VenHub Global, Inc.: Form 10-Q for the period ended Mar 31, 2026

Throughout this section, unless otherwise noted “we,” “us,” “our,” “Company,” “VenHub,” refers to VenHub Global, Inc., and its consolidated subsidiaries. You should read the following discussion and analysis in conjunction with VenHub’s consolidated financial statements, which VenHub has prepared in accordance with GAAP, included elsewhere in this proxy statement. This discussion contains forward-looking statements that involve risks and uncertainties. VenHub’s actual results and timing of events could differ materially from those anticipated in these forward-looking statements due to various factors, including those set forth under “Risk Factors” and elsewhere in this proxy statement/prospectus.

Overview

Business Model

VenHub Global, Inc. is a fully autonomous and robotic-operated store that utilizes advanced technologies such as artificial intelligence (AI) and smart inventory management systems to offer a seamless shopping experience for customers. The Company intends VenHub technology to combine the convenience of a store with the efficiency of robotics. This will be achieved by providing customers with a unique shopping experience that will be fully autonomous and that operates 24/7. The Company believes that with its use of advanced sensors, artificial intelligence, and robotics, VenHub is designed to ensure that customers will always have access to products with a few taps on their smartphones. From scanning and purchasing products to bagging and delivering them, VenHub’s robots will be able to take care of everything in a seamless and efficient manner. The store’s artificial intelligence algorithm will be able to keep track of customer preferences, allowing it to tailor its offering to meet individual customer’s tastes and preferences.

The Company’s business model is designed to generate both one-time deployment revenue from the sale and installation of Smart Store units, as well as recurring revenue from SaaS subscriptions, maintenance agreements, support services, and other platform-related offerings. While the Company has not yet charged customers for SaaS or maintenance services as part of its early commercialization strategy, management expects recurring revenue streams to become an increasingly important component of the Company’s operating model as commercial deployments expand.

Management believes the recurring nature of SaaS and maintenance revenue may provide greater long-term revenue visibility and operating leverage as the installed base of Smart Store units grows.

The Company is continuing to build its commercialization and deployment infrastructure to support the anticipated expansion of Smart Store deployments. Through its subsidiaries, the Company manages manufacturing, assembly, installation, software development, maintenance, and support operations associated with its Smart Store platform. Management believes the Company’s operational structure is designed to support future scaling of deployments across both Company-owned and customer-operated locations.

As commercialization efforts continue, the Company expects scaling activities to include increased manufacturing capacity, inventory procurement, deployment logistics, installation coordination, software support, and field maintenance operations. The Company’s ability to expand deployments remains dependent on several factors, including available capital resources, supply chain conditions, customer demand, site readiness, and operational execution.

Management believes the Company’s current investments in inventory, infrastructure, software, and operational capabilities position the Company to support future growth and broader commercial rollout initiatives.

The Company has four subsidiaries:

VenHub, LLC to manage manufacturing, assembly and installation of units.

VenHub, Services LLC to provide software-as-a-service (SaaS) and ongoing maintenance services.

VenHub IP, LLC to hold and manage the Company’s intellectual property.

VenHub Stores LLC, to manage all Company owned stores.

On January 30, 2026, the Company commenced trading under the ticker symbol “VHUB” on the NASDAQ Global Market.

The Company currently has four full time employees and over 40 independent contractors. The Company will be converting the majority of independent contractors to full time employees throughout the rest of 2026 using a Professional Employment Organization “PEO”.

By reducing the need for employees, VenHub offers store owners labor cost savings, paving the way for potential increased profits. Leveraging sensors, artificial intelligence, and robotics, VenHub promises a shopping adventure that is not only seamless but also deeply personal. With a tap of a smartphone, and let VenHub’s robots whisk you through a journey, from scanning and purchasing products to bagging and delivering them with planned precision. As described in “Business of VenHub and Certain Information About VenHub,” the Company’s Smart Stores are delivered as fully functional physical autonomous retail units capable of performing core physical and mechanical robotic operations using embedded software installed at deployment. SaaS activation is not required for the Smart Store to perform these core physical functions and is addressed separately pursuant to distinct SaaS agreements as the Company transitions to scaled commercial operations.

