UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
Commission File No.
| (Exact name of registrant as specified in its charter) |
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(Address of principal executive offices) (Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
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been subject to such filing requirements for the past 90 days.
Indicate by check mark whether
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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 Exchange Act.
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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
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As of February 14, 2025, there were
RICHTECH ROBOTICS INC.
Quarterly Report on Form 10-Q
Table of Contents
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect our current expectations and views of future events. The forward-looking statements are contained principally in the section of this Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Readers are cautioned that significant known and unknown risks, uncertainties and other important factors (including those over which we may have no control and others listed in this Report and in the “Risk Factors” section of our Annual Report on Form 10-K/A for the fiscal year ended September 30, 2024 (“2024 Annual Report”), as filed with the Securities and Exchange Commission (the “SEC”) on February 7, 2025, may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs.
Our operations and business prospects are always subject to risks and uncertainties including, among others:
| ● | Our ability to secure raw materials and components to manufacture sufficient quantities of robots to match demand; |
| ● | Our ability to secure enterprise clients and deals in the face of growing competition; |
| ● | Assumptions around the speed of robotic adoption in service environments; |
| ● | Assumptions relating to the size of the market for our products and services; |
| ● | Unanticipated regulations of robots and automation that add barriers to adoption and have a negative effect on our business; |
| ● | Our ability to obtain and maintain intellectual property protection for our products; and |
| ● | Our estimates of expenses, future revenue, capital requirements and our needs for, or ability to obtain, additional financing. |
These forward-looking statements involve numerous and significant risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results of operations or the results of other matters that we anticipate herein could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” section contain in this Report and in the “Risk Factors” and other sections of the 2024 Annual Report. You should thoroughly read this Report and the documents that we refer to with the understanding that our actual future results may be materially different from, and worse than, what we expect. We qualify all our forward-looking statements by these cautionary statements.
The forward-looking statements made in this Report relate only to events or information as of the date of this Report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this Report completely and with the understanding that our actual future results may be materially different from what we expect.
ii
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
RICHTECH ROBOTICS INC.
Unaudited Consolidated Balance Sheets
(In thousands, except share and per share data)
| December 31, | September 30, | |||||||
| 2024 | 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short term investment | ||||||||
| Accounts receivable, (net of allowance for doubtful accounts) | ||||||||
| Amount due from related parties, current | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use-assets | ||||||||
| Intangible assets, net | ||||||||
| Other assets, non-current | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Amount due to related parties, current | ||||||||
| Accrued expenses | ||||||||
| Short-term loan | ||||||||
| Tax payables | ||||||||
| Operating lease liabilities, current | ||||||||
| Total current liabilities | ||||||||
| Long-term payables | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 7) | ||||||||
| Stockholders’ equity: | ||||||||
| Class A Common stock, $ | $ | $ | ||||||
| Class B Common stock, $ | ||||||||
| Additional Paid-in Capital | ||||||||
| Retained earnings | ( | ) | ( | ) | ||||
| Total controlling stockholders’ equity | ||||||||
| Non-controlling interests | ( | ) | ||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
1
RICHTECH ROBOTICS INC.
Unaudited Consolidated statements of Operations
(In thousands, except share and per share data)
| Three Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue, net | $ | $ | ||||||
| Cost of revenue, net | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Research and development | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Non-operating income(expense): | ||||||||
| Investment Income | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Total other expense | ( | ) | ||||||
| Loss before income tax expense | ( | ) | ( | ) | ||||
| Consolidated net loss | ( | ) | ( | ) | ||||
| Less: Net loss Attributable to Non-Controlling Interest | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted net loss per share of common stock | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares used to compute basic and diluted net loss per share | ||||||||
2
Richtech Robotics Inc.
Unaudited Consolidated Statements of Equity
For the three months ended December 31, 2024 and 2023
(In thousands except share data)
| Common stock* | Additional | Retained earnings | Total | |||||||||||||||||||||||||
Class A | Class B | Paid-in | (Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | deficit) | equity | ||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Issuance of Common Shares for Intangible Asset Acquisition | - | |||||||||||||||||||||||||||
Issuance of shares upon exercise of warrants for cash | ||||||||||||||||||||||||||||
| Shares Issued to Employees and Directors | - | |||||||||||||||||||||||||||
| Shares Issued for services | ||||||||||||||||||||||||||||
| Non-controlling interests | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Common stock* | Additional | Retained earnings | Total | |||||||||||||||||||||||||
Class A | Class B | Paid-in | (Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | deficit) | equity | ||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Initial public offering related expenses | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Common stock Issuance for initial public offering | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
3
RICHTECH ROBOTICS, INC.
