2 hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2.2 hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Exercise Form or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Exercise Form if such Exercise Form is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2.2 hereof, which Bid Price shall be shown on supporting documents provided by the Holder to the Company within two Trading Days of delivery of the exercise form, or (iii) the VWAP on the date of the applicable exercise form if the date of such exercise form is a Trading Day and such exercise form is both executed and delivered pursuant to Section 2.2 hereof after the close of “regular trading hours” on such Trading Day; and
B=The Exercise Price.
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date), or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Trading Day” means a day on which the New York Stock Exchange is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).
1.2Legend. Unless the Warrant Shares purchased under this Purchase Warrant have been registered under the Securities Act of 1933, as amended (the “Securities Act”), each certificate for such Share shall bear the following legend:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE LAW. NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE LAW WHICH, IN THE OPINION OF COUNSEL TO THE COMPANY, IS AVAILABLE.”
2.Transfer.
2.1General Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder will not for a period of one hundred eighty (180) days following the Effective Date: (a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant or the Warrant Shares issuable hereunder to anyone other than: (i) Network 1 or an underwriter or a selected dealer participating in the Offering, or (ii) the bona fide officers or partners, registered persons or affiliates of Network 1 or of any such underwriter or selected dealer, in each case in accordance with FINRA Conduct Rule 5110(e), and (b) cause this Purchase Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Purchase Warrant or the securities issuable hereunder, except as provided for in FINRA Rule 5110(e)(2). On and after 180 days after the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) business days transfer this Purchase Warrant on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Warrant Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.
2.2Restrictions Imposed by the Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until: (i) if required by applicable law, the Company has received the opinion of counsel for the Company that the securities may be transferred pursuant to an exemption from registration under the Securities Act and applicable state securities laws, or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to the offer and sale of such securities has been filed by the Company and declared effective by the Commission and compliance with applicable state securities law has been established.
3.Registration Rights.
3.1 Demand Registration at Company’s Expense. At any time during the period commencing on the Commencement Date and ending on the fifth (5th) anniversary of the Effective Date, the Holder (or Holders of at least a majority of the Warrant Shares issued or issuable upon exercise of the Purchase Warrants) may make one (1) written demand to the Company for registration under the Securities Act of all or part of the Warrant Shares (a “Demand Registration”). Within thirty (30) days of receipt of such demand, the Company shall file a registration statement on the appropriate form under the Securities Act covering such Warrant Shares and shall use its commercially reasonable efforts to cause such registration statement to become effective as promptly as practicable. All fees, costs and expenses of such Demand Registration (other than underwriting discounts and selling commissions applicable to the sale of Warrant Shares by the Holder) shall be borne by the Company.
3.2Demand Registration at Holder’s Expense. In addition to the demand registration right set forth in Section 4.1, at any time during the period commencing on the Commencement Date and ending on the fifth (5th) anniversary of the Effective Date, the Holder (or Holders of at least a majority of the Warrant Shares issued or issuable upon exercise of the Purchase Warrants) may make one (1) additional written demand to the Company for registration under the Securities Act of all or part of the Warrant Shares (an “Additional Demand Registration”). Within thirty (30) days of receipt of such demand, the Company shall file a registration statement on the appropriate form under the Securities Act covering such Warrant Shares and shall use its commercially reasonable efforts to cause such registration statement to become effective as promptly as practicable. All fees, costs and expenses of such Additional Demand Registration (including registration and filing fees, printing expenses, fees and disbursements of counsel to the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration, but excluding underwriting discounts and selling commissions) shall be borne by the Holder(s) requesting such registration.
3.3Piggyback Registration. If, at any time during the period commencing on the Commencement Date and ending on the fifth (5th) anniversary of the Effective Date, the Company proposes to register any of its equity securities under the Securities Act (other than (i) a registration on Form S-4 or Form S-8, or any successor forms thereto, or (ii) a registration of securities solely relating to an offering and sale to employees, directors or consultants of the Company pursuant to any employee stock plan or other employee benefit plan arrangement), the Company shall promptly give written notice thereof to the Holder and shall use its commercially reasonable efforts to include in such registration statement all or any part of the Warrant Shares that the Holder requests to be included therein by written notice to the Company given within fifteen (15) days after the Holder’s receipt of the Company’s notice (a “Piggyback Registration”). The Holder shall have unlimited Piggyback Registration rights during such five (5)-year period. All fees, costs and expenses of each such Piggyback Registration (other than underwriting discounts and selling commissions applicable to the sale of Warrant Shares by the Holder) shall be borne by the Company. Notwithstanding the foregoing, if the managing underwriter of any such offering determines in good faith that the number of securities to be sold in such offering is greater than the number which can be sold without adversely affecting the marketability of the offering, the managing underwriter may reduce the number of Warrant Shares to be included in such registration on a pro rata basis among all persons requesting inclusion of securities in such registration.
3.4General Registration Provisions. In connection with any registration pursuant to this Section 4, the Company shall: (a) prepare and file with the Securities and Exchange Commission (the “Commission”) such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such registration statement; (b) furnish to the Holder such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), and such other documents as the Holder may reasonably request in order to facilitate the disposition of the Warrant Shares; (c) use its commercially reasonable efforts to register or qualify such Warrant Shares under such other securities or blue sky laws of such jurisdictions as the Holder reasonably requests; and (d) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission.
4.New Purchase Warrants to be Issued.
4.1Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if exercised pursuant to Section 2.1 hereto, the Company shall cause to be delivered to the Holder without charge a new Purchase Warrant of like tenor to this Purchase Warrant in
the name of the Holder evidencing the right of the Holder to purchase the number of Warrant Shares purchasable hereunder as to which this Purchase Warrant has not been exercised or assigned.
4.2Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, determined in the sole discretion of the Company, the Company shall execute and deliver a new Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.
5.Adjustments.
5.1Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of Warrant Shares underlying the Purchase Warrant shall be subject to adjustment from time to time as hereinafter set forth provided that the Exercise Price shall not be adjusted such that it would result in the Warrant Shares being issued at a price below their par value.
5.1.1Share Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section
6.3 below, the number of outstanding shares of Common Stock is increased by a stock dividend payable in Common Stock or by a split up of the Common Stock or other similar event, then, on the effective day thereof, the number of Warrant Shares purchasable hereunder shall be increased in proportion to such increase in outstanding shares of Common Stock, and the Exercise Price shall be proportionately decreased.
5.1.2Aggregation of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding shares of Common Stock is decreased by a consolidation, combination or reclassification of the Common Stock or other similar event, then, on the effective date thereof, the number of Warrant Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding shares of Common Stock, and the Exercise Price shall be proportionately increased.
5.1.3Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Common Stock other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of the Common Stock, or in the case of any share reconstruction or amalgamation or consolidation or merger of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Common Stock), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of shares of Common Stock obtainable upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in the Common Stock covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers.
5.1.4Changes in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section 6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Warrant Shares as are stated in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the computation thereof.
5.2Substitute Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation or merger of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation or merger which does not result in any reclassification or change of the outstanding
shares of Common Stock), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to receive, upon exercise of such Purchase Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Common Stock for which such Purchase Warrant might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation or merger, sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section shall similarly apply to successive consolidations or share reconstructions or amalgamations or mergers.
5.3Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Warrant Shares upon the exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest whole number of Warrant Shares or other securities, properties or rights.
6.Reservation and Listing. The Company shall at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon exercise of the Purchase Warrants, such number of Warrant Shares or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price therefor, in accordance with the terms hereby, all Warrant Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and nonassessable and not subject to pre-emptive rights of any shareholder.
7.Certain Notice Requirements.
7.1Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holder the right to vote or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall deliver to each Holder a copy of each notice relating to such events given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders.
7.2Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company;(ii) the Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor or (iii) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or share reconstruction or amalgamation) or a sale of all or substantially all of its property, assets and business shall be proposed.
7.3Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holder of such event and change (“Price Notice”). The Price Notice shall describe the event causing the change and the method of calculating same.
7.4Transmittal of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall be deemed to have been duly made when hand delivered, mailed by express mail or private courier service or sent via email: (i) if to the registered Holder of this Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to following address or to such other address as the Company may designate by notice to the Holder:
Veri Medtech Holdings, Inc.
1660 International Dr., Ste. 600
Mclean, Virginia 22102
Attn: Joshua Green
Email: josh@verimedtech.com
with a copy (which shall not constitute notice) to:
Law Offices of Clifford J. Hunt
8200 Seminole Boulevard
Seminole, Florida 33772
Attention: Clifford Hunt
Email: cjh@huntlawgrp.com
8.Miscellaneous.
8.1Amendments. The Company and Network 1 may from time to time supplement or amend this Purchase Warrant without the approval of any of other holders of any other Purchase Warrants issued pursuant to the Underwriting Agreement in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Network 1 may jointly deem necessary or desirable in their discretion.
8.2Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Warrant.
9.3. Entire Agreement. This Purchase Warrant constitutes the entire agreement of the Company and the Holder with respect to the subject matter hereof, and supersedes all prior promises, agreements and understandings, oral and written, with respect to the subject matter hereof.
9.4Binding Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions herein contained.
9.5Governing Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and enforced in the courts located in New York, New York, or in the United States District Court located in New York, New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and the Holder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
9.6Waiver, etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No waiver of any breach, non-compliance or non- fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.
