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What changed in RICHTECH ROBOTICS INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RICHTECH ROBOTICS INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+320 added−293 removedSource: 10-K (2025-01-14) vs 10-K (2024-01-11)

Top changes in RICHTECH ROBOTICS INC.'s 2024 10-K

320 paragraphs added · 293 removed · 159 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

87 edited+99 added−61 removed72 unchanged
Biggest changeFor example, we plan to launch a senior care focused line of robotic solutions as we have identified senior living is one of the most understaffed sectors in the United States. This new line of robotics will be focused on alleviating skilled nursing duties and substituting for strenuous repetitive tasks that are necessary to keep elderly guests healthy.
Biggest changeThis new line of robotics will be focused on alleviating skilled nursing duties and substituting for strenuous repetitive tasks that are necessary to keep elderly guests healthy. ● International Expansion: We are in the process of concluding talks with parties located in Europe, Korea, China and Australia to establish joint ventures (“JVs”) for the purpose of bringing our products to international markets.
Employees may belong to multiple product development teams at the same time as there is significant technical overlap in AMR development. The development teams are overseen directly by the CEO and is are responsible for the ideation, engineering, and testing of new robots.
Employees may belong to multiple product development teams at the same time as there is significant technical overlap in AMR development. The development teams are overseen directly by the CEO and is responsible for the ideation, engineering, and testing of new robots.
When multiple robots are deployed in the same space, the robots communicate over short-range radio waves to coordinate and make way for each other. 4 One of the biggest advantages of the Matradee is the ease of deployment and reliability. Standard deployments involving full installation and staff training are typically completed within three to four hours.
When multiple robots are deployed in the same space, the robots communicate over short-range radio waves to coordinate and make way for each other. One of the biggest advantages of the Matradee is the ease of deployment and reliability. Standard deployments involving full installation and staff training are typically completed within three to four hours.
Additionally, the T7AMR is extremely bulky as it is designed to have a seat for the rider which severely limits its applications in environments that have narrow hallways such as schools, hospitals, and universities. ● ADAM ● Miso Robotics Inc.: Miso Robotics produces single robotic arm food restaurant automation robot, Flippy.
Additionally, the T7AMR is extremely bulky as it is designed to have a seat for the rider which severely limits its applications in environments that have narrow hallways such as schools, hospitals, and universities. 12 ● ADAM ● Miso Robotics Inc.: Miso Robotics produces single robotic arm food restaurant automation robot, Flippy.
Maintenance visits typically encompass an overall health check on the robot, removal of debris and cleaning, edits to mapping or settings, and training of client staff. 12 For warranty claims, our customer service department works with the customer to verify the validity of the warranty claim, and if valid, schedules for the exchange of the robot as quickly as possible.
Maintenance visits typically encompass an overall health check on the robot, removal of debris and cleaning, edits to mapping or settings, and training of client staff. For warranty claims, our customer service department works with the customer to verify the validity of the warranty claim, and if valid, schedules for the exchange of the robot as quickly as possible.
These sensors, combined with a robust navigation software stack based on AI algorithms, provides our robots the ability to perform dynamic path planning through their environments. 3 The ACP service is a business optimization tool that allows customers to benefit from the rich operational data generated by the robots.
These sensors, combined with a robust navigation software stack based on AI algorithms, provides our robots the ability to perform dynamic path planning through their environments. Our ACP service is a business optimization tool that allows customers to benefit from the rich operational data generated by the robots.
Several of our pilot clients have already chosen to move forward with large scale purchase or lease orders following the pilot program. 17 The usage of service robots is a very new concept in the United States, and currently many companies are taking a wait-and-see approach to adoption.
Several of our pilot clients have already chosen to move forward with large scale purchase or lease orders following the pilot program. The usage of service robots is a very new concept in the United States, and currently many companies are taking a wait-and-see approach to adoption.
This sales force is our liaison with our partners and customers, who foster these relationships and build a solid foundation for the company. 13 We market our products primarily through digital marketing, sales outreach, industry exhibitions, and client referrals. Direct online inquiries are the main source of our leads.
This sales force is our liaison with our partners and customers, who foster these relationships and build a solid foundation for the company. We market our products primarily through digital marketing, sales outreach, industry exhibitions, and client referrals. Direct online inquiries are the main source of our leads.
This is because Bear only offers customers a Robot-as-a-Service (RAAS) pricing model while we offer customers the ability to own the robot. The tray on our Matradee is 40% larger and we have one extra tray, which means our robot provides 60% more capacity than Servi.
This is because Bear only offers customers a Robot-as-a-Service pricing model while we offer customers the ability to own the robot. The tray on our Matradee is 40% larger and we have one extra tray, which means our robot provides 60% more capacity than Servi.
The contents of our websites are not incorporated by reference into this Report or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 19
The contents of our websites are not incorporated by reference into this Report or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
The manufacturing and procurement departments primary focus is maintaining supply chains and delivery timelines specified by the CFO based on projections made according to sales data. The accounting team processes accounts payables and receivables, audits internal accounting records, and generate financial reports. 11 Our Revenue Model Our business model is currently a combination of direct sales and robotics-as-a-service (RAAS).
The manufacturing and procurement departments primary focus is maintaining supply chains and delivery timelines specified by the CFO based on projections made according to sales data. The accounting team processes accounts payables and receivables, audits internal accounting records, and generate financial reports. Our Revenue Model Our business model is currently a combination of direct sales and robotics-as-a-service.
Our target market is the hospitality sector, which includes restaurants, hotels, casinos, resorts, senior care, hospitals, and movie theaters. We also plan to leverage our expertise in food automation to bring services directly to the consumer with the ADAM system which is discussed below.
Our target market is the hospitality sector, which includes restaurants, hotels, casinos, resorts, senior care, hospitals, and movie theaters. We also plan to leverage our expertise in food automation to bring services directly to the consumer with the ADAM system which is described below.
Designed for heavy-duty cleaning, the MX comes with a 30-gallon water tank, weighs over 600 lbs., and provides a brush pressure of 13.2g/cm 2 . Data collected by the ACP provide clients with utilization metrics as well as a cleaning maps which show the path the robot took during its cleaning routine.
Designed for heavy-duty cleaning, the MX comes with a 30-gallon water tank, weighs over 600 lbs., and provides a brush pressure of 13.2g/cm 2 . 6 Data collected by the ACP provide clients with utilization metrics as well as a cleaning map which show the path the robot took during its cleaning routine.
For the Matradee, Richie, Robbie, and DUST-E products, Richtech outsources manufacturing to contract factories. These factories manufacture the robots to our specifications and installs our software. For the ADAM system, the finished body components are manufactured in China and shipped to the United States where it is assembled.
For the Matradee, MedBot and DUST-E products, Richtech outsources manufacturing to contract factories. These factories manufacture the robots to our specifications and installs our software. For the ADAM system, the finished body components are manufactured in China and shipped to the United States where it is assembled.
Larger corporations and national franchises in particular generally take more time to test out and vet the application of new technologies such as service robots. However, in spite of these challenges, we were still able to close several Master Service Agreements (“MSAs”) with national chain enterprises (as described below) due to the necessity of our products for their operations.