Consolidated Statements of Cash Flows
For the three months ended December 31, 2024 and 2023
(In thousands)
| 2024 | 2023 | |||||||
| Cash flows from operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Right-of-use asset | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Tax payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Depreciation and amortization | ||||||||
| Operating lease liabilities, current | ( | ) | ||||||
| Operating lease liabilities, non- current | ( | ) | ||||||
| Net cash provided by operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Purchase of short-term investments | ( | ) | ||||||
| Purchase of long-term investments | ( | ) | ||||||
| Cash used for lending to related parties | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payment of loans received from third parties | ( | ) | ||||||
| Loans received from third parties | ( | ) | ||||||
| Payment of related party debt | ( | ) | ||||||
| Proceeds from issuance of ordinary shares | ||||||||
| Proceeds from stockholder capital injection | ||||||||
| Net Cash used in financing activities | ||||||||
| Net change in cash and cash equivalents | ||||||||
| Cash, cash equivalents and restricted cash at beginning of the period | $ | $ | ||||||
| Cash, cash equivalents and restricted cash at end of the period | $ | $ | ||||||
4
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023
(Dollars in thousands, unless otherwise stated)
NOTE 1: Nature of Business
Description of Business
Richtech Robotics Inc. (“we”,
“us”, “our” “Richtech” or the “Company”), is a C-Corporation registered in Nevada. Richtech
was converted from Richtech Creative Displays, LLC on
We are a leading provider of service robotic solutions. We develop, manufacture, and deploy novel products that address the growing need for automation in the service industry and provide service automation solutions that directly address the labor shortage problem affecting the US service industry. Our solutions include delivery, commercial cleaning, food & beverage service, and customization and development service, which have been implemented in more than 80 cities across the United States in restaurants, hotels, casinos, senior living homes, factories and retail centers. Our solutions automate repetitive and time-consuming tasks which allows clients to reallocate labor hours to more value-creating roles. Many of our clients see our robotic solutions as crucial to expanding and scaling their businesses. Our goal is to be a long-term partner to our clients, providing them with a range of robotic solutions to alleviate their problems.
Risk and Uncertainties
The Company’s business and operations are sensitive to general business and economic conditions worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the world economy. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse developments in these general business and economic conditions could have a material adverse effect on the Company’s financial condition and the results of its operations. In addition, the Company competes with many companies that currently have extensive and well-funded projects and marketing and sales operations. The Company may be unable to compete successfully against these companies. The Company’s industry is characterized by rapid changes in technology and market demands. As a result, the Company’s products, services, or expertise may become obsolete or unmarketable. The Company’s future success will depend on its ability to adapt to technological advances, anticipate customer and market demands, and enhance its current technology under development.
Emerging Growth Company Status
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies.
We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we are (1) no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
We will remain an emerging
growth company until the earliest of (1) the last day of the first fiscal year (A) following the fifth anniversary of the completion of
our initial public offering on November 21, 2023, (B) in which our total annual gross revenue is at least $
NOTE 2: Summary of Significant Accounting Policies
Basis of Presentation
These financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
5
Segment Reporting
Operating segments are identified as components
of an enterprise about which separate financial information is available for evaluation by the chief operating decision-maker in making
decisions regarding resource allocation and assessing performance. We view our operations and manage our business as
Cash and Cash Equivalents
We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. We place our cash and cash equivalents in highly liquid instruments with, and in the custody of, financial institutions with high credit ratings.
Accounts Receivable
Our accounts receivable primarily consist of trade receivables, which represent amounts owed to us by customers for products and services provided. These receivables are presented net of any rebates, price protection adjustments, and an allowance for credit losses. In addition to trade receivables, our accounts receivable also include unbilled receivables. These primarily relate to work completed on development services and semi-custom products for which revenue has been recognized but not yet invoiced to customers. We expect these unbilled receivables to be billed and collected within twelve months.
We actively manage our exposure to customer credit risk through various measures, including credit limits, credit lines, ongoing monitoring procedures, and credit approvals. We perform in-depth credit evaluations of all new customers and periodically reassess the creditworthiness of existing customers. If deemed necessary, we may require letters of credit, bank or corporate guarantees, or advance payments to mitigate credit risk.
To
account for potential losses from uncollectible accounts, we maintain an allowance for credit losses. This allowance considers both specific
troubled accounts and an overall estimate of potential uncollectible receivables based on historical experience and current credit quality
assessments. As of December 31, 2024, the allowance for credit losses was $
Inventories
We value inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about future demand and market conditions. In determining excess or obsolescence reserves for our products, we consider assumptions such as changes in business and economic conditions, other-than-temporary decreases in demand for our products, and changes in technology or customer requirements. In determining the lower of cost or net realizable value reserves, we consider assumptions such as recent historical sales activity and selling prices, as well as estimates of future selling prices. We fully reserve for inventories and non-cancellable purchase orders for inventory deemed obsolete. We perform periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by us, additional inventory carrying value adjustments may be required.
Inventory as of December 31,2024 and September 30, 2024 are as follows:
| December 31, | September 30, | |||||||
| 2024 | 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
6
Property, and Equipment, net
Property and equipment, net is stated at cost less
accumulated depreciation and amortization and is depreciated using the straight-line method over the estimated useful lives of the assets.
