ORHub, Inc. Investor Update

To Our Investors:

First and foremost, we want to thank the majority of you who have shown tremendous support of the ORHub, Inc. (the “Company”) and management during an extremely challenging time.  Your support has come in many different ways including your time, your capital, and your patience in dealing with AXT Analytics, LLC and Mr. Buonincontri’s protracted and costly litigation. It is important to the Company that our investors are informed of factual events and details rather than opinion. In that spirit, there are some questions that have arisen in recent days to which we would like to give additional clarification:   

Note Agent Election and Legal Action

The Series 2017-A Note Agreement (the “Agreement”) (Link to NOTE AGREEMENT) is a contract between the Company and the former Series 2017-A “Note Holders”. Under “Section 5.3 Selection of Note Agent” of  the Agreement, “the Holder of the Note(s) with the largest outstanding principal balance (or, in the event no one Holder holds Note(s) with an outstanding principal balance greater than the others, then among such Holders, the Holder of the Note with the lowest registration number) shall appoint an individual to act as the Note Agent under this Agreement and notify each of the Holders of the appointment within that time period.” When there was concern voiced by Mr. Buonicontri about the Note Agent, ORHub management reached out to the three largest Note Holders to inquire as to whether or not they would like to be the Note Agent, at which time Mr. Stribrny indicated his desire to become Note Agent given his rights under the Note Agreement. In accordance with Section 5.3 of the Agreement, this litigation should have ended on November 20, 2018 when Mr. Stribrny formally accepted the position of Note Agent. 

During that process, Mr. Buonincontri filed for “receivership” (Link to RECEVIERSHIP MOTION) with neither the authority of being the Note Agent, nor the approval of the majority of the Note Holders to do so, which is clearly required and stated in Section 5.8 (b) “the Holders of not less than 50% of the aggregate principal amount of the outstanding Note shall have made written request to the Note Agent to institute proceedings in respect of such Event of Default in its own name as Note Agent hereunder”.  How many Note Holders received a ballot to vote in favor of a Note Agent to institute receivership proceedings? Answer: None!  There was no ballot to institute proceedings nor were a majority of the Note Holders in favor of filing for receivership.  

Note Conversion

In April 2019, another vote was held to convert the Notes at $0.10 in which the majority of the Note Holders (54.3%) voted in favor of the conversion.  This would have resulted in all Notes being converted and an end to the litigation, but Mr. Buonincontri filed a motion to stop the conversion, and contacting our transfer agent informing ComputerShare was NOT to convert any of the Notes (Link to LETTER TO COMPUTERSHARE).  Despite the lack of authority under the Agreement, this action was taken going against the majority of the Note Holders who did vote in favor of a conversion(“Section 8.2 Amendment.  This Agreement may be amended by an affirmative vote of more than 50% of the Note Holders with votes tabulated by the principal of the Notes held by such Note Holders, including any accrued and unpaid interest.  If any amendments are proposed, Note Holders will receive 10-day notice of the proposed amendment with a ballot.  Amendments may also be made by consent of a majority of the Holders in which case other Note Holders will receive a notice of such Amendment”).  AXT Analytics and Mr. Buonincontri challenged the validity and accuracy of the vote even though a majority of the Note Holders voted in favor of doing so.

For someone who claims to represent the interest of all Note Holders inclusive of the “majority” Note Holders, Mr. Buonincontri has on numerous occasions, ignored the interest and will of the “majority” Note Holders.

Conversion Price

The litigation has gone back on the calendar for tomorrow, November 21^st, to determine whether the April 2019 vote was valid, which we believe it is.  Nevertheless, as ORHub has previously notified all Note Holders, the Board of Directors has already approved the conversion at $.021 as we received an investment in June 2019 for $50,000 in exchange for common shares in the Company at that price. Along with receiving that investment, we issued an unsecured note in the amount of $36,000 in exchange for monies owed with a conversion price of $0.021. Under the Note Agreement, the conversion price of the Notes is adjusted if certain events occur, including issuing a Note at a lower conversion price or if certain actions are taken as it relates to stock issuance.  The indirect effect of the unsecured note issuance and the issuance of common stock at $0.021 resulted in the adjustment of the conversion price in accordance with the Note Agreement. 