The Company is in the initial deployment phase of its Smart Store platform. While customer agreements contemplate that purchasers will subscribe to the Company’s cloud-based SaaS platform, the enhanced SaaS functionality has not yet been activated for customer use. For early deployments, the Company has implemented an introductory concession under which SaaS subscription fees may be waived for up to twelve months. Accordingly, no SaaS revenue has been recognized to date.

As of the date of this filing, none of the Company’s deployed Smart Stores have software-as-a-service (“SaaS”) functionality activated, and the Company does not currently provide analytics, dashboards, reporting tools, or other operator-facing software to store owners or operators. Any mobile application functionality is limited to consumer product browsing, ordering, and checkout, is provided free of charge to customers, and is not part of the Company’s SaaS platform. The Company expects to introduce customer-accessible and operator-accessible SaaS functionality in future Smart Store versions under separate commercial terms.

As of the date of this filing, the Company has deployed five (5) Smart Stores, and none of these stores have SaaS functionality activated. Accordingly, five of five (5 of 5), or 100%, of the Company’s deployed Smart Stores are currently operating without SaaS activation.

As of March 31, 2026, the Company has six Smart Store units under contract for planned deployment in Las Vegas, Nevada during 2026. Advance payments received in connection with these contracts are recorded as deferred revenue on the consolidated balance sheet. Revenue will be recognized as the related performance obligations are satisfied in accordance with ASC 606.

In addition to existing contracted deployments, the Company is engaged in ongoing discussions with multiple casino and hospitality operators in Las Vegas regarding the potential deployment of Smart Store units at their respective properties. Management believes these discussions reflect growing interest in autonomous retail solutions within high-traffic entertainment and hospitality venues. While no assurances can be provided that these discussions will result in executed agreements or future deployments, the Company views these opportunities as part of its broader pipeline of prospective commercial locations and future growth initiatives.

A typical sales cycle for the Company’s Smart Store deployments ranges from approximately two to six months, depending on the customer type, site readiness, permitting requirements, and customization needs. The sales process generally begins with initial customer outreach, demonstrations, and evaluation of deployment opportunities, followed by commercial negotiations, site selection, and execution of purchase agreements.

Following contract execution, customers typically provide an advance deposit to secure production scheduling and deployment timelines. The Company then proceeds through site planning, permitting, manufacturing customization, logistics coordination, installation, and commissioning of the Smart Store. Timing can vary depending on local permitting processes, utility readiness, and customer-specific integration requirements.

For enterprise customers, including casinos, transportation hubs, municipalities, and hospitality venues, the sales cycle may be longer due to internal approval processes, compliance reviews, and coordination with multiple stakeholders. Conversely, standardized deployments for repeat customers or existing partners may result in shorter implementation timelines.

Management believes that as the Company expands operational deployments, establishes repeat customer relationships, and further standardizes manufacturing and installation processes, overall deployment timelines and sales conversion cycles may improve over time.

The VenHub was first displayed publicly on October 25, 2023, in Pasadena at the unveiling of its Alpha Smart Store with approximately 150 attendees.

The Company has since launched a full assembly production facility in Las Vegas, Nevada to meet the market demand. At the core of VenHub will be an intelligent algorithm that understands your unique preferences, by tracking customer tastes and curating a selection that caters specifically to the customer.

VenHub aims to revolutionize the way people shop for their daily necessities, its vision is to create a world where shopping is effortless, convenient and accessible.

The Company sold its first two stores in the first quarter of 2025, with locations in North Hollywood, and Glendale, California respectively. In the second quarter VenHub opened its Company owned flagship store at Los Angeles Airport (LAX) In the third quarter the Company sold a store which opened in Hollywood, CA. VenHub deployed a Company owned store at Union Station Los Angeles during the fourth quarter of 2025.

The Company’s strategy is focused on scaling production and developing recurring revenue streams through SaaS and maintenance services, which are expected to be monetized in future periods.