Estimated useful lives of equipment is
Property and equipment, as of December 31, 2024 and September 30, 2024 are as follows:
| December 31, | September 30, | |||||||
| 2024 | 2024 | |||||||
| Furniture, fixtures & equipment | $ | | $ | | ||||
| Equipment held for lease | $ | |||||||
| Leasehold improvements | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Intangible Asset, net
The Company’s intangible assets consist of
multiple systems purchased for our robotic product. These assets are amortized using the straight-line method over their estimated useful
life of
Intangible Asset, as of December 31, 2024 and September 30, 2024 are as follows:
| December 31, | September 30, | |||||||
| 2024 | 2024 | |||||||
| Intangible Asset | $ | $ | ||||||
| Accumulated Amortization | ( | ) | ( | ) | ||||
| Intangible Asset, net | $ | $ | ||||||
Stockholders’ Equity
During the quarter ended December
31, 2024, the Company issued a total of
- Issuance of Shares Upon Exercises
of warrants for cash: an aggregate of
- Shares Issued as Consideration
for Technology Development:
- Shares Issued for Services:
- Shares Issued to Employees
and Directors:
7
Purchase of Intangible Assets
In the quarter ended September
30, 2024, the Company acquired intangible assets through a combination of cash and common stock. The total consideration included $
In the quarter ended December
31, 2024, the Company acquired intangible assets through common stock. The total consideration included approximately $
Revenue Recognition
Revenue is recognized when we transfer promised goods or services to our customers, in amounts that reflect the consideration that we expect to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under each agreement, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer.
Product Revenue
We generate revenue through the sale of our branded robotic products directly to customers. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with our customers. There is a single performance obligation in all our contracts, which is our promise to transfer our product to customers based on specific payment and shipping terms in the arrangement. The entire transaction price is allocated to this single performance obligation. Product revenue is recognized when a customer obtains control of our product, which occurs at a point in time and may be upon shipment or delivery, based on the terms of the contract.
Revenue from Robots-as-a-Service (RaaS)
As part of our evolving business model, we generate revenue through our Robots-as-a-Service (“RaaS”) offerings, which provide customers with ongoing access to our robotic solutions under long-term contracts. For RaaS agreements, revenue is recognized over time on a monthly basis as the services are provided and the customer benefits from the use of the robotic solutions.
Other Revenue Policies
Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.
We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised products to the customer will be one year or less, which is the case with substantially all customers.
We recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. These costs are included in selling expenses.
We account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products.
We record the related costs within cost of goods sold.
8
Research and Development Costs
Research and development costs primarily consist of employee-related expenses, including salaries and benefits, facilities costs, depreciation, and other allocated expenses. Research and development costs are expensed as incurred.
Income Taxes
The Company accounts for income taxes in accordance with income tax accounting guidance (Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not some portion or all of a deferred tax asset will not be realized.
Tax positions are recognized if it is more likely than not, based on the technical merits, the tax position will be realized or sustained upon examination. The term “more likely than not” means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment.
The Company recognizes interest and penalties on income taxes as a component of income tax expense.
Recent Accounting Pronouncements
In February 2016, the FASB
issued Accounting Standards Update (“ASU”) 2016-02, Leases (“Topic 842”). The guidance in this ASU supersedes
the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities
on the balance sheet for all leases with terms longer than
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard allows certain exceptions, including an exception to the use of the incremental approach for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially based on income to be reported as income tax and to reflect the effects of enacted changes in tax laws or rates in the annual effective tax rate computation from the date of enactment. Lastly, in any future acquisition, we would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction. The standard will be effective for us beginning January 1, 2022, with early adoption of the amendments permitted. The adoption of ASU 2019-12 did not have a material impact on our financial statements and disclosures.
9
In May 2020, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another topic. ASU 2021-04 is effective for fiscal years beginning after December 15, 2021. The Company has determined the adoption of ASU 2021-04 did not have a material impact on our financial statements and disclosures.
NOTE 3: Earnings per Share
| Three Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Numerators: | ||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted Average ordinary shares used in computing | ||||||||
| Basis and diluted net loss per share (in each dollar) | $ | ( | ) | $ | ( | ) | ||
NOTE 4: Income Taxes
We have no material uncertain tax positions as of December 31, 2024 and 2023. It is our policy to recognize interest and penalties related expenses on income tax as a component of income tax expense, in our audited condensed consolidated statements of operations and comprehensive income. As of December 31, 2024 and 2023, we have not accrued any interest or penalties associated with uncertain tax positions.
Note 5 Commitments and Contingencies
Lease
We lease office facilities under noncancelable operating lease agreements. We lease space for our corporate headquarters in Las Vegas, Nevada through August 2027,
The components of leases and lease costs are as follows (in thousands):
| Operating leases | As of December 31, 2024 | As of September 30, 2024 | ||||||
| Operating lease right-of use assets | $ | $ | ||||||
| Operating lease liabilities, current portion | $ | $ | ||||||
| Operating lease liabilities, non-current portion | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
10
| Operating leases | Three Months
Ended December 31, 2024 | Three Months
Ended December 31, 2023 | ||||||
| Operating lease cost | $ | $ | ||||||
Future minimum lease payments under these leases as of December 31, 2024, are approximately as follows:
| Fiscal Year | Amount | |||
| Reminder of 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| Total future minimum lease payments | $ | |||
NOTE 6: Subsequent Events
On October 25, 2024, the Company
received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, because the closing bid price for
the Company’s Class B common stock had fallen below $
In January 2025, the Company
received warrant exercise notices from three investors, collectively exercising an aggregate of
On February 9, 2025, the Company opened its first Clouffee & Tea franchise store located in Las Vegas, Nevada. This marked the launch of the Company’s franchise program.