9.7Exchange Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and Network 1 enter into an agreement (“Exchange Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.
IN WITNESS WHEREOF, the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of the [ ] day of [ ], 2026.
VERI MEDTECH HOLDINGS, INC.
By:
Name: Samuel Adetunji
Title: Chief Executive Officer
NOTICE OF EXERCISE
TO: Veri Medtech Holdings, Inc.
Date: , 20
The undersigned hereby elects irrevocably to exercise the Purchase Warrant for [●] shares (the “Shares”) of common stock, par value $0.0001 per share, of Veri Medtech Holdings, Inc., a Delaware corporation (the “Company”), and hereby makes payment of $[●] (at the rate of $[●] per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been exercised.
or
The undersigned hereby elects irrevocably to convert its right to purchase [●] Shares of the Company under the Purchase Warrant for [●] Shares, as determined in accordance with the following formula:
X | = | Y(A-B) |
|
| A |
Where,
X = The number of Shares to be issued to Holder;
Y = The number of Shares for which the Purchase Warrant is being exercised;
A = The Fair Market Value of one Share (which is equal to $[●]); and
B = The Exercise Price (which is equal to $[●] per Share)
The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect to the calculation shall be resolved by the Company in its sole discretion. Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been converted.
Signature
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name:
(Print in Block Letters)
Address:
NOTICE: The signature to this form must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or any change whatsoever.
FORM OF ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the within Purchase Warrant):
FOR VALUE RECEIVED, does hereby sell, assign and transfer unto the right to purchase shares of common stock, par value $0.0001 per share, of Veri Medtech Holdings, Inc., a Delaware corporation (the “Company”), evidenced by the Purchase Warrant to and does hereby authorize the Company to transfer such right on the books of the Company.
Dated: , 20
Signature
NOTICE: The signature to this form must correspond with the name as written upon the face of the within Purchase Warrant without alteration or enlargement or any change whatsoever.
VERI MEDTECH HOLDINGS, INC.
STOCK INCENTIVE 2025 PLAN
AMENDED AND RESTATED EFFECTIVE AS OF SEPTEMBER 12, 2026
The name of the plan is the Veri Medtech Holdings, Inc. Stock Incentive 2025 Plan, as amended and restated effective as of September 12, 2026 (the “2025 Plan”). The 2025 Plan was originally effective as of September 30, 2025 and is hereby amended and restated in its entirety effective as of September 12, 2026 (the “Amendment and Restatement Date”).
Effective as of the Amendment and Restatement Date, the 2025 Plan amends, restates, supersedes and replaces in their entirety all prior stock incentive, equity compensation, stock option, restricted stock, restricted stock unit, stock unit, deferred stock, performance award and other equity-based compensation plans, programs or arrangements of the Company or any predecessor of the Company, regardless of the year adopted or established, the date of any amendment, the date of any award granted thereunder, or the name or title of such plan, program or arrangement, including, without limitation, any such plan, program or arrangement adopted or maintained in 2025, 2024, 2023 or any earlier year (collectively, the “Prior Plans”).
Effective as of the Amendment and Restatement Date, all outstanding awards granted under any Prior Plan, regardless of the date on which such award was originally granted, including awards granted prior to 2025, shall constitute “Outstanding Awards” under this 2025 Plan and shall be subject to this 2025 Plan, except to the extent that a particular provision of an applicable award agreement expressly provides otherwise or such application would be prohibited by applicable law. For the avoidance of doubt, Outstanding Awards include, without limitation, all outstanding stock options, stock appreciation rights, restricted stock, restricted stock units, stock units, deferred stock awards, performance awards and other equity-based awards granted under any Prior Plan.
The amendment, restatement, supersession and replacement of the Prior Plans and the application of this 2025 Plan to Outstanding Awards shall not, by itself, terminate, cancel, forfeit or otherwise adversely affect any Outstanding Award. Except as expressly provided in this 2025 Plan, the original grant date of each Outstanding Award shall remain unchanged for purposes of determining the applicable vesting schedule, exercise period, expiration date and other terms of such Award.
From and after the Amendment and Restatement Date, no new Award shall be granted under any Prior Plan. The 2025 Plan shall constitute the Company’s governing stock incentive plan for all new Awards and, subject to the foregoing, shall govern all Outstanding Awards.
All Awards outstanding as of the Amendment and Restatement Date, including Awards granted on the Amendment and Restatement Date, are referred to herein as “Outstanding Awards.”
The purpose of the 2025 Plan is to secure for Veri Medtech Holdings, Inc. (the “Company”) and its stockholders the benefit of the incentives inherent in stock ownership and the receipt of incentive awards by selected employees and directors of the Company and its Subsidiaries who contribute to and will be responsible for its continued long-term growth. The 2025 Plan is intended to motivate such individuals to enhance the long-term value of the Company by providing an opportunity for capital appreciation and to recognize services that contribute to the success of the Company. Capitalized terms used in the 2025 Plan shall have the meanings set forth in Section 14.
SECTION 2. 2025 PLAN ADMINISTRATION
(a) The 2025 Plan shall be administered by the Board of Directors, Executive Compensation Committee of the Board or such other committee of the Board as the Board may from time to time determine (the “Committee”).
(b) The Committee shall have the power and authority to do any or all of the following in its sole discretion: grant Awards, including the power and authority to select from among those eligible the persons to whom Awards may from time to time be granted; determine the time or times of grant of any Awards; determine the number of shares to be covered by any Award; determine the terms and conditions of any Award, including the form of settlement thereunder (whether in shares of Stock, other property, cash or a combination of the foregoing); accelerate the vesting and/or exercisability of any Award; adopt such rules, guidelines and practices for administration of the 2025 Plan and for its own acts and proceedings as it shall deem advisable; interpret the terms and provisions of the 2025 Plan and any Award; prescribe such forms and agreements as it deems advisable in connection with any Award; make all determinations it deems advisable for the administration of the 2025 Plan; decide all disputes arising in connection with the 2025 Plan; and otherwise supervise the administration of the 2025 Plan.
(c) The Committee may delegate its power and authority under the 2025 Plan to such officers or other employees of the Company or a Subsidiary, or other persons, as it determines; provided, that only the Committee shall have the power and authority to take such actions under the 2025 Plan as are required by applicable law or stock exchange requirements to be taken by Independent Directors. To the extent consistent with the foregoing, the Committee may, as part of any such delegation, provide that all or part of any such delegated powers and authorities may be further delegated to any officer, employee or person to whom the Committee could have made the delegation in the first instance. For purposes of the 2025 Plan, other than in this Section 2(c), and as used in any Award, the term “Committee” shall be deemed to include any such delegate (or subdelegate) acting within the scope of any such delegation (or subdelegation), to the extent of such delegation.
(d) All decisions and interpretations of the Committee shall be binding on all persons, including the Company, its Subsidiaries and Participants.
SECTION 3. SHARES ISSUABLE UNDER THE 2025 PLAN; MERGERS; SUBSTITUTION
(a) Shares Issuable.
(i) The number of shares of Stock (the “Share Limit”) available to be issued under the 2025 Plan, determined as of the Amendment and Restatement Date and including, for the avoidance of doubt, shares subject to all Outstanding Awards, regardless of the Prior Plan under which such Awards were originally granted or the date on which such Awards were originally granted, is 50,000,000. For purposes of the Share Limit, (A) each share subject to a Stock Award, Stock Option or SAR shall count as one (1) share; (B) shares issued under the 2025 Plan shall include only the number of shares actually issued under an Award and shall not include shares subject to an Award to the extent the Award is forfeited, expires, or is satisfied without the issuance of Stock; provided, however, that unissued shares resulting from the net settlement in Stock of a Stock Award, Stock Option or SAR, and shares retained by or delivered to the Company to satisfy any purchase or exercise price or the payment of withholding taxes in connection with a Stock Award, Stock Option or SAR, shall be treated as issued; and further provided, for the avoidance of doubt, that the purchase of shares by the Company on the open market with the proceeds of the exercise of a Stock Award or Stock Option will not increase the Share Limit; and (C) to the extent an Outstanding Award other than a Stock Award, Stock Option or SAR is forfeited, the Share Limit shall be appropriately increased consistent with clause (A) above.
For the avoidance of doubt, all Outstanding Awards originally granted under any Prior Plan, including Awards originally granted prior to 2025, shall be included in the determination and administration of the Share Limit to the extent required by this Section 3.
(ii) Shares issued under the 2025 Plan may be authorized but unissued shares or shares reacquired by the Company.
(iii) The Company shall appropriately reserve shares in connection with the grant of Awards to reflect the limitations set forth above.
The per-individual limits described above shall be construed to include earnings or notional earnings on Awards.
(b) Stock Dividends, Mergers, etc.
In the event of a stock dividend, stock split, reverse stock split or similar change in capitalization, or extraordinary dividend or distribution or restructuring transaction affecting the Stock, the Committee may make such adjustments as it deems appropriate in the number and kind of shares of stock or securities on which Awards may thereafter be granted, including the limits described in Section 3(a) and Section 7(c), and may make such adjustments as it deems appropriate, in the number and kind of shares remaining subject to outstanding Awards, and the option or purchase price in respect of such shares as it may deem appropriate at its sole discretion. In the event of any merger, consolidation, dissolution or liquidation of the Company, the Committee in its sole discretion may, as to any outstanding Awards, make such substitution or adjustment in the aggregate number of shares reserved for issuance under the 2025 Plan and in the number and purchase price (if any) of shares subject to such Awards as it may determine, or accelerate, amend or terminate such Awards upon such terms and conditions as it shall provide (which, in the case of the termination of the vested portion of any Award, shall require payment or other consideration which the Committee deems equitable in the circumstances), subject, however, to the provisions of Section 12.