Key Factors Affecting Our Performance

Our Company has limited operating history. The Company was formed as a corporation in 2023. We have limited established business operations, and it is currently unclear, if any, of our current and intended plans may come into fruition and, if they do, which ones will be a success. To date, the Company has incurred net losses and has generated limited revenue. There is no assurance that the Company will ever be able to establish successful business operations, become profitable or generate sufficient revenues to operate our business or pay dividends.

Defects, failures or security breaches in and inadequate upgrades of, or changes to, our vending machines and its accompanying software could harm our business. The operation of our business depends on sophisticated software, hardware, computer networking and communication services that may contain undetected errors or may be subject to failures or complications. These errors, failures or complications may arise particularly when new, changed or enhanced products or services are added. Future upgrades, improvements or changes that may be necessary to expand and maintain our business could result in delays or disruptions or may not be timely or appropriately made, any of which could seriously harm our operations. Further, certain aspects of the operating systems relating to our business are provided by third parties, including telecommunications. Accordingly, the effectiveness of these operating systems is, to a certain degree, dependent on the actions and decisions of third parties over whom we may have limited control.

The Company depends on key personnel and faces challenges recruiting needed personnel. The Company’s future success depends on the efforts of a small number of key personnel. In addition, due to its limited financial resources and the specialized expertise required, it may not be able to recruit the individuals needed for its business needs. There can be no assurance that the Company will be successful in attracting and retaining the personnel the Company requires to operate and be innovative.

Revenue

Our revenue to date has been derived primarily from the sale of Smart Stores and product sales in our Company owned stores. Revenue from Smart Store sales is recognized when control of the unit transfers to the customer, generally upon delivery. The revenue from product sales (items sold through the VenHub store) is recognized when control of the product transfers to the end customer, which generally occurs at the point of sale when the customer completes the transaction and the product is dispensed from the Smart Store.

For our initial Smart Store deployments, the Company has granted a temporary commercial waiver of SaaS consideration for up to twelve (12) months for initial deployments. During this period, the Company does not provide the enhanced cloud-based functionality contemplated by the agreement. This introductory waiver applies only to SaaS services. For example, during the year ended December 31, 2025, the Company entered into SaaS agreements in connection with the North Hollywood and Glendale Smart Stores. While these agreements were executed, the transaction price allocated to SaaS was zero because the Company elected not to provide such services as part of its early commercialization strategy.

As a result, no revenue related to SaaS or maintenance services has been recognized for the periods presented. When implemented, SaaS revenue will be recognized ratably over the subscription term, typically one year, and maintenance revenue will be recognized over the contract period. We believe these services will represent a growing and recurring component of our revenue model in future periods. SaaS activation is expected to occur in phases as integrations and deployment configurations are completed

Introductory SaaS Concession

To support early customer adoption and refine the performance of initial deployments, the Company implemented an introductory concession under which customers receive up to twelve months of SaaS access at no charge. During this period, the enhanced cloud-based SaaS functionality has not been activated, and therefore no SaaS revenue has been recognized. The introductory waiver applies only to SaaS services. Because SaaS subscription fees are waived during the introductory period, the transaction price allocated to SaaS is $0 for the periods presented, and all consideration is allocated to the Smart Store hardware in accordance with ASC 606-10-32-28. Maintenance services must be contracted separately and were not contracted for in the periods presented.

The Company evaluated its revenue arrangements in accordance with ASC 606-10-25-19 through 25-22 and determined that Smart Store hardware, SaaS services, and maintenance services are separate performance obligations. The Smart Store is fully functional upon delivery without SaaS activation, the SaaS platform does not significantly modify or customize the hardware, and the promises are not highly interdependent or interrelated. As a result, Smart Store revenue is recognized at a point in time, while SaaS and maintenance revenues, once activated or contracted, will be recognized over time. For product sales, revenue is typically recognized at the point in time when control is transferred, which generally occurs upon shipment or delivery, depending on the terms of the contract.