On February 10, 2025, the
Company entered into a warrant exercise inducement offer letter with a holder of its existing common stock warrants exercisable for an
aggregate of
In connection with the Armistice
Warrant Inducement, and pursuant to the Rodman Engagement Letter, Rodman was paid a fee equal to
On February 13, 2025, the Company entered into a settlement and release
agreement (the “Settlement Agreement”) with AC Sunshine Securities LLC (“ACSS”), pursuant to which the parties
agreed to mutually release and all claims against each other arising out of that certain engagement letter, dated as of July 2, 2024,
by and between the Company and ACSS. Pursuant to the Settlement Agreement, the Company agreed to pay to ACSS a sum of $
11
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Report and in our other filings with the Securities and Exchange Commission (the “SEC”). The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors” in our 2024 Annual Report and elsewhere in this Report. These risks could cause our actual results to differ materially from any future performance suggested below.
Overview
We are a leading provider of service robotic solutions by developing, manufacturing, and deploying novel products that address the growing need for automation in the service industry. We develop, manufacture, and deploy cutting-edge robots that streamline operations, enhance efficiency, and alleviate labor shortages across a diverse range of sectors, including restaurants, hotels, casinos, senior living facilities, and retail centers. Our commitment to technological advancement and customer-centric solutions has positioned us as a key player in the rapidly evolving robotics landscape.
Key Business Highlights for the First Quarter of Fiscal Year 2025
| ● | Strategic Transition to Robotics-as-a-Service: We have embarked on a strategic transition from a traditional product sales model to a RaaS model. This shift is aimed at generating a more predictable and recurring revenue stream over the long term, enhancing customer accessibility to our advanced technologies, and aligning with prevailing industry trends. |
| ● | Continued Investment in Research and Development: We remain dedicated to innovation and technological advancement, as evidenced by the increase in research and development expenses during fiscal year 2024. These investments are focused on expanding our product portfolio, enhancing existing offerings, and maintaining our competitive edge in the dynamic robotics market. |
| ● | Expansion of Sales and Marketing Efforts: To support the RaaS model and drive customer acquisition, we have significantly increased our investment in sales and marketing initiatives. These efforts are crucial for educating potential customers about the benefits of leasing robotics solutions, building brand awareness, and cultivating new customer relationships. |
| Our first One Kitchen store opened within a Walmart location near Chicago. This innovative concept features our AI-powered robot, ADAM, as the centerpiece of the customer experience. One Kitchen offers a unique and interactive dining experience, showcasing the potential of our robotic technology to transform the food service industry. We anticipate opening additional One Kitchen stores near Atlanta and San Diego in late spring 2025. |
| Our first Clouffee & Tea store opened its doors in February 2025, marking our entry into the rapidly growing market for automated coffee and tea service. Clouffee & Tea combines our advanced robotics technology with a curated selection of premium beverages, creating a unique and engaging customer experience. We are confident in the potential of this brand and plan to open additional Clouffee & Tea locations in the coming months. |
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Recent Developments
On October 25, 2024, we received a notice from Nasdaq notifying us that, because the closing bid price for our Class B common stock had fallen below $1.00 per share for 30 consecutive business days, we no longer complied with the minimum bid price requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial compliance period of 180 calendar days, or until April 23, 2025, to regain compliance with the minimum bid price requirement. On January 6, 2024, we received a notice from Nasdaq that we had regained compliance with the minimum bid price requirement and the matter is closed.
In January 2025, we received warrant exercise notices from three investors, collectively exercising an aggregate of 3,814,611 warrants. As a result, we issued an aggregate of 3,814,611 shares of Class B common stock and received aggregate proceeds of $5,149,724.85. Rodman was paid a fee equal to 7% of the gross proceeds of the warrant exercises, pursuant to the Rodman Engagement Letter.
On February 10, 2025, we entered into a warrant exercise inducement offer letter with a holder of Existing Warrants exercisable for an aggregate of 2,699,797 shares of its Class B common stock, to exercise its Existing Warrants at the existing exercise price of $1.35 per share, generating gross proceeds of approximately $3,644,726 before deducting financial advisory fees. In consideration for the immediate exercise of the Existing Warrants, we issued to such holder 2,699,797 Inducement Warrants with an exercise price of $4.00 per share, which are immediately exercisable and valid for five years from issuance. The shares of Class B common stock underlying the Inducement Warrants are entitled to registration rights. In connection with the Armistice Warrant Inducement, and pursuant to the Rodman Engagement Letter, Rodman was paid a fee equal to 7% of the gross proceeds of the Existing Warrant exercises and will be entitled to 7% of the proceeds from any exercise of the Inducement Warrants. In addition, we issued to Rodman warrants to purchase an aggregate of 188,986 shares of Class B common stock at an exercise price of $5.00 per share, which are immediately exercisable and valid for five years from issuance, pursuant to the Rodman Engagement Letter.
On February 13, 2025, we entered into a Settlement Agreement with ACSS, pursuant to which the parties agreed to mutually release and all claims against each other arising out of that certain engagement letter, dated as of July 2, 2024, by and between the Company and ACSS. Pursuant to the Settlement Agreement, we agreed to pay to ACSS a sum of $430,000.