(c) Substitute Awards.
The Company may grant Awards under the 2025 Plan in conversion, replacement or adjustment of outstanding options or other equity-based compensation awards held by employees of another corporation or other entity who become employees or Eligible Directors of the Company or a Subsidiary as described in the first sentence of Section 4 as the result of a merger or consolidation of the employing corporation or other entity (or an affiliate of such corporation or entity) with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of stock of the employing corporation or an affiliate. The Committee may direct that the converted, replacement or adjusted awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances to reflect the transaction. The shares that may be delivered under such substitute Awards shall be in addition to the limitations on the number of shares available for issuance under Awards and other limits described in Section 3(a).
SECTION 4. ELIGIBILITY
Participants in the 2025 Plan will be (i) such full or part time officers and other employees of the Company and its Subsidiaries who are selected from time to time by the Committee in its sole discretion, and (ii) Eligible Directors. Persons who are not employees of the Company or a subsidiary (within the meaning of Section 424 of the Code) shall not be eligible to receive grants of ISOs.
SECTION 5. DURATION OF AWARDS; TERM OF 2025 PLAN
(a) Duration of Awards.
Subject to Sections 13(a) and 13(e) below, no Stock Option or SAR may remain exercisable beyond 10 years from the applicable grant date, and no other Award shall have a vesting or restriction period that extends beyond 10 years from the applicable grant date, except that deferrals elected by Participants of the receipt of Stock or other benefits under the 2025 Plan may extend beyond such date. For purposes of this Section, the original grant date of an Outstanding Award originally granted under a Prior Plan shall remain the applicable grant date.
(b) Latest Grant Date.
No new Award shall be granted under the 2025 Plan after October 15, 2033, but Outstanding Awards may extend beyond such date. No Award shall be granted under any Prior Plan after the Amendment and Restatement Date.
SECTION 6. STOCK OPTIONS; SARs
Any Stock Option or SAR granted under the 2025 Plan shall be in such form as the Committee may from time to time approve. Stock Options granted under the 2025 Plan may be either ISOs or NSOs. Any Stock Option that is not expressly designated as an ISO at time of grant shall be deemed to have been expressly designated at time of grant as an NSO.
Stock Options granted under the 2025 Plan shall be subject to the provisions of Sections 6(a) through Section 6(f) below. SARs shall be subject to the provisions of Section 6(g) below; and Stock Options and SARs shall contain such additional terms and conditions, not inconsistent with the terms of the 2025 Plan, as the Committee shall deem desirable. No term of an Award shall provide for automatic “reload” grants of additional Awards upon the exercise of a Stock Option or SAR. Except as contemplated by Section 3(b), no dividends or dividend equivalent payments shall be payable with respect to Stock Options or SARs.
(a) Option Price.
The option price per share of Stock purchasable under a Stock Option shall be determined by the Committee at the time of grant but shall be not less than 100% of Fair Market Value on the date of grant.
(b) Exercisability.
Stock Options shall be exercisable at such time or times, whether or not in installments, as shall be determined by the Committee at or after the grant date. The Committee may at any time accelerate the exercisability of all or any portion of any Stock Option. Unless the Committee expressly provides otherwise, the following rules will apply to any portion of a Stock Option that is outstanding immediately prior to the termination of employment of the person to whom the Stock Option was granted (the “Outstanding Stock Option”).
(i) Termination by Reason of Death or Disability: Partial Acceleration of Exercisability. If the employment of such person terminates by reason of death or Disability, in either case occurring more than three months after the grant of the Outstanding Stock Option, the Outstanding Stock Option shall be exercisable as to the number of shares for which it could have been exercised immediately prior to such termination or, if greater, (A) the total number of shares subject to the Stock Option multiplied by a fraction, the numerator of which shall be the number of days between the grant of the Stock Option and such termination and the denominator of which shall be the number of days between the grant of the Stock Option and the date upon which the Stock Option, by its terms, would have become fully
exercisable, minus (B) the number of shares, if any, previously purchased under the Stock Option. For the avoidance of doubt, (y) if the employment of such person terminates by reason of death or Disability, in either case occurring within three months of the grant of the Outstanding Stock Option, this Section 6(b)(i) shall not apply to the Outstanding Stock Option and (z) this Section 6(b)(i) shall apply regardless of whether the employment of such person terminates at a time when such person has satisfied the requirements for Normal Retirement or Special Service Retirement.
(ii) Termination by Reason of Death: Extension of Exercise Period. If the employment of such person terminates by reason of death, the Outstanding Stock Option may thereafter be exercised, to the extent exercisable immediately prior to death (determined after taking into account any applicable acceleration), for a period of five years (or such other period as may be specified under the terms of the Stock Option) from the date of death or until the expiration of the stated term of the option, if earlier.
(iii) Termination by Reason of Disability: Extension of Exercise Period. If the employment of such person terminates by reason of Disability, the Outstanding Stock Option may thereafter be exercised, to the extent it was exercisable immediately prior to such termination (determined after taking into account any applicable acceleration), for a period of five years (or such other period as may be specified under the terms of the Stock Option) from the date of such termination of employment or until the expiration of the stated term of the option, if earlier. The death during the final year of such exercise period of the person to whom such Stock Option was granted shall, to the extent the Stock Option remains outstanding, extend such period for one year following death or until the expiration of the stated term of the option, if earlier.
(iv) Termination by Reason of Normal Retirement: Extension of Exercise Period. If the employment of such person terminates by reason of Normal Retirement, or if the employment of such person terminates for any reason (other than for Cause) at a time when such person has satisfied the requirements for Normal Retirement, the Outstanding Stock Option may thereafter be exercised, to the extent that it was exercisable immediately prior to such termination, for a period of five years (or such other period as may be specified under the terms of the Stock Option) from the date of such termination or until the expiration of the stated term of the option, if earlier. The death during the final year of such exercise period of the person to whom such Stock Option was granted shall, to the extent the Stock Option remains outstanding, extend such period for one year following death, subject to termination on the expiration of the stated term of the option, if earlier.
(v) Termination by Reason of Special Service Retirement: Continued Vesting and Extension of Exercise Period. If the employment of such person terminates by reason of a Special Service Retirement, or if the employment of such person terminates for any reason (other than for Cause) at a time when such person has satisfied the requirements for Special Service Retirement, the Outstanding Stock Option may thereafter be exercised, to the extent exercisable from time to time as hereinafter determined, for a period of five years (or such other period as may be specified under the terms of the Stock Option) from the date of such termination or until the expiration of the stated term of the option, if earlier. The death during the final year of such exercise period of the person to whom such Stock Option was granted shall, to the extent the Stock Option remains outstanding, extend such period for one year following death or until the expiration of the stated term of the option, if earlier. To the extent the Outstanding Stock Option is not yet fully exercisable at the date of the Special Service Retirement (or the date of such other termination (other than for Cause) as contemplated above in this subclause (v)) of the person to whom the Stock Option was granted, it shall continue to become exercisable over the period of three years following the employment termination date (subject to the stated term of the option, or on such accelerated or other basis as the Committee shall at any time determine and after giving effect to any accelerated vesting set forth in subclause (i) above), on the same basis as if such person had not retired.
(vi) Other Termination. If the employment of such person terminates for any reason other than death, Disability, Normal Retirement, Special Service Retirement or for Cause, and at a time when such person has not satisfied the requirements for Normal Retirement or Special Service Retirement, the Outstanding Stock Option may thereafter be exercised, to the extent it was exercisable on the date of termination of employment, for a period of three months (or such other period as may be specified under the terms of the Stock Option) from the date of termination of employment or until the expiration of the stated term of the option, if earlier. Notwithstanding any other provision of this Section 6(b)(i) through (v), if the employment of such person terminates or is terminated for Cause, all outstanding Stock Options previously granted to such person (whether or not exercisable) shall immediately terminate. Unless the Committee expressly provides otherwise, each Stock Option shall terminate and cease to be outstanding as follows: (A) in the event of any termination of employment by any person who has not satisfied the requirements for Special Service Retirement, any portion of the Outstanding Stock Option that is not exercisable immediately prior to such termination of employment (determined after taking into account any applicable acceleration) shall terminate and cease to be outstanding upon such termination; (B) in the case of a Special Service Retirement, any portion of the Outstanding Stock Option that has not become exercisable by the last day of the applicable post-retirement vesting period under clause (v) above shall terminate and cease to be outstanding at the end of such period; and (C) to the extent not earlier exercised, forfeited or terminated, and after giving effect to any settlement pursuant to Section 6(f), any outstanding portion of the Stock Option (whether or not exercisable) shall terminate and cease to be outstanding upon expiration of any applicable post-termination of employment exercise period or upon the expiration of the stated term of the option, if earlier.
Stock Options that are exercisable may be exercised only by the person to whom the Stock Option was granted during such person’s lifetime. In the event of such person’s death, Stock Options that are exercisable may be exercised by his or her legal representative, legatee or such other person as permitted by administrative procedures under the 2025 Plan or as otherwise approved by the Committee. If applicable, Stock Options may also be settled in accordance with Section 6(f).