Larger corporations and national franchises in particular generally take more time to test out and vet the application of new technologies such as service robots. However, in spite of these challenges, we were still able to close several MSAs with national chain enterprises (as described below) due to the necessity of our products for their operations.
We received additional purchase orders totaling $127,626.50 under this MSA during the remainder of 2023. We expect more purchase orders to come in 2024. The current term of the Gaming MSA terminates on the later of December 31, 2026 or the completion of services under the agreement.
We received additional purchase orders totaling $127,626 under this MSA during the remainder of 2024. We expect more purchase orders to come in 2025. The current term of the Gaming MSA terminates on the later of December 31, 2026 or the completion of services under the agreement.
Material Contracts Richtech expects to derive significant revenue from sales to enterprise customers as part of our long-term strategy. We define “enterprise” customers as companies with annual revenues of over $1 billion. Throughout 2022 and 2023, we have proven the value proposition and reliability of our robots to many of our enterprise clients by running extended pilot programs.
Material Contracts Richtech expects to derive significant revenue from sales to enterprise customers as part of our long-term strategy. We define “enterprise” customers as companies with annual revenues of over $1 billion. From 2022 through 2024, we have proven the value proposition and reliability of our robots to many of our enterprise clients by running extended pilot programs.
The primary use case for the SX is in open commercial spaces such as lobbies of hotels and more challenging surfaces such as those of restaurants where there may be food debris and spills. The SX utilize a high-power vacuum and multi-roller system that categorizes the debris it picks up for a one-pass cleaning efficiency.
The primary use case for the S is in open commercial spaces such as lobbies of hotels and more challenging surfaces such as those of restaurants where there may be food debris and spills. The S utilizes a high-power vacuum and multi-roller system that categorizes the debris it picks up for a one-pass cleaning efficiency.
The majority of our robots can be characterized as Autonomous Mobile Robots (AMRs), meaning that our robots can understand and move through their environment independently. AMRs differ from their predecessors, Autonomous Guided Vehicles (AGVs), which rely on tracks or predefined paths and often require operator oversight.
The majority of our robots can be characterized as Autonomous Mobile Robots (“AMRs”), meaning that our robots can understand and move through its environment independently. AMRs differ from their predecessors, Autonomous Guided Vehicles (“AGVs”), which rely on tracks or predefined paths and often require operator oversight.
Customer facing departments which include sales, marketing, tech support, and customer service utilize a variety of technology tools to keep clear customer records and respond to customer requests. These tools include Salesforce CRM, ClickUp, Zoominfo, Apollo.io, Jotform, Zendesk, Zoom, and Google Workspace. Salesforce is used as the preferred CRM for sales recordkeeping.
Customer facing departments which include sales, marketing, tech support, and customer service utilize a variety of technology tools to keep clear customer records and respond to customer requests. These tools include Hubspot CRM, ClickUp, Apollo.io, Jotform, and Google Workspace. Hubspot is used as the preferred CRM for sales recordkeeping.
The nonindustrial service robotics market includes warehouse picker robots, self-driving floor scrubbers, customer service robots, delivery robots, surgery robots, food harvesting robots for agriculture, underground and underwater inspection robots, security robots, military defense robots, drug research robots and others.
The nonindustrial service robotics sector includes warehouse picker robots, self-driving floor scrubbers, customer service robots, delivery robots, surgery robots, food harvesting robots for agriculture, underground and underwater inspection robots, security robots, military defense robots, robots for healthcare logistics, drug research robots and others.
We believe that there is only one other competitive product that was launched for room service delivery prior to our Richie and Robbie being introduced to the market.
We believe that there is only one other competitive product that was launched for room service delivery prior to our Richie and Robbie (now rebranded as Medbot) being introduced to the market.
ClickUp, Zendesk and Jotform are used by the customer service and tech support team to keep track of customer requests and schedule robot installations. Zoominfo and Apollo.io are utilized for lead generation by the sales and marketing teams. Zoom and Google Workspace are used across the company for meetings, email, and filesharing.
ClickUp and Jotform are used by the customer service and tech support team to keep track of customer requests and schedule robot installations. LinkedIn Sales Navigator and Apollo.io are utilized for lead generation by the sales and marketing teams. Google Workspace is used across the company for meetings, email, and filesharing.
In September 2022, we also entered into an MSA with one of the top casino companies in the United States (the “Gaming MSA”), for the purchase of our Matradee L and other robots. As of the date of this Report, we have recognized $344,270 in revenue under this MSA. $306,914 is reflected in our financials as of September 30, 2023.
In September 2022, we entered into an MSA with one of the top casino companies in the United States (the “Gaming MSA”), for the purchase of our Matradee L and other robots. As of the date of this Report, we have recognized $344,270 in revenue under this MSA. $328,411 is reflected in our financials as of September 30, 2024.
The majority of companies that have adopted the service robot technology are smaller businesses that have a much shorter chain of command and make decisions faster. As a result, the vast majority (over 90%) of our existing revenue currently result from purchase or lease contracts from smaller companies with one or two locations, primarily in the hospitality industry.
The majority of companies that have adopted the service robot technology are smaller businesses that have a much shorter chain of command and make decisions faster. As a result, the vast majority (over 90%) of our existing revenue currently result from purchase or lease contracts from smaller companies.
The market is currently in the phase where end-users and system integrators are still gaining experience in adoption and implementation of nonindustrial service robots. In North America, the primary driver for adoption is expected to be the ongoing trend to automate menial or non-value-adding-tasks.
The market is currently in the phase where end-users and system integrators are still gaining experience in adoption and implementation of nonindustrial service robots. In North America, the primary driver for adoption is expected to be the ongoing trend to automate menial or non-value-adding-tasks. These tasks include cleaning, transport and delivery, hospital logistics, and food preparation.
We currently have five people on our sales team. The sales team earns a flat 5% gross sales commission on top of base salary and bonuses. Orders are created by the sales team and approved for shipping by the Office General Manager.
The sales team earns a flat 5% gross sales commission on top of base salary and bonuses. Orders are created by the sales team and approved for shipping by the Office General Manager.
Available Information Our website is located at www.richtechrobotics.com, and our investor relations website is located at ir.richtechrobotics.com. Access to copies of our SEC filings, corporate governance information, and other items that may be material or of interest to our investors is available via our investor relations website.
Access to copies of our SEC filings, corporate governance information, and other items that may be material or of interest to our investors is available via our investor relations website.
Our Strategies We intend to establish ourselves as the leading provider of service robotic solutions by developing, manufacturing, and deploying novel products that address the growing need for automation in the service industry.
Our Strategies We intend to establish ourselves as the leading provider of service robotic solutions by developing, manufacturing, and deploying novel products that address the growing need for automation across all key target sectors.
Having a variety of products not only provides clients with a one-stop-shop for their service robotic needs, it also creates the impression that we are a reliable resource to consult as they approach the general adoption and implementation of robotic solutions across different sectors of their business. ● Distribution: We have an extensive network of distribution channels with over 30 regional and national distributors.
Having a variety of products not only provides clients with a one-stop-shop for their service robotic needs, it also creates the impression that we are a reliable resource to consult as they approach the general adoption and implementation of robotic solutions across different sectors of their business.
Global Operations Our business operations are based mainly in the U.S, except for some of our R&D work, which is based in China. We currently employ a team of 16 engineers through a third-party human resource company in China for R&D work.