Going Concern

As of March 31, 2026, the Company has sold three stores and is operating two Company owned stores which were operational on June 6, 2025 and November 4, 2025. Since its inception, the Company has experienced recurring losses and, as of March 31, 2026, reported an accumulated deficit of $98,777,720 and negative cash flows from operating activities for the three months then ended. These matters raise substantial doubt about the Company’s ability to continue as a going concern. During the next twelve months, the Company intends to fund its operations with funds from revenue producing activities by fulfilling the pre order list along with exploring both additional equity and debt financing. If the Company cannot secure additional short-term capital, it may cease operations. These financial statements and related notes thereto do not include any adjustments that might result from these uncertainties.

Critical Accounting Policies and Estimates

Our significant accounting policies are more fully described in the notes to our consolidated financial statements. Those material accounting estimates that we believe are the most critical to an investor’s understanding of our financial results and condition are discussed immediately below and are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.

Inventory

Inventories are stated at the lower of cost or estimated realizable value. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company’s product based on management’s judgment, future commercialization is considered probable, and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development.

Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 – Revenue from Contracts (“ASC 606”) using the 5 step process:

1) Identify the contract with a customer.

2) Identify the performance obligations in the contract.

3) Determine the transaction price.

4) Allocate the transaction price.

5) Recognize revenue when the entity satisfies a performance obligation.

The Company’s primary sources of revenue are from the sale of Smart Stores, product sales at the Company owned stores and, once fully commercialized, recurring subscription fees for its SaaS platform and related maintenance and support services.

Property and Equipment

Property and equipment is recorded at cost and consists primarily of robotics systems, store structures, and related technology infrastructure. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are expensed as incurred. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the balance sheet accounts and the resultant gain or loss is reflected in income. As of March 31, 2026, the Company had $1,276,439 of property and equipment, net. The Company had $1,275,078 of property and equipment, net at December 31, 2025.

Depreciation is provided using the straight-line method, based on useful lives of the assets, which the Company estimates is 5-7 years. The Company’s property and equipment is comprised of machinery and equipment and leasehold improvements whose useful life is the lesser of the remaining lease term or estimated useful life.

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized as equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. The Company had no impairment as of March 31, 2026.

The Company capitalizes the costs of constructing and preparing company-owned retail stores and display centers for their intended use. Capitalized costs include expenditures directly attributable to the acquisition, construction, and development of store locations, such as leasehold improvements, construction costs, architectural and design fees, furniture, fixtures, and equipment. Internal payroll and related costs that are directly associated with store development activities are also capitalized.

Once a store or display is placed into service, the assets are depreciated on a straight-line basis over their estimated useful lives, which generally range from five to seven years for furniture, fixtures, and equipment, and over the shorter of the useful life or lease term for leasehold improvements. Routine maintenance and repair costs are expensed as incurred.

If indicators of impairment are present, the Company evaluates company-owned stores or display centers for recoverability by comparing the carrying amount of the store assets to the estimated future undiscounted cash flows expected to be generated. If the carrying value exceeds expected cash flows, an impairment charge is recognized equal to the amount by which the carrying value exceeds fair value.

Stock Based Compensation

The Company recognizes as compensation expense all share-based payment awards made to employees, directors, and consultants including grants of stock, stock options and warrants, based on estimated fair values. Fair value is generally determined based on the closing price of the Company’s common stock on the date of grant and is recognized over the service period.

Key Components of Results of Operations

For the three months ended March 31, 2026 and 2025

Revenues and cost of goods sold

There was $67,836 of revenue and $64,147 in cost of goods sold for the three months ended March 31, 2026, all relating to product sales and costs of goods sold from our Company owned stores For the three months ended March 31, 2025, we had $500,000 of revenue and $323,388 of cost of revenue, from the sale of our first two smart stores.

The decrease in revenue was primarily attributable to the timing of the Company’s Smart Store deployments. During the three months ended March 31, 2025, the Company recognized revenue related to the delivery of Smart Store units to customers. In contrast, during the three months ended March 31, 2026, the Company had not yet commenced delivery of Smart Store units under new customer contracts, and therefore did not recognize comparable store sale revenue during the period.