(c) Method of Exercise.
The person holding a Stock Option may exercise the Stock Option in whole or in part in accordance with and subject to such exercise procedures as the Committee may from time to time establish, each of which shall require, as the Committee determines, delivery to the Committee of the full purchase price plus (as provided in Section 13(d)) any taxes required to be withheld in connection with the exercise, or delivery of an unconditional and irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay such purchase price and taxes, for the portion of Stock Option so exercised. If so permitted by the Committee in its discretion and subject to such limitations and restrictions as the Committee may impose, payment in full or in part of the exercise price or payment of withholding taxes (as provided in Section 13(d)) may also be made in the form of shares of Stock not then subject to restrictions under any Company 2025 Plan, including shares of Stock that would otherwise be delivered under such Stock Option. The person holding a Stock Option shall have the rights of a shareholder (including, but not limited to, rights to receive dividends) only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.
(d) Non-transferability of Options.
No ISO (and, except as determined by the Committee, no NSO) shall be transferable by the person to whom such Stock Option was granted otherwise than by will or by the laws of descent and distribution, and all ISOs (and, except as determined by the Committee, all NSOs) shall be exercisable during the lifetime of the person to whom such Stock Options were granted only by such person. Transfers of NSOs, if any, permitted by the Committee shall be limited to gratuitous transfers (transfers not for value).
Where an NSO is permitted by the Committee to be transferred, references in the 2025 Plan to the “person to whom the Stock Option was granted” and similar terms shall be construed, as the Committee in its discretion deems appropriate, to include any permitted transferee to whom the Stock Option is transferred.
(e) Form of Settlement.
Subject to Section 13(a) and Section 13(e) below, shares of Stock issued upon exercise of a Stock Option shall be free of all restrictions under the 2025 Plan, except as provided in the following sentence. The Committee may provide at time of grant that the shares to be issued upon the exercise of a Stock Option shall be in the form of Restricted Stock, or may reserve the right to so provide after time of grant.
(f) Automatic Settlement.
Except as otherwise provided by the Committee and subject to such limitations as the Committee may prescribe, if a Stock Option granted on or after January 31, 2009 remains unexercised on the date it would otherwise have expired and if on such date the Fair Market Value of the shares subject to the Stock Option exceeds the aggregate consideration that would have been required to have been paid to purchase such shares had the Stock Option been exercised, the person then holding the Stock Option shall be deemed to have requested, and the Committee shall be deemed to have approved, a cancellation of such Stock Option in accordance with the first sentence of this Section 6(f) and the amount payable pursuant to the first sentence of this Section 6(f) shall be paid in the form of shares of Stock in accordance with the first sentence of this Section 6(f). The Committee may provide that the automatic settlement provision set forth in the foregoing sentence applies to a Stock Option granted prior to January 31, 2009.
(g) SARs.
An SAR is an award entitling the recipient to receive an amount in cash or shares of Stock (or in any other form of payment acceptable to the Committee) or a combination thereof having a value determined by reference to (and not to exceed) the excess of the Fair Market Value of a share of Stock on the date of exercise over the Fair Market Value of a share of Stock on the date of grant (or over the option exercise price, if the SAR was granted in tandem with a Stock Option). The Committee shall determine all terms of SARs granted under the 2025 Plan. SARs may be granted in tandem with, or independently of, any Stock Option granted under the 2025 Plan. Any SAR granted in tandem with ISOs shall comply with the ISO rules relating to tandem SARs. The Committee may at any time accelerate the exercisability of all or any portion of any SAR.
SECTION 7. OTHER STOCK-BASED AWARDS
(a) Nature of Stock Awards.
Awards under this Section 7 include Awards other than Stock Options or SARs that entitle the recipient to acquire for a purchase price (which may be zero) shares of Stock subject to restrictions under the 2025 Plan (including a right on the part of the Company during a specified period to repurchase such shares at their original purchase price, or to require forfeiture if the purchase price was zero, upon the Participant’s termination of employment) determined by the Committee or as set forth in Participant’s stock award agreement (“Restricted Stock”); Awards that entitle the recipient, with or without payment, to the future delivery of shares of Stock, subject to such conditions and restrictions as may be determined by the Committee (“Stock Units”); and other Awards (excluding Stock Options or SARs) under which Stock may be acquired or which are otherwise based on the value of Stock.
(b) Rights as a Shareholder.
A Participant shall have all the rights of a shareholder, including voting and dividend rights, (i) only as to shares of Stock received by the Participant under an Other Stock-based Award, and (ii) in any case, subject to such nontransferability restrictions, Company repurchase or forfeiture rights, and other
conditions as are made applicable to the Award.
(c) Restrictions.
The Committee may determine the conditions under which an Other Stock-based Award, or Stock acquired under an Other Stock-based Award, shall be forfeited, and may at any time accelerate, waive or, subject to Section 10, amend any or all of such limitations or conditions. Each Other Stock-based Award shall specify the terms on which such Award or the shares under such Award shall vest (become free of restrictions under the 2025 Plan), which may include, without limitation, terms that provide for vesting on a specified date or dates, vesting based on the satisfaction of specified performance conditions, and accelerated vesting in the event of termination of employment under specified circumstances. The Committee shall take such steps as it determines to be appropriate to reflect any restrictions applicable to an Other Stock-based Award or the shares thereunder and to facilitate the recovery by the Company of any such Award or shares that are forfeited.
Notwithstanding the foregoing but subject to Section 3(a)(ii)(C) and subject to the following provisions of this paragraph, no grants of Full Value Awards shall specify a vesting date that is less than three years from the date of grant other than (i) grants made in connection with a Participant’s commencement of employment with the Company or any Subsidiary; (ii) Performance Awards, the vesting of which is set by reference to a performance period of at least one year; (iii) Awards that specify full vesting in no less than three years and partial vesting at a rate no faster than one-third of the Award each year; and (iv) Awards to Eligible Directors under Section 7(e). Acceleration of vesting of a Full Value Award (whether pursuant to the original terms of an Award or otherwise) in the event of death, disability, retirement or a Change of Control shall not be taken into account in determining whether the Full Value Award complies with the foregoing vesting limitations.
Except as otherwise determined by the Committee, if the employment by the Company and its Subsidiaries of a person to whom an Other Stock-based Award has been granted terminates for any reason, (i) any shares of Restricted Stock that are not then vested (taking into account any accelerated vesting applicable to such shares under the terms of the Award or otherwise) shall be resold to the Company at their purchase price or forfeited to the Company if the purchase price was zero and (ii) any Other Stock-based Award that is not then vested (taking into account any accelerated vesting applicable to such Award under the terms of the Award or otherwise) shall immediately terminate. The Committee at any time may accelerate the vesting date or dates for an Other Stock-based Award or for Restricted Stock, if any, granted thereunder and may otherwise waive or, subject to Section 10, amend any conditions of the Award. Neither the Committee nor the Company shall be liable for any adverse tax or other consequences to a Participant from any such acceleration, waiver, or amendment.
(d) Dividends; Dividend Equivalents.
A Participant’s rights under an Other Stock-based Award to dividends (or dividend equivalent payments, in the case of an Other Stock-based Award, if any, other than Restricted Stock, that is subject to vesting conditions and as to which the Committee has made provision for such payments) shall be treated as unvested so long as such Award remains unvested (the “restricted period”), and any such dividends or dividend equivalent payments that would otherwise have been paid during the restricted period shall instead be accumulated and paid following the date on which such Award is determined by the Company to have vested (in such timeframe as established by the Committee).
(e) Annual Deferred Stock Awards, Additional Deferred Stock Awards and Dividend Awards for Eligible Directors.
(i) Accounts. The Company shall establish and maintain an Account in the name of each Eligible Director to which the Annual Deferred Stock Awards, Additional Deferred Stock Awards and Dividend Awards shall be credited.
(ii) Annual Awards. On the date of each Annual Meeting, each Eligible Director who is elected a
Director at such Annual Meeting shall automatically and without further action by the Board or Committee be granted an Annual Deferred Stock Award as provided in subsection (iv) and an Additional Deferred Stock Award as provided in subsection (v). On each date other than the date of an Annual Meeting on which an Eligible Director is first elected a Director by the Board, the Eligible Director then so elected shall automatically and without further action by the Board or Committee be granted a prorated Annual Deferred Stock Award as provided in subsection (iv) and a prorated Additional Deferred Stock Award as provided in subsection (v). The grant of each Annual Deferred Stock Award and Additional Deferred Stock Award shall entitle each recipient, automatically and without further action by the Board or the Committee, to Dividend Awards as provided in subsection
(vi).
(iii) Nature of Awards. Each Annual Deferred Stock Award, Additional Deferred Stock Award and Dividend Award shall be an Other Stock-based Award subject to the terms of this 2025 Plan and shall constitute an unfunded and unsecured promise of the Company to deliver in the future to such Eligible Director, without payment, the number of shares of Stock in the amounts and at the times hereinafter provided. The shares of Stock notionally credited to the Accounts of Eligible Directors shall be notional shares only and shall not entitle the Eligible Director to any voting rights, dividend or distribution or other rights except as expressly set forth herein. Nothing herein shall obligate the Company to issue or set aside shares of Stock, in trust or otherwise, to meet its contractual obligations hereunder.