Global Operations Our business operations are based mainly in the U.S, except for some of our R&D work, which is based in China. We currently employ a team of 20 engineers through a third-party human resource company in China for R&D work. The majority of our ODM and OEM partners are also located in China.
We expect that this will generate significant recurring revenue. ● Establish enterprise partnerships: We plan to continue to place strong emphasis on forming enterprise relationships in the hotel, restaurant, casino, and senior living sectors. We see enterprise adoption as the biggest stepping stone towards our success.
We expect that the franchise robotic restaurant business will generate significant recurring revenue. ● Establish enterprise partnerships: We plan to continue to place strong emphasis on forming enterprise relationships all target sectors. We see enterprise adoption as the biggest stepping stone towards our success.
Either party may terminate the agreement in the event of breach or default and failure to cure such breach or default within 30 days after receiving written notice of such breach or default Pursuant to the Gaming MSA, we have granted to the customer a perpetual, non-revocable, fully paid license (or fully paid sub-license, as the case may be) to allow the customer to use our intellectual property that may be embedded in or associated with any work product delivered under the agreement. 18 Additionally, in January 2023, we executed an MSA with a major hotel brand with over 5,000 properties worldwide (the “Hotel MSA”) for purchases of our Matradee L robot.
Either party may terminate the agreement in the event of breach or default and failure to cure such breach or default within 30 days after receiving written notice of such breach or default Pursuant to the Gaming MSA, we have granted to the customer a perpetual, non-revocable, fully paid license (or fully paid sub-license, as the case may be) to allow the customer to use our intellectual property that may be embedded in or associated with any work product delivered under the agreement.
While Pudu robots are cheaper, they only operate in the United States through a distributor network and have no direct customer support or service network. 10 ● Richie and Robbie ● Savioke, Inc.: Founded in 2014, their Relay robot performs similar room service delivery tasks as Richie and Robbie.
While Pudu robots are cheaper, they only operate in the United States through a distributor network and have no direct customer support or service network. ● Medbot ● Savioke, Inc.: Founded in 2014, their Relay robot performs similar room service delivery tasks as Medbot. However, their robot has continued to face technical challenges which has stifled their growth.
FY2023 FY2022 Product Sale 91.0 % 61.7 % Service Sale 5.7 % 31.0 % Lease 2.3 % 7.3 % Other 1.0 % 0.0 % Our Customers Most of our clients are in the hospitality sector, which is an extremely diversified B2B market where the clients range from individual mom and pop restaurants to large national or global enterprises.
FY2024 FY2023 Product Sale 32.0 % 91.0 % Service Sale 43.3 % 5.7 % Lease 18.6 % 2.3 % Other 6.1 % 1.0 % 13 Our Customers The majority of our customer base is within the hospitality sector, which is an extremely diversified B2B market where the clients range from individual mom and pop restaurants to large national or global enterprises.
We have deployed close to 200 robots in the last two fiscal years. These robots are currently operating in the field across 34 states in the U.S., providing services in diverse environments including restaurants, casinos, hotels, as well as factories, schools, and senior living.
We have deployed close to 300 robots over the last several fiscal years. These robots are currently operating in the field across over 40 states and territories in the U.S., providing services in diverse environments including restaurants, casinos, hotels, factories, schools, senior living, hospitals, stadiums and others.
We utilize a selection of freight carriers including FedEx, TrumpCard, and Pegasus Logistics Group among others for shipping. Tracking information and freight costs are uploaded into our system by the logistics team to ensure this data is readily available if needed. Research and Development (“R&D”) In FY 2023 and FY2022, we spent $1,980 thousand and $1,772 thousand on R&D, respectively.
We utilize a selection of freight carriers including FedEx, TrumpCard, and Pegasus Logistics Group among others for shipping. Tracking information and freight costs are uploaded into our system by the logistics team to ensure this data is readily available if needed.
Typically, a Matradee will perform over 1000 deliveries per month in a busy restaurant. On the ACP, clients can review number of deliveries, distance traveled, hours of operation, utilization patterns over time, and manage their robotic fleet.
The robot is designed to operate in narrow and busy environments, navigating around tables and people in order to get to its destination. Typically, a Matradee will perform over 1000 deliveries per month in a busy restaurant. On the ACP, clients can review number of deliveries, distance traveled, hours of operation, utilization patterns over time, and manage their robotic fleet.
A robotics-based restaurant business addresses the two biggest challenges facing franchisees of traditional restaurants today, which are labor and quality consistency. This opens the way for a wide variety of scalable businesses based on the ADAM system. We plan to prove this concept in Las Vegas and invite franchisees to purchase ADAM systems to deploy across the United States.
A robotics-based restaurant business addresses the two biggest challenges facing franchisees of traditional restaurants today, which are labor and quality consistency. This opens the way for a wide variety of scalable businesses based on the ADAM system.
Compliance with enhanced data protection laws requires additional resources and efforts, and noncompliance with personal data protection regulations could result in increased regulatory enforcement and significant monetary fines and costs.
Compliance with enhanced data protection laws requires additional resources and efforts, and noncompliance with personal data protection regulations could result in increased regulatory enforcement and significant monetary fines and costs. Available Information Our website is located at www.richtechrobotics.com, and our investor relations website is located at ir.richtechrobotics.com.
The ACP is expected to provide reminders for routine replacement of consumable and renewable components, and preemptive maintenance alerts for all robots. 6 Food and Beverage Automation ADAM is our food and beverage automation robot. The core concept of ADAM is to develop a fully independent food and beverage business based entirely on robots and automation.
The ACP is expected to provide reminders for routine replacement of consumable and renewable components, and preemptive maintenance alerts for all robots. Food and Beverage Automation ADAM is our food and beverage automation robot developed on the NVIDIA Jetson Orin platform.
November 24, 2021 Pending 17817639 AUTONOMOUS CLEANING ROBOT SYSTEM AND METHOD U.S. August 4, 2022 Pending 29846011 VENDING MACHINE ASSEMBLY FOR AN AUTONOMOUS DELIVERY ROBOT U.S. July12, 2022 Pending 29791849 CLEANING ROBOT U.S. February 12, 2022 Pending 29836627 DEBRIS GATHERING BRUSH ASSEMBLY FOR A CLEANING ROBOT U.S.
December 13, 2021 Published 29790385 SERVICE ROBOT U.S. November 24, 2021 Published 29790387 CLEANING ROBOT U.S. November 24, 2021 Pending 17817639 AUTONOMOUS CLEANING ROBOT SYSTEM AND METHOD U.S. August 4, 2022 Published 29846011 VENDING MACHINE ASSEMBLY FOR AN AUTONOMOUS DELIVERY ROBOT U.S. July 12, 2022 Pending 29791849 CLEANING ROBOT U.S.
After meeting through a mutual customer, they invited us to speak in front of their customers about the implications of robotics and how they could leverage robots in their businesses. The robotics industry is extremely hot right now, and as experts in this field, other companies see us a valuable resource to introduce to their customers and provide value.
After meeting through a mutual customer, they invited us to speak in front of their customers about the implications of robotics and how they could leverage robots in their businesses. There is significant interest in robotics at the moment, companies often see us as a useful resource to provide value to their clients.