The Company’s revenue model for Smart Store sales is based on the transfer of control of the store to the customer, which generally occurs upon delivery and installation. As a result, revenue is inherently subject to period-to-period fluctuations based on the timing of store deliveries, rather than consistent recognition over time.

While the Company continues to build its pipeline of customer orders and has received advance payments reflected as deferred revenue on the balance sheet, revenue will not be recognized until the related performance obligations are satisfied through the delivery of Smart Store units.

The Company expects revenue to increase in future periods as it begins fulfilling its existing backlog of customer orders and continues to scale its production and deployment capabilities. However, the timing of such revenue recognition will depend on manufacturing, installation schedules, and customer readiness.

During the quarter ended March 31, 2026, the Company adjusted pricing across select product categories to improve transaction volume and customer engagement as part of ongoing optimization of its automated retail model.

General and administrative expenses

For the year three months ended March 31, 2026

Our total operating expenses for the three months ended March 31, 2026 were $4,463,355. This was comprised of $1,271,177 in share-based compensation, $841,500 in contractor expense, $640,941 in advertising, $482,500 in accrued compensation, $373,069 in legal and professional expense, $316,279 in travel, $173,529 in rent, $110,301 in dues and subscriptions, $88,715 in research and development, $82,513 in insurance, $68,764 in depreciation and amortization and $14,067 in miscellaneous expense.

We incurred $12,149,544 in other expense for the three months ended March 31, 2026 consisting of $11,217,349 in interest expense and $932,195 of change in fair value of convertible debt.

As a result of the foregoing, we had a net loss of $16,609,210 for the three months ended March 31, 2026.

For the three months ended March 31, 2025

Our total operating expenses were $9,355,889. This was comprised of $7,609,099 in non-cash share-based compensation, $465,806 in contractor expense, $335,521 in legal and professional expense, $317,500 in accrued compensation, $301,355 in research and development, $140,988 in advertising related to our crowdfunding, $70,130 in rent, $39,581 in travel, $11,575 in depreciation and $64,244 in miscellaneous expense.

We incurred $169,598 of other expense comprised of $108,033 in interest expense and $61,565 in change of fair value of convertible debt for the period.

As a result of the foregoing, we had a net loss of $9,348,875 for the three months ended March 31, 2025.

Results of Operations for the Three Months Ended March 31, 2026, Compared to 2025

Other Expense

7

Net Loss

Total operating expenses for the three months ended March 31, 2026 were $4,463,355, compared to $9,355,889 for the three months ended March 31, 2025, representing a decrease of $4,892,534, or 52%. The decrease was primarily attributable to a reduction in non-cash share-based compensation of $6,337,922, reflecting significant equity grants in the prior year that did not recur in the current period. This decrease was partially offset by increases in contractor expense, advertising, accrued compensation, travel, and rent, driven by the Company’s continued operational expansion, including store deployments, increased marketing efforts, and higher personnel-related costs. Additional increases in dues and subscriptions and insurance expenses reflect costs associated with scaling operations and operating as a public company. Depreciation and amortization increased due to the capitalization and deployment of store-related assets, while research and development expense decreased as the Company shifted its focus from development activities toward commercialization.

Other expense for the three months ended March 31, 2026 was $12,149,544, compared to $169,598 for the three months ended March 31, 2025, representing an increase of $11,979,946. This increase was primarily driven by $11,217,349 in interest expense related to the Company’s convertible debt financing, including amortization of debt discounts and payment-in-kind interest, as well as a $932,195 increase in the change in fair value of convertible debt.

As a result of the foregoing, the Company reported a net loss of $16,609,210 for the three months ended March 31, 2026, compared to a net loss of $9,348,875 for the three months ended March 31, 2025. The increase in net loss was primarily driven by higher financing-related expenses, partially offset by a decrease in non-cash share-based compensation.