(iv) Annual Deferred Stock Award. In respect of each Annual Deferred Stock Award granted on the date of an Annual Meeting, the Company shall credit to each Eligible Director’s Account, effective as of the date of such Annual Meeting, the number of notional shares of Stock, including any fractional share, equal to an amount determined by the Board (subject to the limit contained in Section 3(a)(iii)) divided by the Fair Market Value of a share of Stock on the date of such Annual Meeting. In respect of each Annual Deferred Stock Award granted on a date other than the date of an Annual Meeting, the Company shall credit to the Account of the Eligible Director first elected on such date the number of notional shares of Stock, including any fractional share, equal to (i) an amount determined by the Board (subject to the limit contained in Section 3(a)(iii)) divided by the Fair Market Value of a share of Stock on the date of such first election multiplied by (ii) the quotient (not greater than one) obtained by dividing (A) the number of days starting with the date of such first election and ending on the day first preceding the anticipated date of the next Annual Meeting, by (B) 365.
(v) Additional Deferred Stock Award. In addition to the Annual Deferred Stock Award, the Company shall credit to the Account of each Eligible Director, effective as of the date that any Annual Deferred Stock Award is credited to such Account, an Additional Deferred Stock Award covering the same number of shares as are covered by such Annual Deferred Stock Award determined in the same manner prescribed in subsection (iv) above.
(vi) Dividend Awards. Except as otherwise determined by the Committee, and subject to and in accordance with such rules that may be prescribed by the Committee for crediting dividends with respect to shares allocated to the Eligible Director’s Account, the Company shall credit (each such credit, a “Dividend Award”) the Account of each Eligible Director on the date of each Annual Meeting and on the date on which an Eligible Director ceases to be a Director if not the date of an Annual Meeting with a number of notional shares of Stock, including any fractional share, equal to (i) plus (ii), divided by (iii), where:
(i) is the product obtained by multiplying the number of shares then allocated to such Eligible Director’s Account (disregarding, for purposes of this clause (i), any shares credited to such Account since the date of the immediately preceding Annual Meeting) by the aggregate per-share amount of regular cash dividends for which the record date occurred since the date of the immediately preceding Annual Meeting;
(ii) is the product obtained by multiplying the number of shares first credited to such Eligible Director’s Account since the date of the immediately preceding Annual Meeting but prior to the date of such Dividend Award by the aggregate per-share amount of regular cash dividends for which the record date occurred since the date that such shares were credited to such Account; and
(iii) is the Fair Market Value of one share of Stock on the date of such Dividend Award.
(vii) Vesting. Each Annual Deferred Stock Award, and any Dividend Awards in respect of Annual Deferred Stock Awards, shall vest immediately upon grant and be non-forfeitable. Unless earlier vested pursuant to Section 12, each Additional Deferred Stock Award, and any Dividend Awards in respect of Additional Deferred Stock Awards, shall vest and become non-forfeitable on the date immediately preceding the date of the Annual Meeting next succeeding the date of grant of such Award, provided, that the recipient is still a Director on such date. Upon termination of an Eligible Director’s service as a Director for any reason, the Eligible Director shall forfeit any then unvested Additional Deferred Stock Award and any Dividend Awards in respect of then unvested Additional Deferred Stock Awards (determined after taking into account any acceleration of vesting pursuant to Section 12).
(viii) Delivery. With respect to any Annual Deferred Stock Awards, unless otherwise determined by the Committee, the Company shall deliver to an Eligible Director (or a former Eligible Director) the number of shares of Stock, rounded up to the next full share, represented by notional shares of Stock credited to the Account of such Eligible Director in respect of Annual Deferred Stock Awards (including any Dividend Awards made in respect of such Annual Deferred Stock Awards) at the earlier of the following: (x) immediately prior to a Change of Control or (y) not later than sixty (60) days following the Eligible Director’s death or earlier separation from service (as determined under the regulations under Section 409A of the Code). With respect to any vested Additional Deferred Stock Award, unless otherwise determined by the Committee, absent an election to defer delivery of the shares of Stock subject to such Award pursuant to subsection (ix) below, the Company shall deliver to an Eligible Director the number of shares of Stock, rounded up to the next full share, represented by notional shares of Stock credited to the Account of such Eligible Director in respect of such Additional Deferred Stock Award (including any Dividend Awards made in respect of such Additional Deferred Stock Award) within sixty (60) days following the date of vesting pursuant to subsection (vii) above or, if earlier and if so provided in accordance with the terms of the applicable Award pursuant to Section 12, immediately prior to a Change of Control. In the event of a termination by reason of death, such shares of Stock shall be delivered to such beneficiary or beneficiaries designated by the Eligible Director in writing in such form, and delivered prior to his or her death to such person at the Company, as specified by the Company or, in the absence of such a designation, to the legal representative of Eligible Director’s estate, legatee or such other person as permitted by administrative procedures under the 2025 Plan or as otherwise approved by the Committee.
(ix) Deferral of Delivery of Additional Deferred Stock Awards; Redeferral. By filing a written notice to the Company in such form, and delivered to such person at the Company, as specified by the Company, an Eligible Director may irrevocably elect to defer receipt of the delivery of shares of Stock representing all or a portion of the notional shares of Stock subject to any Additional Deferred Stock Award (including any Dividend Awards made in respect of such notional shares) such that those shares are delivered as soon as practicable and in all events within sixty (60) days following the Eligible Director’s death or earlier separation from service (as determined under the regulations under Section 409A of the Code); except that if so provided in accordance with the terms of the applicable Award, such shares shall instead be delivered immediately prior to any earlier occurrence of a Change of Control. Any election made pursuant to this subsection (ix) must be submitted with respect to any Additional Deferred Stock Award (A) in the case of the Additional Deferred Stock Award granted on the date an Eligible Director
is first elected as a Director, no later than 30 days after the date of such Eligible Director’s election to the Board or (B) in the case of any other Additional Deferred Stock Award, no later than December 31 of the calendar year preceding the calendar year in which such Award is granted, or (C) at such other time as is necessary to satisfy the requirements of Section 409A of the Code, as determined by the Committee. The Committee may permit a redeferral of any Annual Deferred Stock Award or Additional Deferred Stock Award subject to and in accordance with such rules that it may prescribe.
SECTION 8. PERFORMANCE AWARDS
(a) Nature of Performance Awards. A Performance Award is an award entitling the recipient to acquire cash or shares of Stock, or a combination of cash and Stock, upon the attainment of one or more specified performance goals. If the grant, vesting, or exercisability of a Stock Option, SAR, or Other Stock-Based Award is conditioned upon attainment of any Performance Criteria, it shall be treated as a Performance Award for purposes of this Section and shall be subject to the provisions of this Section in addition to the provisions of the 2025 Plan applicable to such form of Award.
(b) Terms of Performance Awards. The Committee in its sole discretion shall determine the performance goals applicable under each such Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the Award. Performance Awards may be granted independently or in connection with the granting of other Awards.
(c) Rights as a Shareholder. A Participant shall have all the rights of a shareholder, including voting and dividend rights, (i) only as to shares of Stock received by the Participant under a Performance Award, and (ii) in any case, subject to such nontransferability restrictions, Company repurchase or forfeiture rights, and other conditions as are made applicable to the Award. Notwithstanding the foregoing and for the avoidance of doubt, in the case of any Performance Award that is also an Other Stock-based Award, the limitations of Section 7(d) (providing that rights to dividends and dividend equivalents shall remain unvested until the underlying Stock or rights to Stock are vested) shall apply to any right to dividends or dividend equivalent payments hereunder.
(d) Termination. Except as may otherwise be provided by the Committee, a Participant’s rights in all Performance Awards shall automatically terminate upon the Participant’s termination of employment by the Company and its Subsidiaries for any reason (including death).
(e) Acceleration, Waiver, etc. The Committee may in its sole discretion accelerate, waive or, subject to Section 10, amend any or all of the goals, restrictions or conditions imposed under any Performance Award. Neither the Committee nor the Company shall be liable for any adverse tax or other consequences to a Participant from any such acceleration, waiver, or amendment.
SECTION 9. TERMINATION OF EMPLOYMENT; TRANSFER; LEAVE OF ABSENCE
For purposes of the 2025 Plan, and subject to and in accordance with such rules that may be prescribed by the Committee, the following events shall not be deemed a termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another;
(b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, unless otherwise determined by the Committee.
For purposes of the 2025 Plan, the employees of a Subsidiary of the Company shall be deemed to have terminated their employment on the date on which such Subsidiary ceases to be a Subsidiary of the Company unless in connection with such event the employee continues to be employed by the Company or another Subsidiary. Subject to the foregoing, except as otherwise provided by the Committee and subject to and in accordance with such rules that may be prescribed by the Committee, an individual’s employment with the Company and its Subsidiaries shall be considered to have terminated on the last day of his or her actual employment, whether such day is determined by agreement between the Company or a Subsidiary and the individual or unilaterally, and whether such termination is with or without notice, and no period of advance notice, if any, that is or ought to have been given under applicable law in respect of such termination of employment shall be taken into account in determining the individual’s entitlements, if any, under the 2025 Plan or any Award.