These assembled components are then combined with materials purchased in the United States to complete the system. Currently the largest supplier, SUNWING INDUSTRIES LIMITED, provided $486,284 in materials in 2023. The second largest was NANJING YUDINGXIN ELECTRONIC, with a purchase amount of $80,900 in 2023. The third was UFACTORY TECHNOLOGY, with a purchase amount of $71,500 in 2023.
These assembled components are then combined with materials purchased in the United States to complete the system. 14 Our largest current supplier, SUNWING INDUSTRIES LIMITED, provided $1,766,048.24 in materials in 2024. The second largest was UFACTORY TECHNOLOGY, with a purchase amount of $203,400 in 2024. The third was NANJING YUDINGXIN ELECTRONIC, with a purchase amount of $97,875 in 2024.
( https://www.hospitalitynet.org/news/4110253.html ) ● DUST-E ● Avidbots Corp: Avidbots is a Canadian company that designs and manufactures Neo, which is a functional equivalent of the DUST-E MX. The MX offers similar functionality for over $10,000 less, and lower maintenance costs.
The value of Skylark to the customer is higher than what is provided by Relay’s product. ● DUST-E ● Avidbots Corp: Avidbots is a Canadian company that designs and manufactures Neo, which is a functional equivalent of the DUST-E MX. The MX offers similar functionality for over $10,000 less, and lower maintenance costs.
These dispatched workers are employees we have contracted through a third-party and are managed directly by us. We believe that we maintain a good working relationship with our employees and to date, we have not experienced any labor disputes.
We believe that we maintain a good working relationship with our employees and to date, we have not experienced any labor disputes.
It has also gotten costlier to attract good talent. ● Rising Cost of Raw Materials: 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.
It has also gotten costlier to attract good talent. ● Rising Cost of Raw Materials: Inflationary pressures are also a concern as it is difficult to make reliable projections for the cost of components.
We believe this is the best way to capitalize on our technology allowing us to produce food and beverage delivery products at a lower cost than competitors.
We believe this is the best way to capitalize on our technology allowing us to produce food and beverage delivery products at a lower cost than competitors. This business model also solves for two of the significant problems the hospitality industry currently faces, labor and quality control.
Percentage of sales attributable to our enterprise customers in fiscal year 2023 and 2022 were 3.82% and 2.06%, respectively. Percentage of sales attributable to our MSA customers in fiscal year 2023 and 2022 were 3.4% and 0.77%, respectively. All of our MSAs are with enterprise customers.
Percentage of sales attributable to our enterprise customers in fiscal year 2024, 2023 and 2022 were 8.08%, 3.82% and 2.06%, respectively. Percentage of sales attributable to our MSA customers in fiscal year 2024, 2023 and 2022 were 7.9%, 3.4% and 0.77%, respectively. We currently have two MSAs in place, all from successful pilot programs.
The ACP maximizes the potential of the data generated by these robots to provide clients a level of insight into the day-to-day operation of their businesses.
The combination of advanced sensors and redundant obstacle avoidance protocols makes our robots extremely safe and intelligent. The ACP maximizes the potential of the data generated by these robots to provide clients a level of insight into the day-to-day operation of their businesses.
Our Industry Our product family was designed to provide labor-intensive businesses with robotic automation solutions. We believe hospitality is the most labor-intensive industry, which is why we have deployed our robots across restaurants, hotels, casinos, hospitals, bars, event spaces, and senior living homes.
Hospitality is one of the most labor-intensive industries, which is why we have deployed our robots across restaurants, hotels, casinos, hospitals, bars, event spaces, and senior living homes.
As we mentioned, many of our clients also come through referrals from other companies we meet via mutual customers. These companies introduce us to their clients as a resource for customers to learn about robotics and automation, and how they can apply these solutions to their business. Order processing and logistics is managed internally.
These companies introduce us to their clients as a resource for customers to learn about robotics and automation, and how they can apply these solutions to their business. 15 Order processing and logistics is managed internally. We currently have five people on our sales team.
The dual six-degree-of-freedom robotic arms are designed to provide the same level of flexibility as a human arm, allowing ADAM to easily emulate human movements. We designed ADAM to be friendly and approachable by giving it a white and round exterior, and designed it to look more like a robot than a human to avoid the “uncanny valley” effect.
We designed ADAM to be friendly and approachable by giving it a white and round exterior, and designed it to look more like a robot than a human to avoid the “uncanny valley” effect.
We design our robots to be friendly, customizable to client environments, and extremely reliable. For example, our food service delivery robots typically make over 1000 deliveries every month in busy environments. Our current customer base includes major hotel brands, national chain restaurants, leading senior care facilities, and top casino management companies.
For example, our food service delivery robots typically make over 1000 deliveries every month in busy environments, while our medical robots are utilized for tasks such as delivering medications and supplies in hospitals, enhancing operational efficiency. Our current customer base includes major hotel brands, national chain restaurants, leading senior care facilities, and top casino management companies, and prominent healthcare institutions.
These tasks include cleaning, transport and delivery, and food preparation. 7 Market Opportunities The primary market for our robots and automation tools are businesses that cannot find affordable or reliable labor to perform certain task. We believe that the current economic environment provides conditions that should drive growth.
Market Opportunities The primary market for our robots and automation tools are businesses that cannot find affordable or reliable labor to perform certain task. We believe that the current economic environment provides conditions that should drive growth. As of September 2024, there were 13.7 million job openings in the United States, surpassing the number of unemployed Americans.
Designed with professional cleaning in mind, the MX is a floor scrubber tailored to large industrial and commercial spaces such as warehouses, factories, large hotel floors, event spaces, schools and universities, and department stores. The MX comes in a variety of configurations that accommodate different floor types from bare concrete to more sensitive vinyl tiles.
The MX is our largest unit capable of cleaning spaces up to 500,000 sq ft. Designed with professional cleaning in mind, the MX is a floor scrubber tailored to large industrial and commercial spaces such as warehouses, factories, large hotel floors, event spaces, schools and universities, and department stores.
All employees are located in three different office locations: Las Vegas with 33 employees, Austin with 2 employees, and China with 16 employees. 16 The following table provides a breakdown of our employees by function as of September 30, 2023: Function Number of Employees % of Total R&D 24 47.1 % Tech Support & Customer Service 3 5.9 % Sales & Marketing 5 9.8 % Business Operation 14 27.4 % Administration 5 9.8 % Total 51 Properties The company currently leases properties in Austin, TX and Las Vegas, NV.
All employees are located in three different office locations: Las Vegas 29, California 1, Florida 1, Illinois 2, Georgia 1, Austin 1, New York 1, China 20. 18 The following table provides a breakdown of our employees by function as of September 30, 2024: Function Number of Employees % of Total R&D 36 63.1 % Tech Support & Customer Service 3 5.3 % Sales & Marketing 8 14 % Business Operation 5 8.8 % Administration 5 8.8 % Total 57 Properties We lease office facilities under noncancelable operating lease agreements.
As a Super-operator, our robotic fleet will be performing a wide variety of tasks within a business, from completing deliveries and scrubbing floors to cooking noodles and preparing drinks. Our ACP platform will allow businesses to plug in their robots and immediately leverage an immense amount of data to optimize workflows, lower management complexity, and minimize labor dependency.