Approximately one month after the investment and note issuance, the stock traded at three times the conversion price for ten consecutive days which resulted in the Mandatory Conversion clause being triggered in the Agreement. 

AXT Analytics and Mr. Buonincontri have filed a Temporary Restraining Order (Link to TRO) to also block the Mandatory Conversion. It is NOT the Company blocking the Mandatory Conversion. It is the Company’s intent to honor the Mandatory Conversion Price so long as AXT Analytics withdraws the temporary restraining order from the Courts to allow us to do so.

Settlement Discussions

In August 2019, our newly appointed CEO flew to Arizona to meet with Mr. Buonincontri and a small group of Note Holders located in the area and agreed to stay the litigation in hopes of finally ending it.  However, after hours of negotiations, the Security Agreement set forth by Mr. Buonincontri was not of benefit to the broader group of Note Holders (Link to SECURITY AGREEMENT).  Had ORHub signed the Security Agreement,  it would have resulted in all collateral recovered in the event of a bankruptcy going directly to AXT Analytics with distribution first being made to the Note Agent(“Section 5.7 Application of Money Collected” and Section 7.4 Expenses of Note Agent” of the Note Agreement as well as the “Security Agreement”).  

In yet another attempt to end the litigation we provided a settlement agreement (Link to SETTLEMENT AGREEMENT) on November 12, 2019 to Mr. Buonincontri in which we clearly articulate our intent to allow a majority of the Note Holders to vote in favor of the Mandatory Conversion Price, while arranging for Mr. Buonincontri’s Note as well as the Note owned by Joseph Buonincontri to be repurchased for principal and interest (please note: the Companycannot purchase the Note directly from the Buonincontris under the terms of the Agreement, however, a number of interested parties have expressed interest in acquiring theirNotes in order to end the litigation).  The Settlement proposed to Mr. Buonincontri on November 12, 2019 gavehim the opportunity to walk away with his principal investment plus a return where there is no financial harm, yet, we did nothearfrom Mr. Buonincontri regarding our Settlement proposal.   As litigation continues to be used as a weaponto strangle the Companyof capital, there is no one that benefits, except perhaps Mr. Buonincontri.

Financial Information

One of Mr. Buonincontri’s contentions is the lack of transparency in the Company’s financials, and how this lack of transparency violates the note and a court order, and perhaps how this lack of transparency is an indicator of the mishandling of Company funds, and investment dollars, in the past, and now in the present.

Gathering information from the Company’s past is not an easy task made more difficult by the suspicious timing of the resignation of our former auditors, Malone Bailey, who have a previous or continuing relationship with Mr. Buonincontri’s entities. However, exposing the Company to the publishing of unaudited financials, leaves the Company at great risk in the face of Mr. Buonincontri’s litigation, and his previous and current attempt at placing the Company in bankruptcy.  We want to assure all investors that the success of this Company depends on financial transparency and great efforts are being made to accomplish that goal.

The audit committee has engaged Marcum, LLP, a nationwide PCAOB audit firm, to proceed with the preparation of auditedfinancials.  We are currently going through the client acceptance process, which we expect to be completed shortly. Once completed, all financials will be presented to Marcum, LLP from our accountants at Rotenburg Merrill, for a complete financial audit that will be made available publicly.  Once this audit is complete, it will give a larger group of investors a view into our Company that is necessary and required for due diligence and will allow existing investors, like yourselves, to feel comfortable when trading our stock on the open market.

Looking Forward

The litigation has impaired the Company’s ability to raise capital, fund its growth, and retain key people, yet in the last 3 months we have made great strides and will continue to do so. The Company has a well defined “end-game” that new management has already put into action (Link to PRESS RELEASE- NEW CONTRACT), a concise strategic plan (Link to STRATEGIC PLAN),and a conversion of the Notes at $0.021 with the return on your investment being achieved through the growth and success of the Company.           

Despite the significant financial damage that has been caused to the Company, its investors, employees, and customers, we have remained focused on growing the business.  We are happy to announce the closing of new accounts, and the first commercial revenue for the Company’s Surgical Spotlight^®product. This signifies our premier product, Surgical Spotlight^®, commercialization and entry into  the healthcare market. More accounts will soon follow, and we appreciate your continued support and patience.