Notwithstanding the foregoing, in the case of any Award that is subject to the requirements of Section 409A of the Code, “termination of employment” shall mean a separation from service (as determined under the regulations under Section 409A of the Code, after giving effect to the presumptions contained therein).
For the avoidance of doubt, nothing in this Section 9 shall be construed as limiting the Committee’s authority to specify Award terms that provide for forfeiture or other consequences in connection with an event other than termination of employment.
SECTION 10. AMENDMENTS AND TERMINATION
The Board or the Committee may at any time amend or discontinue the 2025 Plan and the Committee may at any time amend or cancel any Outstanding Award, including any Outstanding Award originally granted under a Prior Plan, for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall materially adversely affect rights under any Outstanding Award without the holder’s consent, except to the extent otherwise expressly permitted under the applicable Award agreement or required by applicable law.
Effective as of the Amendment and Restatement Date, the 2025 Plan constitutes the sole operative Company-wide stock incentive plan governing the grant of new equity-based Awards, and all Prior Plans are superseded and replaced as provided in Section 1. The termination, supersession and replacement of the Prior Plans shall not, by itself, constitute a termination, cancellation or forfeiture of any Outstanding Award.
However, no such amendment shall be effective unless approved by stockholders if it would (i) reduce the exercise price of any Stock Options previously granted hereunder or otherwise constitute a repricing requiring stockholder approval under applicable New York Stock Exchange rules or the rules of any successor exchange, or (ii) provide for a Participant to receive any payment or other consideration upon the termination or cancellation of any Stock Option or SAR pursuant to the provisions of this Section 10 if the exercise price of such Stock Option or SAR is equal to or greater than the Fair Market Value of a share of Stock on the date of such termination or cancellation, or (iii) otherwise require stockholder consent under applicable law (including the Code), regulation, guidance or any listing standard for any stock exchange on which the Stock is traded, as determined by the Committee.
Notwithstanding any provision of this 2025 Plan, the Board or the Committee may at any time adopt such modifications, procedures, sub-2025 Plans and forms of Award as it determines to be necessary or desirable to comply with the laws or regulatory requirements of foreign countries or to facilitate 2025 Plan administration with respect to Participants performing services in such countries, consistent with the objectives of the 2025 Plan.
SECTION 11. STATUS OF 2025 PLAN
With respect to the portion of any Award which has not been exercised and any payments in cash, stock or other consideration not received by a Participant, a Participant shall have no rights greater than those of a general creditor of the Company unless the Committee shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments with respect to awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the provision of the foregoing sentence.
SECTION 12. CHANGE OF CONTROL PROVISIONS
As used herein, a Change of Control and related definitions shall have the meanings set forth in Exhibit A to this 2025 Plan.
Except as otherwise expressly provided in an Award or other agreement or by the Committee, the following provisions shall apply in the event of a Change of Control:
(a) Assumption or Substitution. If the Change of Control is one in which there is an acquiring or surviving entity, the Committee may provide for (i) the assumption or continuation of some or all outstanding Awards or any portion thereof or (ii) the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.
(b) Cash-Out of Awards. The Committee may provide for payment (a “cash-out”), with respect to some or all Awards or any portion thereof (including only the vested portion thereof, with the unvested portion terminating without payment due as provided in Section 12(d)), equal in the case of each applicable Award or portion thereof to the excess, if any, of (i) the fair market value of one share of Stock multiplied by the number of shares of Stock subject to the Award or such portion, minus (ii) the aggregate exercise or purchase price, if any, of such Award or such portion thereof (or, in the case of a SAR, the aggregate base value above which appreciation is measured), in each case, on such payment and other terms and subject to such conditions (which need not be the same as the terms and conditions applicable to holders of Stock generally), as the Committee determines, including that any amounts paid in respect of such Award in connection with the Change of Control be placed in escrow or otherwise made subject to such restrictions as the Committee deems appropriate. For the avoidance of doubt, if the per share exercise or purchase price (or base value) of an Award or portion thereof is equal to or greater than the fair market value of one share of Stock, as determined by the Committee, such Award or portion may be cancelled with no payment due hereunder or otherwise in respect thereof.
(c) Acceleration of Certain Awards. The Committee may provide that any Award requiring exercise will become exercisable, in full or in part, and/or that the delivery of any shares of Stock remaining deliverable under any outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated, in full or in part, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Committee, following the exercise of the Award or the delivery of the shares, as the case may be, to participate as a stockholder in the Change of Control.
(d) Termination of Awards upon Consummation of Change of Control. Except as the Committee may otherwise determine, each Award will automatically terminate (and in the case of outstanding shares of Restricted Stock, will automatically be forfeited) immediately upon the consummation of the Change of Control, other than (i) any Award that is assumed, continued or substituted for pursuant to Section 12(a) and (ii) any Award that by its terms, or as a result of action taken by the Committee, continues following the Change of Control.
(e) Uniform Treatment. For the avoidance of doubt, the Committee need not treat Participants or Awards (or portions thereof) in a uniform manner, and may treat different Participants and/or Awards differently, in connection with a Change of Control.
The Committee may at any time prior to or after a Change of Control accelerate the exercisability of any Stock Options and may waive restrictions, limitations and conditions on Other Stock-based Awards (including without limitation Restricted Stock) and Performance Awards to the extent it shall in its sole discretion determine.
SECTION 13. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal Requirements, etc. The Committee may require each person acquiring shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. No shares of Stock shall be issued pursuant to an Award until all applicable securities law and other applicable legal and stock exchange requirements have been satisfied as determined by the Committee. The Committee may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate. The Committee reserves the right to impose such requirements on participation in the 2025 Plan and any Award hereunder or shares of Stock acquired hereunder to the extent the Company determines it is necessary or advisable to comply with applicable law or facilitate the administration of the 2025 Plan.
(b) References to Employment. Wherever reference is made herein to “employee,” “employment” (or correlative terms), except in Section 4, the term shall include, if so determined by the Committee, both common law employees and others.
(c) Other Compensation Arrangements; No Employment Rights. Nothing contained in this 2025 Plan shall prevent the Board or the Committee from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
Neither the adoption of the 2025 Plan nor the grant of any Award hereunder shall (i) confer upon any employee any right to continued employment or service with the Company or a Subsidiary or to receive other Awards under the 2025 Plan, or (ii) interfere in any way with the right of the Company or a Subsidiary to terminate, or alter the terms of, the employment of any of its employees at any time. In no event shall any Awards be considered part of a Participant’s employment contract, be taken into account for purposes of any pension or retirement entitlement (except as expressly set forth in the 2025 Plan providing for such pension or retirement entitlement) or result in the inclusion of the value of any grants of any Awards in the calculation of any severance payments upon a termination of employment.
(d) Tax Withholding, etc. Each Participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the Participant for U.S. Federal or other income tax purposes or as wages subject to employment taxes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any national, federal, state, or local taxes of any kind required by law to be withheld with respect to such income or wages. The Company in its discretion may, but need not, satisfy any withholding obligation by withholding a portion of the shares of Stock to be delivered to a Participant hereunder up to the maximum extent permitted under the 2025 Plan. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes, or other legally or contractually required withholdings, from any payment of any kind otherwise due to the Participant. The Company may withhold or otherwise administer the 2025 Plan to comply with tax obligations under any applicable foreign laws. The Company is under no obligation to structure the terms of any Award to reduce or eliminate a Participant’s liability for taxes or other amounts due to achieve any particular tax result.
The Committee may provide, in respect of any transfer of Stock under an Award, that if and to the extent withholding of any national, state or local tax is required in respect of such transfer or vesting, the Participant may elect, at such time and in such manner as the Committee shall prescribe, to (i) surrender to the Company Stock not then subject to restrictions under the 2025 Plan or (ii) have the Company hold back from the transfer or vesting Stock having a value calculated to satisfy such withholding obligation. The amount of any Stock surrendered under clause (i) or held back by the Company under clause (ii) shall be subject to any limitations required to avoid adverse accounting treatment under applicable accounting principles (including FASB ASC Topic 718 or any successor provision).
Except as otherwise expressly provided by the Committee in any case, all Awards under the 2025 Plan that are not exempt from the requirements of Section 409A of the Code shall be construed to comply with the requirements of Section 409A of the Code and any discretionary authority of the Committee or the Company with respect to an Award that is intended to be exempt from or in compliance with the requirements of Section 409A of the Code shall be exercised in a manner that is consistent with such intent. Notwithstanding the foregoing, neither the Company nor any Subsidiary, nor any officer, director or employee of the Company or any Subsidiary, nor the Board or the Committee or any member of either, shall be liable to the Participant or any beneficiary of a Participant by reason of any additional tax (whether or not under Section 409A of the Code), including any interest or penalty, or any other adverse tax or other consequence (A) resulting from any exercise of discretion or other action or failure to act by any of the Company, any Subsidiary, any such officer, director or employee, or the Board or the Committee, including without limitation, any acceleration of vesting under Section 6(b), settlement of a Stock Option under Section 6(f) or acceleration, waiver or amendment of an Award under Section 7(c) or 8(e), or (B) by reason of the failure of an Award to qualify for an exemption from, or to comply with the requirements of, Section 409A of the Code, or for any cost or expense incurred in connection with any action by any taxing authority related to any of the foregoing.
(e) Deferral of Awards. Participants may elect to defer receipt of Awards or vesting of Awards in such cases and to such extent, if any, as the Committee may determine at or after the grant date.