As a Super-operator, our robotic fleet will be performing a wide variety of tasks within a business, from completing deliveries and scrubbing floors to cooking noodles, preparing drinks, and supporting logistics in hospitals.
Customer Services As a company, we place strong emphasis on providing a positive customer experience for the client and their customers. We provide nationwide installation, shipping, maintenance, and warranty services. Shipping and installation are coordinated with the client by our customer service and technician teams.
We provide nationwide installation, shipping, maintenance, and warranty services. Shipping and installation are coordinated with the client by our customer service and technician teams. Maintenance services are provided for customers to prolong the longevity of the robots including onsite assistance as needed.
Instead, our contract manufacturers typically purchase the components required to manufacture our products on a purchase order basis.
In many cases, we do not have long-term supply agreements with these suppliers. Instead, our contract manufacturers typically purchase the components required to manufacture our products on a purchase order basis.
However, their robot has continued to face technical challenges which has stifled their growth. Our robots have larger carrying capacities and accessory functions such as the AVM which we believe provides more value to customers. Savioke was acquired by Relay Robotics Inc. in May 2022.
Our robots have larger carrying capacities and accessory functions such as the AVM which we believe provides more value to customers. Savioke was acquired by Relay Robotics Inc. in May 2022. ● Aethon: A long-time player in hospital delivery automation, established in 1997, the company is currently owned by the Singaporean sovereign wealth fund.
We also plan to form a specialized public sector sales team specifically to target education opportunities and other governments contracts. ● Expanding our R&D team: We intend to continue to invest heavily in the technical development of new robots and expand our service offerings. This will require us to form additional technical teams to support this development.
By securing enterprise clients, we will be able to represent ourselves as the most qualified vendor in the service robotic market. ● Expanding our R&D team: We intend to continue to invest heavily in the technical development of new robots and expand our service offerings. This will require us to form additional technical teams to support this development.
These distribution partners span across a broad array of sectors including healthcare, senior living, hotels, and restaurants. Distribution partners are engaged after a review of market opportunities they bring to Richtech and their company’s capabilities as a distributor. During this engagement process distribution terms are discussed and a distribution agreement is eventually signed.
Distribution partners are engaged after a review of market opportunities they bring to Richtech and their company’s capabilities as a distributor. During this engagement process distribution terms are discussed and a distribution agreement is eventually signed. ● Enterprise Partnerships: We have executed Master Service Agreements (“MSAs”) with several large enterprise customers that in total represent over 9,000 restaurants and hotels.
No single customer constitutes greater than 10% of our revenue, and as a result, we are not financially dependent on any one customer. Our long-term strategy as we scale up is to secure MSAs with larger corporations and franchises that operate multiple locations, so that we can roll out our products and services across numerous locations.
For more information on our strategic pivot to RaaS as our business model, see “Item 1 – Business – Our Strategies.” 20 Part of our long-term strategy as we scale up is to secure MSAs with larger corporations and franchises that operate multiple locations, so that we can roll out our products and services across numerous locations.
Advanced features of the ACP include robot control and analysis systems, preemptive maintenance systems, and business optimization systems. 8 ● Broad Product Offerings and Synergies: Unlike our competitors that only provide one robot or one type of robot, we have a breadth of robotic solutions to deploy depending on a client’s needs.
The ACP will prioritize and manage the movement of our AMRs inside these buildings, avoiding congested areas and continuously learning how to optimize travel from point A to point B. 9 ● Broad Product Offerings and Synergies: Unlike our competitors that only provide one robot or one type of robot, we have a breadth of robotic solutions to deploy depending on a client’s needs.
ITEM 1. Business Overview and Recent Developments We are a developer of advanced robotic technologies focused on transforming labor-intensive services in hospitality and other sectors currently experiencing unprecedented labor shortages.
ITEM 1. Business Overview We are a developer of advanced robotic technologies focused on transforming labor-intensive services in hospitality and other sectors currently experiencing unprecedented labor shortages. With a global R&D team based out of China and the United States, we design, manufacture and sell robots to restaurants, hotels, senior living centers, casinos, factories, movie theaters and other businesses.
The waiter could then load the Matradee with dirty plates and send it to the dish washing zone in the kitchen. This keeps the waiter on the floor serving guests and reduces physical stress on the waiter. The robot is designed to operate in narrow and busy environments, navigating around tables and people in order to get to its destination.
For example, Matradee will transport food from the kitchen to the table where a waiter can come by and serve the guests. The waiter could then load the Matradee with dirty plates and send it to the dish washing zone in the kitchen. This keeps the waiter on the floor serving guests and reduces physical stress on the waiter.
While our current customer base is in the B2B sector, we anticipate expanding into the consumer sector with the launch of the ADAM robotic franchise. We plan to grow our customer base in both the B2B and B2C markets by making full use of our strategic advantages in each sector and leveraging relationships of our distribution network.
We plan to grow our customer base in both the B2B and B2C markets by making full use of our strategic advantages in each sector and leveraging relationships within our distribution network. Customer Services As a company, we place strong emphasis on providing a positive customer experience for the client and their customers.
We also hosted sessions at these shows to educate attendees on the value preposition around service robotics. In 2023, we attended CES, the National Restaurant Association Show, the Bar and Restaurant Exhibition, Leading Age, The Hospitality Show, and a few others. Client referrals and testimonials have also been a strong accelerant to our growth.
We also hosted sessions at these shows to educate attendees on the value preposition around service robotics. Client referrals and testimonials have also been a strong accelerant to our growth. At one of our recent conventions, we hosted a session where two of our clients went on stage and spoke about the positive impacts of our robots.
The SX comes with a number of advanced features including a charging station with a ten-gallon clean water tank for automatic water exchange, scheduled cleaning functions, and precise localization that brings down the wall gap to just three centimeters.
The S comes with a number of advanced features including a charging station, scheduled cleaning functions, and precise localization that brings down the wall gap to just three centimeters. Future models are expected to include an AI driven categorization system that adjusts the cleaning routine according to the type and intensity of the mess being cleaned.
Some factory clients also utilize the Matradee for delivery of parts by making use of the remote summoning feature to call the robot to specific stations to pick up items for delivery. Richie and Robbie are our room service delivery robots, that are elevator enabled and can traverse over 850,000 sq. ft.
Some factory clients also utilize the Matradee for delivery of parts by making use of the remote summoning feature to call the robot to specific stations to pick up items for delivery. 5 Medbot is designed specifically for secure and efficient deliveries in hospitals and other healthcare spaces.
April 28, 2022 Pending Trademarks Trademark Application Number Status Jurisdiction RICHTECH 90869957 Registered U.S. RICHTECH ROBOTICS 97553162 Registered U.S. Domain Names The company currently owns and operates three domain names: ● www.richtechrobotics.com ● www.richtechrobot.com ● www.richtechsystem.com Employees As of September 30, 2023, we had 51 full-time employees of which 16 were dispatched workers accounting for 31.4% of our total workforce.
Domain Names The company currently owns and operates three domain names: ● www.richtechrobotics.com ● www.richtechrobot.com ● www.richtechsystem.com Employees As of September 30, 2024, we had 57 full-time employees, of which 20 were dispatched workers accounting for 35.1% of our total workforce. These dispatched workers are employees we have contracted through a third-party and are managed directly by us.