Factors and Trends Affecting Our Business and Results of Operations
The following trends and uncertainties either affected our financial performance historically or are likely to impact our results of operations in the future:
| ● | As our robotic products market potential is seen by others, more competitors enter the market, which will lead to price competition and a decline in profit margins; |
| ● | A recession could lead to a decline in customer demand in our robotic products and services; |
| ● | Some of the products are currently assembled by suppliers in China, which may delay the supply if they are affected by international shipping, epidemic, geopolitical conflicts and other factors; |
| ● | We anticipate that our general and administrative expenses will continue to increase in the future as a result of increased costs associated with operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, attorneys, and accountants, and personnel-related stock-based compensation costs, among other expenses, and, in the case of public company-related expenses, services associated with strengthening our internal control over financial reporting, maintaining compliance with Nasdaq listing and SEC reporting requirements, director and officer liability insurance costs, and investor and public relations costs, among other expenses. |
| ● | Inflationary pressures are also a concern as it is difficult to make reliable projections for the cost of components. This means profit margins could be affected, and our pricing would need to re-evaluated on a regular basis. |
| ● | The rising interest rate will lead to a higher borrowing cost. It will increase our costs for any potential future borrowings and financing activities. Higher interest rates reduce consumer spending and business investment, causing the economy to contract, which will impact our business and will reduce our customers’ purchasing power. |
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Results of Operations
Comparison of the three months ended December 31, 2024 and 2023
The following table summarizes our results of operations (in thousands) for the three month ended December 31, 2024 and 2023, together with the dollar change in those items from period to period:
| three months ended December 31, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| Revenue, net | $ | 1,257 | $ | 1,106 | $ | 151 | ||||||
| Cost of revenue, net | 123 | 497 | (374 | ) | ||||||||
| Gross profit | 1,134 | 609 | 525 | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | 484 | 834 | (350 | ) | ||||||||
| Sales and marketing | 245 | 595 | (350 | ) | ||||||||
| General and administrative | 4,303 | 1,443 | 2,860 | |||||||||
| Total operating expenses | 5,032 | 2,872 | 2,160 | |||||||||
| Loss from operations | (3,898 | ) | (2,263 | ) | (1,635 | ) | ||||||
| Non-operating income(expense): | ||||||||||||
| Investment Income | 333 | - | 333 | |||||||||
| Interest expenses, net | (4 | ) | (486 | ) | 482 | |||||||
| Total other expenses | 329 | (486 | ) | 815 | ||||||||
| Loss before income tax expense | (3,569 | ) | (2,749 | ) | (820 | ) | ||||||
| Income tax benefit/(expense) | - | (1 | ) | 1 | ||||||||
| Net loss | (3,569 | ) | (2,750 | ) | (819 | ) | ||||||
| Less: Net loss Attributable to Non-Controlling Interest | (21 | ) | - | (21 | ) | |||||||
| Net loss | $ | (3,548 | ) | $ | (2,750 | ) | $ | (798 | ) | |||
Revenue
For the three months ended December 31, 2024, total revenue was $1,257 thousand, compared to $1,106 thousand for the same period in 2023, reflecting an increase of $151 thousand, or 14%. This positive performance is primarily attributed to the strategic expansion of our service and leasing offerings, particularly our RaaS model.
The RaaS model allows us to provide our advanced robotic solutions to a wider range of customers by reducing the barrier to entry associated with high upfront costs. Instead of requiring customers to purchase the robots outright, the RaaS model allows them to lease the robots and pay for their use on a subscription basis. This not only makes our cutting-edge automation technology more accessible to businesses with limited capital budgets but also aligns with the growing trend towards subscription-based services across various industries.
We believe this strategic shift towards RaaS offers several key advantages:
| ● | Increased Market Reach: By lowering the initial investment hurdle, RaaS enables us to target a broader customer base, including small and medium-sized businesses that may have previously been unable to afford our robotic solutions. |
| ● | Recurring Revenue Streams: The subscription-based nature of RaaS generates more predictable and recurring revenue streams, contributing to greater financial stability and long-term growth prospects. | |
| ● | Stronger Customer Relationships: RaaS fosters closer and more enduring customer relationships, as we provide ongoing support and maintenance throughout the lease term. |
| ● | Reduced Sales Cycles: RaaS can potentially shorten sales cycles, as customers may be more willing to commit to a subscription service than a large upfront purchase. |
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The positive impact of our RaaS model is already evident in our results for the quarter ended December 31, 2024, and we anticipate continued growth in service and leasing revenue as we further expand our RaaS offerings and market reach. We are confident that this strategic initiative, combined with our commitment to innovation and customer service, will strengthen our position in the rapidly evolving robotics market.