Liquidity and Capital Resources

March 31, 2026

As of March 31, 2026 we had working capital of $1,679,592 comprised of $5,796,468 in cash, $2,432,864 in inventory, $942,151 in prepaid expenses, $48,637 in sales tax receivable, $2,000 in security deposit – current offset by $1,356,333 in accounts payable and accrued expenses, $2,100,000 in loan payable – related party, $2,013,606 in accrued payroll and compensation, $1,500,000 in deferred revenue, $351,335 in current operating lease liability, $179,500 in customer deposits, $34,789 in interest payable - current and sales tax payable of $6,965.

Non-current assets included $1,276,439 in property and equipment, net, $851,524 in right of use asset, and $153,046 in security deposits.

Non-current liabilities consisted of $619,154 in right of use liability.

December 31, 2025

At December 31, 2025, we had negative working capital of $9,192,737 comprised of $89,634 in cash, $1,021,947 in inventory, and $248,032 in prepaid expenses $2,000 in security deposit - current, offset by $4,576,949 in convertible debt at fair value, $2,114,487 in accrued payroll and compensation, $1,500,000 in deferred revenue relating to down payments for pre orders, $1,000,000 in loan payable – related party, $716,329 in accounts payable and accrued expenses, $346,953 in current operating lease liability, $203,645 in customer deposits and $89,148 in interest payable and $6,839 in sales tax payable.

Non-current assets included $1,275,078 in property and equipment — net, $907,705 in right of use asset, and $79,566 in security deposits.

Non-current liabilities consisted of $2,550,930 in promissory note, $706,441 in right of use liability and $131,549 in interest payable.

For the three months ended March 31, 2026

We used $7,512,685 of cash in operating activities which represented our net loss from continuing operations of $16,609,210 including $11,300,000 in non-cash interest expense related to note extension, $1,271,177 in share based compensation, $932,195 of change in fair value of convertible debt, $640,004 in accounts payable and accrued expenses, $56,181 of change in operating right of use asset, $68,764 in depreciation and amortization expense, $126 in sales tax payable offset by $2,550,930 in settlement payment related to promissory note, $1,410,917 in inventory, $694,119 in prepaid expenses, $185,908 in interest payable, $100,881 in accrued payroll and compensation, $82,905 of change in operating right of use liability, $73,480 in security deposit, $48,637 in sales tax receivable, and $24,145 in customer deposits.

We used $70,124 of cash in investing activities relating to property and equipment, net.

We generated $13,289,643 of cash from financing activities including $18,865,000 in proceeds from warrant issuance, $1,100,000 in related party notes, $300,012 in proceeds from stock purchase agreements, offset by $5,509,144 in repayment of convertible notes and $1,466,225 in payment of offering costs.

For the three months ended March 31, 2025

We used $1,354,246 of cash in operating activities which represented our net loss from continuing operations of $9,348,875 including $7,609,099 in share-based compensation, $322,360 in inventory, $164,500 in accrued payroll and compensation, $108,033 in interest payable, $88,704 in deferred offering cost, $61,565 in unrealized loss on convertible debt, $19,638 of change in operating right of use asset, $15,000 in security deposit, $11,308 in depreciation expense offset by $243,883 in accounts payable and accrued expenses, $115,900 in prepaid expenses, $44,795 of change in operating right of use liability and $1,000 in deferred revenue.

We had no investing activities for the three months ended March 31, 2025.

We generated $752,701 of cash from financing activities consisting of $102,701 in proceeds from crowdfunding and $650,000 in proceeds from convertible debt, net.

On February 14, 2025 the Company executed five notes with five investors for a combined $650,000.

Future Outlook

We have historically funded operations and development activities through a combination of debt, equity issuances, and, to a lesser extent, crowdfunding initiatives. During the past year, we began focusing on both debt financing and equity-based capital resources. This transition reflects both our strategic objective of reducing leverage and the increasing availability of equity capital as investor appetite for robotics and artificial intelligence companies continues to expand.

We expect this trend to continue in connection with our planned direct listing. The planned equity raise is reasonably likely to materially change the mix of our capital resources by decreasing reliance on debt facilities and enhancing our equity capitalization. We also anticipate that the relative cost of capital will improve, as equity financing is expected to provide greater flexibility and reduce interest expense obligations compared to prior debt arrangements.