We retain all intellectual property rights on work done for us by third parties. Production/Manufacturing Our product manufacturing process starts with finding suitable suppliers. The company’s internal product development and procurement teams will search for suppliers according to technical requirements and consultation with existing suppliers.
These technological trends underscore our commitment to integrating cutting-edge AI solutions into our product offerings, ensuring our robots remain at the forefront of innovation. Production/Manufacturing Our product manufacturing process starts with finding suitable suppliers. The company’s internal product development and procurement teams will search for suppliers according to technical requirements and consultation with existing suppliers.
Under the Hotel MSA, we provide a one-year manufacturer’s limited product warranty, with option to extend to two or three years for additional payments. Government Regulation Our operations are subject to numerous governmental laws and regulations, including those governing antitrust and competition, the environment, collection, recycling, treatment and disposal of covered electronic products and components.
As of the date of this Report, two locations have been secured, one of which is anticipated to be opened in early 2025. 21 Government Regulation Our operations are subject to numerous governmental laws and regulations, including those governing antitrust and competition, the environment, collection, recycling, treatment and disposal of covered electronic products and components.
With a global R&D team based out of China and the United States, we design, manufacture and sell robots to restaurants, hotels, senior living centers, casinos, factories, movie theaters and other businesses. Our robots perform a variety of services including restaurant running and bussing, hotel room service delivery, floor scrubbing and vacuuming, and beverage and food preparation.
Our robots perform a variety of services including restaurant running and bussing, hotel room service delivery, floor scrubbing and vacuuming, and beverage and food preparation. We design our robots to be friendly, customizable to client environments, and extremely reliable.
ADAM is capable of making a wide variety of beverages including coffee, craft cocktails, and Boba tea autonomously. In 2022, we rented the ADAM bartending system out for corporate and celebrity events. Clients included one of the “Big Four” accounting firms, a global alcoholic beverage company and a major U.S. celebrity. ADAM is a robotic development platform.
ADAM is capable of making a wide variety of beverages including coffee, craft cocktails, and Boba tea autonomously. ADAM is currently serving customers at various venues across the country including inside supermarkets, stadiums, hospitals, and coffee shops across the country. Since 2022, we have rented the ADAM system out for corporate and celebrity events.
Competition The service robotics market is new so there is only a limited number of competitors.
This means profit margins could be affected, and our pricing would need to re-evaluated on a regular basis. 11 Competition The service robotics market is new so there is only a limited number of competitors.
This business model also solves for two of the significant problems the hospitality industry currently faces, labor and quality control. ● Market Coverage: Richtech currently provides deployment and maintenance services to the entire continental United States and Hawaii. We have deployments in 37 states and anticipate adding more on a monthly basis.
Our goal is to build a large base of RaaS and franchise customers that will allow us to leverage economies of scale as a competitive advantage. ● Market Coverage: Richtech currently provides deployment and maintenance services to the entire continental United States and Hawaii. We have deployments in over 40 states and anticipate adding more on a monthly basis.
Federal Reserve Chair Jerome Powell stated in his speech on November 30 th , 2022 that there is a “current labor force shortfall of roughly 3-1/2 million people.” We believe our products not only provide a solution to the labor challenges faced by businesses today, but also a way to improve guest experience, lower operation costs and complexity, and provide a path to growth and scalability.
Our products not only provide a solution to the labor challenges faced by businesses today, but also a way to improve guest experience, lower operation costs and complexity, and provide a long-term path to stable growth. We believe the excitement around robotics and automation will help accelerate customer adoption of our solutions.
The fourth was MINGSHILI INTELLIGENT SYSTEM, with a purchase amount of $70,700 in 2023. The fifth was ARO ROBOTICS, in 2023 with a purchase amount of $69,613. We depend on sole source suppliers for certain components in our products, such as batteries and touchscreens. In many cases, we do not have long-term supply agreements with these suppliers.
The fourth was INCH TECHNOLOGY CO., LTD, with a purchase amount of $75,473.50 in 2024. The fifth was Maanshan Yushan Huigu design studio, in 2024 with a purchase amount of $59,025. We depend on sole source suppliers for certain components in our products, such as batteries and touchscreens.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe have 19,913,000 outstanding shares of Class B common stock that may be sold after the expiration of lock-up agreements at least 180 days following the closing of the offering of the shares, unless such shares are held by an affiliate of ours, as more fully described in our Registration Statement on From S-1 (File Nos 333-269470 and 333-275612), filed with the Securities and Exchange Commission (“SEC”) in connection with our initial public offering (“IPO Prospectus”), in the section entitled “Shares Eligible for Future Sale.” Moreover, we have registered shares of Class B common stock issuable under our 2023 Stock Option Plan on a Registration Statement on Form S-8, filed the SEC on December 11, 2023, and such shares can be freely sold in the public market upon issuance, subject to the lock-up agreements described above and in the IPO Prospectus.
Biggest changeFor example, we have registered an aggregate of 14,311,215 shares of Class B common stock issuable under our Amended and Restated 2023 Stock Option Plan on a Registration Statement on Form S-8, filed with the SEC on December 11, 2023, as amended by Post-Effective Amendment No. 1 to Form S-8, filed with the SEC on November 7, 2023, and such shares can be freely sold in the public market upon issuance (unless issued to an affiliate of the Company).
Anti-takeover provisions contained in our second amended and restated articles of incorporation and bylaws, as well as provisions of Nevada law, could impair a takeover attempt.
Anti-takeover provisions contained in our second amended and restated articles of incorporation and second amended and restated bylaws, as well as provisions of Nevada law, could impair a takeover attempt.
Our second amended and restated articles of incorporation, bylaws and Nevada law contain provisions which could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors.
Our second amended and restated articles of incorporation, second amended and restated bylaws and Nevada law contain provisions which could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors.
If our products are not selected by these large corporations or if these corporations decide to go with a competitor, it will have an adverse effect on our business. We must successfully manage product introductions and transitions in order to remain competitive. We must continually develop new and improved robotic solutions that meet changing consumer demands.
If our products are not selected by these large corporations or if these corporations decide to go with a competitor, it will have an adverse effect on our business. 23 We must successfully manage product introductions and transitions in order to remain competitive. We must continually develop new and improved robotic solutions that meet changing consumer demands.
If we are unable to maintain a good reputation or further enhance our brand recognition, our ability to attract and retain customers and key employees could be harmed and, as a result, our business and revenues would be materially and adversely affected. 22 We rely on third party manufacturers/suppliers and expect to continue to do so for the foreseeable future.
If we are unable to maintain a good reputation or further enhance our brand recognition, our ability to attract and retain customers and key employees could be harmed and, as a result, our business and revenues would be materially and adversely affected. We rely on third party manufacturers/suppliers and expect to continue to do so for the foreseeable future.
This could adversely affect our relationships with our customers and partners and could cause delays in shipment of our products and adversely affect our operating results. Components used in our sensors may fail as a result of manufacturing, design or other defects over which we have no control and render our devices permanently inoperable.
This could adversely affect our relationships with our customers and partners and could cause delays in shipment of our products and adversely affect our operating results. 26 Components used in our sensors may fail as a result of manufacturing, design or other defects over which we have no control and render our devices permanently inoperable.
Our management has limited experience in operating a public company. Our executive officers have limited experience in the management of a publicly traded company subject to significant regulatory oversight and reporting obligations under federal securities laws. Our management team may not successfully or effectively manage our transition to a public company.