(f) Transfer and Other Restrictions. In addition to the restrictions on transfer that apply to Stock Options under Section 6(d), no Award may be sold, assigned, transferred (except for transfers by will or by the laws of descent and distribution), pledged, or otherwise encumbered or disposed of except as specifically provided herein or as otherwise permitted by the Committee. In addition, all Awards shall be subject to applicable prohibitions under Company policy regarding the use of Awards for pledging (including, for the avoidance of doubt, as collateral for a loan or in a margin account) or in any hedging or derivative transactions.
(g) Acceptance of Terms and Conditions. The Committee may condition the grant, vesting, exercisability or other full enjoyment of any Award under the 2025 Plan on the Participant’s acceptance of all the terms and conditions thereto on the timeframe specified by, and in such form as is acceptable to, the Committee.
(h) Governing Law. Awards and shares of Stock will be granted, issued and administered consistent with the requirements of applicable Delaware law relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case, as determined by the Committee. Except as otherwise provided herein or by the express terms of an Award, the provisions of the 2025 Plan and of Awards and the rights and obligations of the Company, Subsidiaries and Participants hereunder and thereunder shall be governed by and construed in accordance with the domestic substantive laws of the state of Wyoming without giving effect to any choice or conflict of laws provision or any rule that would result in the application of the domestic substantive laws of any other jurisdiction.
(i) Dispute Resolution. By accepting or being deemed to have accepted an Award under the 2025 Plan, each Participant waives (or will be deemed to have waived), to the maximum extent permitted under applicable law, any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the 2025 Plan or any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees (or will be deemed to have agreed) that any such action, proceedings or counterclaim will not be tried before a court or a jury. By accepting (or being deemed to have accepted) an Award under the 2025 Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers. Notwithstanding anything to the contrary in the 2025 Plan, the Company and a Participant agree to submit any dispute arising under the terms of the 2025 Plan or any Award first to good-faith negotiations, second to mediation and finally to binding arbitration as a condition of receiving an Award hereunder, under the rules of the American Arbitration Association then in full force and effect.
(j) Forfeiture and Recoupment. Awards shall be subject to forfeiture and/or repayment to the Company to the extent and in the manner required (i) under the terms of the Company’s Policy for Recovery of Executive Officer Incentive Compensation, to the extent applicable to the Participant, or under the terms of such compensation recovery or recoupment policy, if any, as may be adopted by the Company and applicable to the Participant; and (ii) under such other forfeiture and/or recoupment provisions set forth in an Award agreement, or other terms of an Award, under the 2025 Plan.
(k) Data Privacy. Subject to any specific data privacy terms set out in an applicable Award agreement, by accepting or being deemed to have accepted an Award under the 2025 Plan, each Participant hereby consents to the collection, use and transfer, in electronic or other form, of the Participant’s Personal Data (as described below) by and among, as applicable, the Company and any Subsidiary or third parties as may be selected by the Company, for the exclusive purpose of implementing, administering, and managing the Participant’s participation in the 2025 Plan. The Company and any Subsidiary or designated third parties may hold personal information about a Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company or any Subsidiary, details of all Awards or Stock awarded, canceled, vested, settled, unvested or outstanding in the Participant’s favor (“Personal Data”). Each Participant understands that Personal Data may be transferred to any Subsidiary or third parties assisting in the implementation,
administration and management of the 2025 Plan, that these recipients may be located in the United States, the Participant’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. In particular, the Company may transfer Personal Data to the broker or stock plan administrator assisting with the 2025 Plan, to its legal counsel and tax/accounting advisor(s), and to the Subsidiary that is the Participant’s employer and its payroll provider.
SECTION 14. DEFINITIONS
The following terms shall be defined as set forth below:
(a) “Account” means a bookkeeping account established and maintained under Section 7(e) in the name of each Eligible Director to which Annual Deferred Stock Awards, Additional Deferred Stock Awards, and Dividend Awards are credited hereunder.
(b) “Act” means the Securities Exchange Act of 1934.
(c) “Additional Deferred Stock Award” means an Award granted to an Eligible Director pursuant to Section 7(e)(v).
(d) “Annual Deferred Stock Award” means an Award granted to an Eligible Director pursuant to Section 7(e)(iv).
(e) “Annual Meeting” shall mean the annual meeting of stockholders of the Company.
(f) “Award” or “Awards,” except where referring to a particular category of grant under the 2025 Plan, shall include Stock Options, SARs, Stock Awards, Other Stock-based Awards and Performance Awards. For the avoidance of doubt, the term “Award” or “Awards” also includes all Outstanding Awards originally granted under any Prior Plan.
(g) “Board” means the Board of Directors of the Company.
(h) “Cause” means (i) as to any Participant who at the relevant time is party to an employment, severance, or similar agreement with the Company or a Subsidiary that is approved by the Committee and contains a definition of “cause” (including any similar term used in connection with a for-cause involuntary termination), the definition set forth in such agreement, and (ii) in every other case, except as provided by the Committee or as set forth in an Award agreement under the 2025 Plan, a felony conviction of a Participant or the failure of a Participant to contest prosecution for a felony, or a Participant’s willful misconduct or dishonesty, any of which is directly harmful to the business or reputation of the Company or any Subsidiary. A termination for Cause shall also be deemed to have occurred in circumstances that in the sole determination of the Committee would have constituted grounds for the Participant’s employment to be terminated for Cause.
(i) “Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
(j) “Committee” means the Committee referred to in Section 2.
(k) “Company” is defined in Section 1.
(l) “Director” means a member of the Board.
(m) “Disability” means disability as determined in accordance with standards and procedures similar to those used under the Company’s long term disability program. The Committee shall have the authority to deem an inactive employee as having been terminated by reason of Disability.
(n) “Dividend Award” means an Award granted to an Eligible Director pursuant to Section 7(e)(vi).
(o) “Effective Date” means September 30, 2025, the original effective date of the 2025 Plan.
(p) “Amendment and Restatement Date” means September 12, 2026, the date on which the 2025 Plan was amended and restated in its entirety and became effective as amended and restated.
(q) “Eligible Director” means a Director who is not employed by the Company or by any Subsidiary.
(r) “Fair Market Value” on any given date means the last sale price regular way at which Stock is traded on such date as reflected in the New York Stock Exchange Composite Index (or any successor index determined by the Committee) or, where applicable, the value of a share of Stock as determined by the Committee in accordance with the applicable provisions of the Code.
(s) “Full Value Award” means an Award other than a Stock Option or an SAR.
(t) “Independent Director” means a Director who is a Non-Employee Director and an “independent director” within the meaning of Section 303A.02 of the New York Stock Exchange Listed Company Manual (or any successor rule) or under such other applicable standard as the New York Stock Exchange (or any successor exchange) may establish pursuant to its rule-making authority.
(u) “ISO” means a Stock Option intended to be and designated as an “incentive stock option” as defined in the Code.
(v) “Non-Employee Director” shall have the meaning set forth in Rule 16b-3(b)(3) promulgated under the Act, or any successor definition under the Act.
(w) “NSO” means any Stock Option that is not an ISO.
(x) “Normal Retirement” means, subject to and in accordance with such rules as may be prescribed by the Committee, retirement from active employment with the Company and its Subsidiaries at or after age 65 with at least five years of service for the Company and its Subsidiaries. For purposes of determining whether a retirement is a Normal Retirement, years of service shall be determined by the Committee; provided, that, except as otherwise provided by the Committee, periods of service for an entity prior to the date the entity becomes a Subsidiary will not be treated as service.
(y) “Other Stock-based Award” means an Award of one of the types described in Section 7.
(z) “Participant” means a participant in the 2025 Plan.
(aa) “Performance Award” means an Award described in Section 8.
(bb) “Performance Criteria” means specified criteria, other than the mere continuation of employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. Performance Criteria may be based on any one or any combination of the criteria described in this definition. Each Performance Criterion and any targets with respect thereto need not be based upon an increase, a positive or improved result or avoidance of loss and may be applied to a Participant individually, or to a business unit or division of the Company or to the Company as a whole. Each Performance Criterion may be based on objectively determinable or qualitative measures of performance, may be measured on an absolute basis or relative to one or more comparators, including one or more companies or indices, and may be determined on a consolidated, divisional, line of business, project, geographical or individual responsibilities basis. Each Performance Criterion may also be based on strategic objectives, individual performance and/or subjective performance criteria. The Committee may provide that one or more of the Performance Criteria applicable to such Award will be adjusted in a manner to reflect events (for example, but without limitation, acquisitions or dispositions, divestitures, extraordinary items, other unusual or non-recurring items and/or changes in accounting principles) occurring during the performance period that affect the applicable Performance Criterion or Criteria. Nothing herein shall be construed as limiting the Committee’s authority to reduce or eliminate a Performance Award (including, without limitation, by restricting vesting under any such Award) that would otherwise be deemed to have been earned.
(cc) “2025 Plan” is defined in Section 1 and means the Veri Medtech Holdings, Inc. Stock Incentive 2025 Plan, originally effective as of September 30, 2025, as amended and restated effective as of September 12, 2026.