Our Revenue (in thousands) for the three months ended December 31, 2024 and 2023 is shown below:
| Three months ended December 31, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| Robotics | ||||||||||||
| Product revenue | $ | 750 | $ | 187 | $ | 563 | ||||||
| Service/Rental revenue | 133 | 799 | (666 | ) | ||||||||
| Leasing revenue | 138 | 13 | 125 | |||||||||
| Total Robotics revenue | 1,021 | 999 | 22 | |||||||||
| Smart hardware | 6 | 16 | (10 | ) | ||||||||
| Interactive system | - | 30 | (30 | ) | ||||||||
| Cloutea* | - | 61 | (61 | ) | ||||||||
| AlphaMax* | 230 | - | 230 | |||||||||
| Total | $ | 1,257 | $ | 1,106 | $ | 151 | ||||||
| * | Cloutea is the revenue generated from our boba tea store opened in May, 2023. We opened this store as a model to further develop the concept of an interactive robot barista utilizing our ADAM robot. Cloutea has been rebranded “Clouffee and Tea,” which has been opened in a new location in Las Vegas in February 2025. |
| * | Alphamax Management LLC is a wholly-owned subsidiary of Richtech Robotics Inc., established to spearhead our expansion into the food and beverage sector. As a consulting and management company, Alphamax will oversee the operation of our innovative food and beverage concepts, including the interactive robot barista cafe. This initiative will serve as a model for future development and expansion within the food and beverage industry, showcasing the potential of our advanced robotic technologies in revolutionizing customer experiences and streamlining operations. |
Cost of Revenue, Net
Cost of revenue saw a substantial decrease in the three months ended December 31, 2024, dropping to $123 thousand compared to $497 thousand in the same period of 2023. This significant reduction of $374 thousand, or 75%, is primarily attributed to the ongoing transition towards the RaaS model and favorable changes in our product costs.
Under the RaaS model, we lease our robots to customers rather than selling them outright. This shift in revenue recognition has a direct impact on cost of revenue. When a robot is leased, the associated costs are not immediately recognized in full. Instead, they are spread out over the lease term, resulting in a lower cost of revenue in the current period.
In addition to the impact of RaaS, we also benefited from lower product costs during the quarter. Due to the increase in robot volume, we were able to negotiate better pricing with our suppliers, which resulted in a reduction in the cost of goods sold for our product sales.
To provide a clearer understanding of the dynamics affecting our revenue and cost of revenue, below is the breakdown of our revenue streams:
Product Revenue: Product revenue increased significantly, from $187 thousand in the quarter ended December 31, 2023 to $750 thousand in the quarter ended December 31, 2024. This growth reflects a growing demand for our robotic solution.
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Service/Rental Revenue: Service and rental revenue decreased significantly, from $799 thousand in the quarter ended December 31, 2023 to $133 thousand in the quarter ended December 31, 2024. This decline is primarily due to the ongoing shift towards the RaaS model, as customers transition from service and rental agreements to leasing arrangements.
Leasing Revenue: Leasing revenue increased substantially, from $13 thousand in the quarter ended December 31, 2023 to $138 thousand in the quarter ended December 31, 2024. This growth highlights the successful adoption of our RaaS model and the increasing popularity of leasing arrangements among our customers.
Gross Profit
Gross profit reached $1,134 thousand in the three months ended December 31, 2024, compared to $609 thousand for the same period in 2023, marking a substantial increase of $526 thousand, or 86%. This strong performance is primarily driven by the considerable reduction in cost of revenue, which we discussed earlier.
The gross margin, which represents the percentage of revenue remaining after deducting cost of revenue, also saw a notable improvement. In the quarter ended December 31, 2024, the gross margin was 90%, compared to 55% in the quarter ended December 31, 2023. This higher gross margin indicates enhanced profitability and operational efficiency.
The strategic shift towards the RaaS model has played a key role in driving this improvement. As a higher proportion of revenue comes from leasing arrangements, the cost of revenue is spread out over the lease term, resulting in a lower cost of revenue and a higher gross margin in the current period.
Additionally, the decrease in product costs due to favorable negotiations with suppliers further contributed to the improvement in gross profit and gross margin.
This strong gross profit performance provides a solid foundation for our continued growth and profitability. As we further expand our RaaS offerings and optimizes our cost structure, we anticipate continued improvement in gross profit and gross margin in the coming quarters.
Sales and Marketing Expenses
Sales and marketing expenses decreased substantially in the period ended December 31, 2024, falling from $595 thousand in December 31, 2023 to $245 thousand in December 31, 2025. This represents a decrease of $350 thousand, or 59%.
This significant decrease is primarily due to the success of our referral program and other cost-saving measures. Our referral program incentivizes existing customers to refer new customers, generating high-quality leads at a lower cost than traditional advertising. This strategy has allowed us to reduce our overall spending on marketing and advertising while maintaining a strong pipeline of potential customers.
In addition to the referral program, we have also implemented other cost-saving measures in our sales and marketing operations. We have streamlined our marketing processes, leveraged digital marketing channels more effectively, and focused on targeted campaigns that deliver higher returns on investment. These initiatives have allowed us to reduce our overall spending while maintaining the effectiveness of our sales and marketing efforts.
We are also investing in new sales and marketing tools and technologies to improve our efficiency and effectiveness. This includes implementing a customer relationship management system to better manage customer interactions and track sales leads, as well as investing in marketing automation software to streamline our marketing campaigns and personalize customer communications.
Furthermore, we are expanding our sales and marketing team to support our growth initiatives. We have hired experienced sales professionals with expertise in the robotics industry, as well as marketing specialists with a proven track record of success in promoting technology solutions. We believe that this investment in human capital will enable us to reach a wider audience and build stronger relationships with our customers.