Our management has limited experience in operating a public company. Some of our executive officers have limited experience in the management of a publicly traded company subject to significant regulatory oversight and reporting obligations under federal securities laws. Our management team may not successfully or effectively manage our transition to a public company.
While such contracts typically give us multiple remedies for addressing instances of infringements, such remedies (e.g. product modification, purchase of licenses) could be expensive and difficult to administer. 26 Risks Related to Compliance We may become subject to new or changing governmental regulations relating to the design, manufacturing, marketing, distribution, servicing, or use of its products, and a failure to comply with such regulations could lead to withdrawal or recall of our products from the market, delay our projected revenues, increase cost, or make our business unviable if it is unable to modify its products to comply.
While such contracts typically give us multiple remedies for addressing instances of infringements, such remedies (e.g. product modification, purchase of licenses) could be expensive and difficult to administer. 29 Risks Related to Compliance We may become subject to new or changing governmental regulations relating to the design, manufacturing, marketing, distribution, servicing, or use of its products, and a failure to comply with such regulations could lead to withdrawal or recall of our products from the market, delay our projected revenues, increase cost, or make our business unviable if it is unable to modify its products to comply.
NRS 78.434 permits a Nevada corporation to opt-out of the statute with appropriate provisions in its articles of incorporation. NRS Sections 78.378 through 78.3793 regulates the acquisition of a controlling interest in an issuing corporation.
NRS 78.434 permits a Nevada corporation to opt-out of the statute with appropriate provisions in its articles of incorporation. 39 NRS Sections 78.378 through 78.3793 regulates the acquisition of a controlling interest in an issuing corporation.
We cannot predict or estimate the amount of additional costs we may incur as a result of continuing to be a public company or the timing of such costs. 31 Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, global pandemics, and interruptions by man-made problems, such as network security breaches, computer viruses or terrorism.
We cannot predict or estimate the amount of additional costs we may incur as a result of continuing to be a public company or the timing of such costs. 34 Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, global pandemics, and interruptions by man-made problems, such as network security breaches, computer viruses or terrorism.
The loss of employees or the inability to hire additional skilled employees as necessary to support the growth of our business and the scale of our operations could result in significant disruptions to our business, and the integration of replacement personnel could be time-consuming and expensive and cause additional disruptions to our business. 24 We believe a critical component to our success and our ability to retain our best people is our culture.
The loss of employees or the inability to hire additional skilled employees as necessary to support the growth of our business and the scale of our operations could result in significant disruptions to our business, and the integration of replacement personnel could be time-consuming and expensive and cause additional disruptions to our business. 27 We believe a critical component to our success and our ability to retain our best people is our culture.
Any invalidation of a patent claim could have a significant impact on our ability to protect the innovations contained within our devices and could harm our business. 25 The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions to maintain patent applications and issued patents.
Any invalidation of a patent claim could have a significant impact on our ability to protect the innovations contained within our devices and could harm our business. 28 The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions to maintain patent applications and issued patents.
It is uncertain if and to what extent various states will conform to the TCJA or the CARES Act. Our ability to utilize any federal net operating carryforwards may be limited under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”).
It is uncertain if and to what extent various states will conform to the TCJA or the CARES Act. In addition, our ability to utilize any federal net operating loss carryforwards may be limited under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”).
In particular, each of our Chief Executive Officer and co-founder, Zhenwu Huang, Chief Financial Officer and co-founder, Zhenqiang Huang, and Chief Operations Officer, Phil Zheng is critical to our overall management, as well as the continued development of our robotics technology, our culture and our strategic direction.
In particular, each of our Chief Executive Officer and co-founder, Zhenwu Huang, Chief Financial Officer and co-founder, Zhenqiang Huang, and Chief Operations Officer, Phil Zheng, President, Matt Casella, is critical to our overall management, as well as the continued development of our robotics technology, our culture and our strategic direction.
Furthermore, integral parties in our supply chain are operating from single sites, increasing their vulnerability to natural disasters or other sudden, unforeseen and severe adverse events, such as the COVID-19 pandemic. If such an event were to affect our supply chain, it could have a material adverse effect on our business.
Furthermore, integral parties in our supply chain are operating from single sites, increasing their vulnerability to natural disasters or other sudden, unforeseen and severe adverse events, such as a global pandemic. If such an event were to affect our supply chain, it could have a material adverse effect on our business.
We have 7 technology patents pending and will in the future file patent applications on inventions that we deem to be innovative. Our ownership of the pending patents are not subject to restrictions or any other arrangements with third parties.
We have three approved technology patents and nine technology patents pending and will in the future file patent applications on inventions that we deem to be innovative. Our ownership of the patents and pending patents are not subject to restrictions or any other arrangements with third parties.
We currently own the rights to all of our intellectual property, including the seven pending patents. We regard the protection of our patents, trade secrets, copyrights, trademarks, trade dress, domain names and other intellectual property or proprietary rights as critical to our success.
We currently own the rights to all of our intellectual property, including three approved patents and nine pending patents. We regard the protection of our patents, trade secrets, copyrights, trademarks, trade dress, domain names and other intellectual property or proprietary rights as critical to our success.
However, as long as at least 1,785,557 shares of Class A common stock remain outstanding, and without giving effect to any future issuances, the holders of our Class A common stock will hold a majority of the outstanding voting power and will continue to control the outcome of matters submitted to stockholders’ approval.
However, as long as at least 7,211,740 shares of Class A common stock remain outstanding, and without giving effect to any future issuances, the holders of our Class A common stock will hold a majority of the outstanding voting power and will continue to control the outcome of matters submitted to stockholders’ approval.
Our corporate governance documents include provisions: ● classifying our board of directors into three classes; ● authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our Class B common stock; ● limiting the liability of, and providing indemnification to, our directors and officers; ● limiting the ability of our stockholders to call and bring business before special meetings; ● requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; ● controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; and ● providing our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings. 35 These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
Our corporate governance documents include provisions: ● classifying our board of directors into three classes; ● authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our Class B common stock; ● limiting the liability of, and providing indemnification to, our directors and officers; ● limiting the ability of our stockholders to call and bring business before special meetings; ● requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; ● controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; and ● providing our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings.
Our Chief Executive Officer and co-founder, Zhenwu Huang, and our Chief Financial Officer and co-founder, Zhenqiang Huang, beneficially own an aggregate of approximately 82.79% of the voting power of our outstanding shares of common stock as of the date of this Report, and as such, these stockholders, individually or together, may be able to significantly influence matters submitted to our stockholders for approval, including the election of directors, amendments of our articles of incorporation, as amended, and any merger or other major corporate transactions that require stockholder approval.
Our Chief Executive Officer and co-founder, Zhenwu Huang, and our Chief Financial Officer and co-founder, Zhenqiang Huang, beneficially own an aggregate of approximately 81.02% of the voting power of our outstanding shares of common stock as of September 30, 2024, and as such, these stockholders, individually or together, may be able to significantly influence matters submitted to our stockholders for approval, including the election of directors, amendments of our articles of incorporation, as amended, and any merger or other major corporate transactions that require stockholder approval.