While we may opportunistically evaluate additional credit facilities in the future, we do not currently anticipate significant off-balance-sheet financing arrangements or other alternative funding mechanisms that would materially alter our capital resource profile.

In October 2025, we entered into new employment agreements with our Chief Executive Officer and our President, effective upon the effectiveness of this registration statement. These agreements include annual base salaries, potential cash bonuses, and equity-based awards tied to geographic expansion and performance milestones. While the agreements contemplate potential annual cash bonuses of up to $3.2 million in the aggregate, such bonuses are contingent on the availability of legally distributable funds as defined under NRS 78.288, Board approval, and may be deferred or accrued until sufficient resources are available in compliance with Nevada law. Accordingly, we have not accrued any amounts for such bonuses to date.

If payable in full, these cash bonuses could increase our annual compensation expense and impact our liquidity. However, because payment is conditional and may be deferred, the timing and extent of this impact cannot be predicted with certainty.

We expect operating expenses to increase in future periods as we expand deployments of our autonomous Smart Stores, invest in further product development, and build out the organizational infrastructure required to support a scaled commercial business. In particular, we anticipate growth in payroll and compensation, research and development, and marketing expenses, partially offset by reduced reliance on share-based compensation compared to prior years. We may also incur increased legal and professional expenses in connection with our financing activities and as a result of our obligations as a public company.

In addition, the equity award provisions in these agreements could result in the issuance of significant additional shares in the event that geographic expansion or performance milestones are achieved, which could result in dilution to existing stockholders.

As of March 31, 2026, the Company had approximately $5.8 million in cash and cash equivalents compared to approximately $89 thousand as of December 31, 2025. The increase was primarily attributable to financing activities completed during the quarter, including proceeds from warrant issuances, stock purchase agreements, and related party financing arrangements.

The Company continues to incur operating losses and negative operating cash flows as it advances commercialization, expands operational infrastructure, and supports Smart Store deployment activities. Management expects operating expenses to continue as the Company invests in manufacturing, inventory procurement, software development, marketing, and deployment capabilities.

Management believes existing cash on hand, together with anticipated financing activities and future revenue-generating operations, will support the Company’s near-term operating and deployment objectives. However, the Company expects that additional capital may be required to execute its broader long-term commercialization and scaling strategy.

Disclosure controls and procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As required by the SEC Rules 13a-15(b) and 15d-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to material weaknesses in internal controls over financial reporting.

To address these material weaknesses, management engaged financial consultants, performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Audit Standard No. 5, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that as of March 31, 2026, our internal controls over financial reporting were not effective at the reasonable assurance level:

1. We do not have sufficient and fully memorialized written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for March 31, 2026. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

2. We do not have sufficient resources in our accounting function, which restricts the Company’s ability to gather, analyze and properly review information related to financial reporting in a timely manner. In addition, due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

3. We do not have personnel with sufficient experience with United States generally accepted accounting principles to address complex transactions.

4. We have inadequate controls to ensure that information necessary to properly record transactions is adequately communicated on a timely basis from non-financial personnel to those responsible for financial reporting. Management evaluated the impact of the lack of timely communication between non–financial personnel and financial personnel on our assessment of our reporting controls and procedures and has concluded that the control deficiency represented a material weakness.

5. We have determined that oversight over our external financial reporting and internal control over our financial reporting is ineffective. The Chief Financial Officer has not provided adequate review of the Company’s SEC’s filings and financial statements and has not provided adequate supervision and review of the Company’s accounting personnel or oversight of the independent registered accounting firm’s audit of the Company’s financial statement.

We have and continue to take steps to remediate some of the weaknesses described above, including by engaging a financial reporting advisor with expertise in accounting for complex transactions. We intend to continue to address these weaknesses as resources permit.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As a smaller reporting company, we are not required to provide the information required by this item. However, please refer to our Form 10-K as filed with and accepted by the SEC on March 23, 2024, to see those Risk Factors listed therein.