(dd) “Prior Plans” means all stock incentive, equity compensation, stock option, restricted stock, restricted stock unit, stock unit, deferred stock, performance award and other equity-based compensation plans, programs or arrangements of the Company or any predecessor of the Company that were adopted, established or maintained at any time before the Amendment and Restatement Date, regardless of the year of adoption or establishment, the date of any amendment, the date of any Award granted thereunder, or the name or title of such plan, program or arrangement, including, without limitation, any such plan, program or arrangement adopted or maintained in 2025, 2024idiaries. For purposes of determining whether a retirement is a Special Service Retirement, years of service shall be determined by the Committee; provided, that, except as otherwise provided by the Committee, periods of service for an entity member of a group constituting the Person acquiring control, a transaction shall not be deemed to be a Change of Control as to a Participant unless the Committee shall otherwise determine prior to
such occurrence more of the Company’s Common Stock and thereafter individuals who were not directors of the Company prior to the date such Person became a 20% owner are elected as directors pursuant to an arrangement or understanding with, or upon the request of or nomination by, such Person and constitute a majority of the Board; provided, however, that unless the Committee shall otherwise determine prior to the acquisition of such 20% ownership, such acquisition of solicitation or series of solicitations of proxies by or on behalf of any Person other than the Board and thereafter individuals who were not directors of the Company prior to the commencement of such solicitation or series of solicitations; provided, however, that unless otherwise determined by the Committee, no transaction shall constitute a Change of Control as to a Participant if, immediately after such transaction, the Participant or any Participant Related Party shall own, 2023 or any earlier year.
(ee) “Restricted Stock” is defined in Section 7(a).
(ff) “Stock Award” means an award described in Section 7.
(gg) “SAR” means an Award described in Section 6(g).
(hh) “Stock Unit” is defined in Section 7(a).
(ii) “Share Limit” means the maximum number of shares of Stock available for issuance under the 2025 Plan as provided in Section 3(a), determined as of the Amendment and Restatement Date.
(jj) “Special Service Retirement” means, subject to and in accordance with such rules as may be prescribed by the Committee, retirement from active employment with the Company and its Subsidiaries (i) at or after age 60 with at least twenty years of service for the Company and its Subsidiaries, or (ii) at or after age 65 with at least ten years of service for the Company and its Subsidiaries. For purposes of determining whether a retirement is a Special Service Retirement, years of service shall be determined by the Committee; provided, that, except as otherwise provided by the Committee, periods of service for an entity prior to the date the entity becomes a Subsidiary will not be treated as service.
(kk) “Stock” means the Common Stock, $.0001 par value, of the Company, subject to adjustments pursuant to Section 3.
(ll) “Stock Option” means any option to purchase shares of Stock granted pursuant to Section 6.
(mm) “Subsidiary” means any corporation or other entity (other than the Company) in an unbroken chain beginning with the Company if each of the entities (other than the last entity in the unbroken chain) owns stock or other interests possessing 50% or more of the total combined voting power of all classes of stock or other interest in one of the other corporations or other entities in the chain.
EXHIBIT A
DEFINITION OF “CHANGE OF CONTROL”
“Change of Control” shall mean the occurrence of any one of the following events:
(a) there occurs a change of control of the Company of a nature that would be required to be reported in response to Item 5.01 of the Current Report on Form 8-K (as amended in 2004) pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) or in any other filing under the Exchange Act; provided, however, that if the Participant or a Participant Related Party is the Person or a member of a group constituting the Person acquiring control, a transaction shall not be deemed to be a Change of Control as to a Participant unless the Committee shall otherwise determine prior to such occurrence; or
(b) any Person other than the Company, any wholly-owned subsidiary of the Company, or any employee benefit plan of the Company or such a subsidiary becomes the owner of 20% or more of the Company’s Common Stock and thereafter individuals who were not directors of the Company prior to the date such Person became a 20% owner are elected as directors pursuant to an arrangement or understanding with, or upon the request of or nomination by, such Person and constitute a majority of the Board; provided, however, that unless the Committee shall otherwise determine prior to the acquisition of such 20% ownership, such acquisition of ownership shall not constitute a Change of Control as to a Participant if the Participant or a Participant Related Party is the Person or a member of a group constituting the Person acquiring such ownership; or
(c) there occurs any solicitation or series of solicitations of proxies by or on behalf of any Person other than the Board and thereafter individuals who were not directors of the Company prior to the commencement of such solicitation or series of solicitations are elected as directors pursuant to an arrangement or understanding with, or upon the request of or nomination by, such Person and constitute a majority of the Board; or
(d) the Company executes an agreement of acquisition, merger or consolidation which contemplates that (i) after the effective date provided for in such agreement, all or substantially all of the business and/or assets of the Company shall be owned, leased or otherwise controlled by another Person and (ii) individuals who are directors of the Company when such agreement is executed shall not constitute a majority of the board of directors of the survivor or successor entity immediately after the effective date provided for in such agreement; provided, however, that unless otherwise determined by the Committee, no transaction shall constitute a Change of Control as to a Participant if, immediately after such transaction, the Participant or any Participant Related Party shall own equity securities of any surviving corporation (“Surviving Entity”) having a fair value as a percentage of the fair value of the equity securities of such Surviving Entity greater than 125% of the fair value of the equity securities of the Company owned by the Participant and any Participant Related Party immediately prior to such transaction, expressed as a percentage of the fair value of all equity securities of the Company immediately prior to such transaction (for purposes of this paragraph ownership of equity securities shall be determined in the same manner as ownership of Common Stock); and provided, further, that, for purposes of this paragraph (d), if such agreement requires as a condition precedent approval by the Company’s shareholders of the agreement or transaction, a Change of Control shall not be deemed to have taken place unless and until the acquisition, merger, or consolidation contemplated by such agreement is consummated (but immediately prior to the consummation of such acquisition, merger, or consolidation, a Change of Control shall be deemed to have occurred on the date of execution of such agreement).
In addition, for purposes of this Exhibit A the following terms have the meanings set forth below:
“Common Stock” shall mean the then outstanding Common Stock of the Company plus, for purposes of determining the stock ownership of any Person, the number of unissued shares of Common Stock which such Person has the right to acquire (whether such right is exercisable immediately or only after the passage of time) upon the exercise of conversion rights, exchange rights, warrants or options or otherwise. Notwithstanding the foregoing, the term Common Stock shall not include shares of Preferred Stock or convertible debt or options or warrants to acquire shares of Common Stock (including any shares of Common Stock issued or issuable upon the conversion or exercise thereof) to the extent that the Board shall expressly so determine in any future transaction or transactions.
A Person shall be deemed to be the “owner” of any Common Stock:
(i) of which such Person would be the “beneficial owner,” as such term is defined in Rule 13d-3 promulgated by the Securities and Exchange Commission (the “Commission”) under the Exchange Act, as in effect on March 1, 1989; or
(ii) of which such Person would be the “beneficial owner” for purposes of Section 16 of the Exchange Act and the rules of the Commission promulgated thereunder, as in effect on March 1, 1989; or
(iii) which such Person or any of its affiliates or associates (as such terms are defined in Rule 12b-2 promulgated by the Commission under the Exchange Act, as in effect on March 1, 1989) has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise.
“Person” shall have the meaning used in Section 13(d) of the Exchange Act, as in effect on March 1, 1989.
A “Participant Related Party” shall mean, with respect to a Participant, any affiliate or associate of the Participant other than the Company or a Subsidiary of the Company. The terms “affiliate” and “associate” shall have the meanings ascribed thereto in Rule 12b-2 under the Exchange Act (the term “registrant” in the definition of “associate” meaning, in this case, the Company).
Notwithstanding the foregoing, in any case where the occurrence of a Change of Control could affect the vesting of or payment under an Award subject to the requirements of Section 409A of the Code, the term “Change of Control” shall mean an occurrence that both (i) satisfies the requirements set forth above in this Exhibit A, and (ii) is a “change in control event” as that term is defined in the regulations under Section 409A of the Code.
Ex. 10.7
2026 STOCK REPURCHASE PLAN
VERI MEDTECH HOLDINGS, INC.
JULY 15, 2026
Stock Repurchase Program: The 2026 Program authorizes the Company to repurchase, at any time, up to 3,000,000 shares of its VRHI common stock on the open market, in privately negotiated transactions or otherwise at the Company’s sole discretion. The 2026 Program may be altered, suspended, or terminated at any time based on various factors including but not limited to market conditions, share price, alternative investment opportunities. The 2026 Program does not obligate or mandate the Company to make any stock purchases of any specific amount, supersedes any other program(s) and continues until terminated.
EXHIBIT 21.1
List of Subsidiaries of the Registrant
Subsidiary |
| Place of Incorporation |
DosePop Inc. |
| Delaware |
Veriheal, Inc. |
| Delaware |
Alternative Medical Clinic LLC |
| Delaware |
Sky Clinics LLC |
| Wyoming |
Consent of Independent Registered Public Accounting Firm
We hereby consent to the use of our report dated May 7, 2026, (except for the reverse stock split discussed in Note 11 as to which the date is September 9, 2026) on the consolidated financial statements of Veri Medtech Holdings, Inc. for the years ended December 31, 2025 and 2024 included herein on the registration statement of Veri Medtech Holdings, Inc. on Form S-1, Amendment 6 and to the reference to our firm under the heading “Experts” in the prospectus.
/s/ Salberg & Company, P.A.
SALBERG & COMPANY, P.A.
Boca Raton, Florida
September 14, 2026