Finally, we are actively exploring new partnerships and collaborations to expand our market reach and promote our robotic solutions. This includes partnering with industry associations, participating in trade shows and conferences, and collaborating with other technology companies to offer integrated solutions to our customers.
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We believe that our continued investment in sales and marketing, combined with our focus on cost optimization and strategic partnerships, will enable us to achieve our growth objectives and solidify our position as a leader in the robotics market.
General and Administrative Expenses
General and administrative expenses were $4,301 thousand and $1,443 thousand for the three months ended December 31, 2024 and 2023, respectively. The $2,858 thousand increase, or 198%, was primarily due to two key factors:
| 1. | Professional and Legal Fees: As a newly public company, we have experienced a significant increase in professional and legal fees. These fees are associated with various compliance requirements, financial reporting obligations, and legal matters related to operating as a public entity. |
| 2. | Payroll Expenses: We have expanded our workforce to support our growth initiatives and strategic expansion. This has resulted in higher payroll expenses, including salaries, benefits, and payroll taxes. The increase in payroll is primarily driven by the addition of new employees in various departments, including engineering, sales, marketing, and administration. |
In addition to these two primary factors, other contributing factors to the increase in general and administrative (“G&A”) expenses include:
| ● | Insurance: We have expanded our insurance coverage to address the broader risks associated with being a public company and operating in a dynamic industry. |
| ● | Rent: We have expanded our office space to accommodate our growing workforce. |
| ● | Utilities: Our utility costs have increased due to the larger office space and increased business activity. |
While the increase in G&A expenses is a natural consequence of our growth and transition to becoming a public company, we are committed to managing these expenses effectively. We are actively implementing cost optimization measures, streamlining processes, and leveraging technology to improve efficiency and control costs.
We believe that our strategic investments in human capital, infrastructure, and compliance are essential to support our long-term growth objectives. As we continue to scale our operations and expand our market presence, we anticipate that G&A expenses will continue to increase, but we are committed to managing these costs prudently and ensuring that they align with our overall financial performance.
Other Income (Expense)
Total other income was $329 thousand for the three months ended Decembers 31, 2024, the total other expense was $486 thousand for the three months ended December 31, 2023. The $815 thousand, or 168%, net decrease in total other income was primarily due to two key factors:
| 1. | Higher Interest Income: We have generated higher interest income during the three months ended Decembers 31, 2024, primarily from our investments in treasury bonds and money market funds. These investments have benefited from favorable market conditions, resulting in increased interest income and investment gains. |
| 2. | Decrease in Interest Expenses: We have successfully reduced our interest expenses through the repayment of debt obligations. As a result of proactive debt management, we have lowered our interest burden, contributing to improved financial performance. |
The combination of higher investment income and lower interest expenses has significantly enhanced our non-operating income, contributing positively to our overall financial results.
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Liquidity and Capital Resources
Our primary sources of liquidity are cash and cash equivalents, which consist of cash on hand and short-term investments that are readily convertible to cash. As of December 31, 2024, our cash and cash equivalents totaled $19.8 million. This represents about 5.2 million increase from $14.6 million at the end of the prior fiscal year. The substantial increase in our cash position is primarily attributable to the net proceeds of $9.2 million received from the issuance of new shares. These proceeds significantly strengthened our balance sheet and provided us with financial flexibility to invest in our growth initiatives, including the expanding our R&D team, purchase of property and equipment to support our expanding operations. This increase was partially offset by cash used in operating activities, primarily due to our net loss and investments in working capital.
Comparison of the three months ended December 31, 2024 and 2023
The following table summarizes our cash flow information (in thousands) for the three months ended December 31, 2024 and 2023, together with the dollar change in those items from period to period:
| Three months ended September 30, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| Net Cash provided by (used in): | ||||||||||||
| Operating activities | $ | (3,598 | ) | $ | (1,212 | ) | (2,386 | ) | ||||
| Investing activities | (380 | ) | (25 | ) | (355 | ) | ||||||
| Financing Activities | 9,240 | 8,339 | 901 | |||||||||
| Net increase (decrease) in cash | $ | 5,261 | $ | 7,102 | (1,841 | ) | ||||||
Operating Activities
Net cash used in operating activities for the three months ended December 31, 2024 was $3,598 thousand, primarily due to a net loss of $3,569 thousand an decrease of $30 thousand in net operating assets and liabilities. The cash flow impact from changes in net operating assets and liabilities was primarily driven by decrease in accounts receivable of $755 thousand and inventory of $248 thousand, partially offset by increase in accounts payable of $380 thousand.
Net cash used in operating activities for the three months ended December 31, 2023 was approximately $1,212 thousand, primarily due to a net loss of approximately $2,748 thousand and an increase of approximately $1,539 thousand in net operating assets and liabilities. The cash flow impact from changes in net operating assets and liabilities was primarily driven by decreases in accounts receivable of approximately $2,432 thousand and inventory of approximately $167 thousand, partially offset by decreases in accounts payable of approximately $1,066 thousand.
Investing Activities
Net cash used for investing activities was $375 thousand for the three months ended December 31, 2024, primarily due to $175 thousand on purchase of long-term investments and $127 thousand on short-term investments.
Net cash used for investing activities was $28 thousand for the three months ended December 31, 2023, primarily due to $28 thousand on cash used for lending to related parties.
Financing Activities
Net cash provided by financing activities totaled $9,240 thousand for the year ended December 31, 2024. We received $9,244 thousand from issuance of common stock.
Net cash provided by financing activities totaled approximately $8,339 thousand for the three months ended December 31, 2023. We raised approximately $9,286 thousand from issuance of ordinary shares, offset by approximately $152 thousand payment of related party debt and approximately $795 thousand payment of short-term loans.
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Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Trend Information
Other than as disclosed elsewhere in this registration statement, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
Seasonality
Seasonality does not materially affect our business or the results of our operations.
Off-Balance Sheet Arrangements
We do not have off-balance sheet arrangements.
Recent Accounting Pronouncements Not Yet Adopted
See Note 2 to our unaudited financial statements included elsewhere in this Report for more information.
Critical Accounting Policies and Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Management bases its estimates on historical experience, market and other conditions, and various other assumptions it believes to be reasonable. See Note 2 to our audited financial statements included elsewhere in this Report for more information.
JOBS Act
Section 107 of the JOBS Act also 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 for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period.
For as long as we remain an “emerging growth company” under the recently enacted JOBS Act, we will, among other things:
| ● | be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act, which requires that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal controls over financial reporting; |
| ● | be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure concerning executive compensation; and |
| ● | be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements. |
Although we are still evaluating the JOBS Act, we currently intend to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an “emerging growth company,” including the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act. Among other things, this means that our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected. Likewise, so long as we qualify as an emerging growth company, we may elect not to provide you with certain information, including certain financial information and certain information regarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate our company. As a result, investor confidence in our company and the market price of our common stock may be materially and adversely affected.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required for smaller reporting companies.
Item 4. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures
Our management, under the supervision and with the participation of our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and VP of Finance, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2024, to ensure that information required to be disclosed in our Exchange Act reports is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures. Our internal control over financial reporting is a process designed by, or under the supervision of, our CEO, CFO, and VP of Finance. It is affected by our Board of Directors, management, and other personnel to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements in accordance with generally accepted accounting principles (GAAP).
These controls include policies and procedures that:
| ● |
Maintain accurate and reliable financial records: We have implemented comprehensive policies and procedures to ensure that our financial records accurately and fairly reflect the transactions and dispositions of our assets. These procedures include robust record-keeping practices, regular reconciliations, and independent reviews to verify the accuracy and completeness of our financial data. |
| ● |
Ensure GAAP-compliant financial reporting: Our financial reporting process is designed to ensure that our financial statements are prepared in accordance with GAAP. We have established detailed procedures for revenue recognition, expense accrual, and asset valuation, among other areas, to ensure that our financial reporting is accurate, complete, and compliant with all applicable accounting standards. |
| ● |
Authorize and control transactions: We have implemented a system of authorizations and approvals to ensure that all transactions are properly reviewed and approved by authorized personnel. This system includes segregation of duties, authorization limits, and multi-level approvals for significant transactions to mitigate the risk of unauthorized or fraudulent activity. |
| ● | Prevent and detect fraud: This includes implementing robust internal controls, conducting regular audits, and providing comprehensive training for employees. Additionally, continuously monitoring financial transactions and promptly addressing any discrepancies can help safeguard the integrity of our financial reporting. By taking these measures, we can mitigate potential risks and maintain stakeholder confidence in our financial management practices. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
(b) Changes in Internal Control over Financial Reporting
There has not been any change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our fiscal quarter ended December 31, 2024 that has materially affected, or is likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
To the knowledge of our management team, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. However, as of the date of this Report, there have been no material changes with respect to those risk factors previously disclosed in our (i) registration statement for our initial public offering and (ii) 2024 Annual Report. Any of these factors could result in a significant or material adverse effect on the results of our operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial business combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5.
In connection with the Armistice Warrant Inducement, and pursuant to the Rodman Engagement Letter, Rodman was paid a fee equal to 7% of the gross proceeds of the Existing Warrant exercises and will be entitled to 7% of the proceeds from any exercise of the Inducement Warrants. In addition, the Company issued to Rodman warrants to purchase an aggregate of 188,986 shares of Class B common stock at an exercise price of $5.00 per share, which are immediately exercisable and valid for five years from issuance, pursuant to the Rodman Engagement Letter.
On February 13, 2025, the Company entered into the Settlement Agreement with ACSS, pursuant to which the parties agreed to mutually release and all claims against each other arising out of that certain engagement letter, dated as of July 2, 2024, by and between the Company and ACSS. Pursuant to the Settlement Agreement, the Company agreed to pay to ACSS a sum of $430,000.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished.
|
| # | Certain portions of this exhibit have been omitted because the omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| RICHTECH ROBOTICS INC. | ||
| Date: February 14, 2025 | By: | /s/ Zhenwu Huang |
| Name: | Zhenwu Huang | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: February 14, 2025 | By: | /s/ Zhenqiang Huang |
| Name: | Zhenqiang Huang | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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