Until we can generate a sufficient amount of revenue from the commercialization of our products and services, if ever, we expect to finance our future cash needs through public or private equity or debt financings, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. 20 We have limited experience in operating our robots in a variety of environments.
Until we can generate a sufficient amount of revenue from the commercialization of our products and services, if ever, we expect to finance our future cash needs through public or private equity or debt financings, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches.
We continue to implement strategic initiatives designed to grow our business. These initiatives may prove costlier than we currently anticipate and we may not succeed in increasing our revenue in an amount sufficient to offset the costs of these initiatives and to achieve and maintain profitability.
These initiatives may prove costlier than we currently anticipate and we may not succeed in increasing our revenue in an amount sufficient to offset the costs of these initiatives and to achieve and maintain profitability.
If a large number of shares of our Class B common stock or securities convertible into our Class B common stock are sold in the public market after they become eligible for sale, the sales could reduce the trading price of our Class B common stock and impede our ability to raise future capital. 34 Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our Class B common stock.
If a large number of shares of our Class B common stock or securities convertible into our Class B common stock are sold in the public market after they become eligible for sale, the sales could reduce the trading price of our Class B common stock and impede our ability to raise future capital.
Even if we are able to establish agreements with third-party manufacturers/suppliers, reliance on third-party manufacturers/suppliers entails additional risks, including: ● failure of third-party manufacturers/suppliers to comply with regulatory requirements and maintain quality assurance; ● breach of the manufacturing/supply agreement by the third party; ● failure to manufacture/supply our product according to our specifications; ● failure to manufacture/supply our product according to our schedule or at all; ● misappropriation of our proprietary information, including our trade secrets and know-how; and ● termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.
Even if we are able to establish agreements with third-party manufacturers/suppliers, reliance on third-party manufacturers/suppliers entails additional risks, including: ● failure of third-party manufacturers/suppliers to comply with regulatory requirements and maintain quality assurance; ● breach of the manufacturing/supply agreement by the third party; ● failure to manufacture/supply our product according to our specifications; ● failure to manufacture/supply our product according to our schedule or at all; ● misappropriation of our proprietary information, including our trade secrets and know-how; and ● termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. 25 If our current or future third-party manufacturers/suppliers cannot perform as agreed, we may be required to replace such manufacturers/suppliers and we may be unable to replace them on a timely basis or at all.
If no securities or industry analysts cover our company, the trading price for our stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline.
If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline.
If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business and financial condition may be harmed. 21 In the course of expanding our international operations and operating overseas, we will be subject to a variety of risks, including: ● differing regulatory requirements, including tax laws, trade laws, labor regulations, tariffs, export quotas, custom duties or other trade restrictions; ● greater difficulty supporting and localizing our products; ● challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, compensation and benefits and compliance programs; ● differing legal and court systems, including limited or unfavorable intellectual property protection; ● risk of change in international political or economic conditions; ● restrictions on the repatriation of earnings; and ● working capital constraints.
In the course of expanding our international operations and operating overseas, we will be subject to a variety of risks, including: ● differing regulatory requirements, including tax laws, trade laws, labor regulations, tariffs, export quotas, custom duties or other trade restrictions; ● greater difficulty supporting and localizing our products; ● challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, compensation and benefits and compliance programs; ● differing legal and court systems, including limited or unfavorable intellectual property protection; ● risk of change in international political or economic conditions; ● restrictions on the repatriation of earnings; and ● working capital constraints. 24 We continue to implement strategic initiatives designed to grow our business.
For instance, cyber criminals or insiders may target us or third-parties with which we have business relationships in an effort to obtain data, or in a manner that disrupts our operations or compromises our products or the systems into which our products are integrated. 28 We are assessing the continually evolving privacy and data security regimes and measures we believe are appropriate in response.
For instance, cyber criminals or insiders may target us or third-parties with which we have business relationships in an effort to obtain data, or in a manner that disrupts our operations or compromises our products or the systems into which our products are integrated.
Our ability to raise capital to continue to fund operations by selling shares of our Class B common stock and our ability to acquire other companies or technologies by using shares of our Class B common stock as consideration may also be impaired. 32 The trading price of our Class B common stock may be volatile, and you could lose all or part of your investment.
Our ability to raise capital to continue to fund operations by selling shares of our Class B common stock and our ability to acquire other companies or technologies by using shares of our Class B common stock as consideration may also be impaired. 35 The market price and trading volume of our Class B common stock may continue to be highly volatile, which could lead to a loss of all or part of a stockholder’s investment.
We could be an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Class B common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
We could be an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Class B common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. 33 We intend to take advantage of these reporting exemptions described above until we are no longer an “emerging growth company.” Under the JOBS Act, “emerging growth companies” can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.
In addition, it may be difficult to evaluate our business because many of the other companies that offer the same or a similar range of solutions, products and services as us also have limited operating histories and evolving businesses.
In addition, it may be difficult to evaluate our business because many of the other companies that offer the same or a similar range of solutions, products and services as us also have limited operating histories and evolving businesses. 32 If we were to lose the services of members of our senior management team, we may not be able to execute our business strategy.
Our ability to use our net operating loss carryforwards may be limited. As of September 30, 2023, we had no U.S. federal or state net operating loss carryforwards.
Our ability to use our net operating loss carryforwards may be limited. As of September 30, 2024, we had $6,780 thousand U.S. federal net operating loss carryforwards.
We cannot be certain that this will happen. If there is pushback against the adoption of robotics in everyday commercial applications, then this market may develop more slowly than we expect, which could adversely impact our operating results and our ability to grow the business.
If there is pushback against the adoption of robotics in everyday commercial applications, then this market may develop more slowly than we expect, which could adversely impact our operating results and our ability to grow the business. 22 We operate in an emerging industry that is subject to rapid technological change and will experience increasing competition.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. The trading market for our Class B common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.
The trading market for our Class B common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If no securities or industry analysts cover our company, the trading price for our stock would be negatively impacted.
If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, operating results and financial condition could be materially harmed. 27 We are subject to governmental export controls and sanctions laws and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in compliance with applicable laws.
If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, operating results and financial condition could be materially harmed.
Nevada law, Nevada Revised Statutes (“NRS”) Sections 78.411 through 78.444, regulate business combinations with interested stockholders. Nevada law defines an interested stockholder as a beneficial owner (directly or indirectly) of 10% or more of the voting power of the outstanding shares of the corporation.
Nevada law defines an interested stockholder as a beneficial owner (directly or indirectly) of 10% or more of the voting power of the outstanding shares of the corporation.
We currently have and target many customers, suppliers and production counterparties that are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions.
Such lawsuits or adverse publicity would negatively affect our band and harm our business, prospects, financial condition and operating results. We currently have and target many customers, suppliers and production counterparties that are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions.
Our competitor base may develop new technologies or products that provide superior features or are less expensive than our products. Our competitors may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, have greater financial, marketing, manufacturing and other resources than we do, or may be more successful in attracting potential customers, employees and strategic partners.
Our competitors may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, have greater financial, marketing, manufacturing and other resources than we do, or may be more successful in attracting potential customers, employees and strategic partners. If we are not able to compete effectively, our business, prospects, financial condition, and operating results will be negatively impacted.
Failures, or perceived failures, to comply with privacy, data protection, and information security requirements in the variety of jurisdictions in which we operate may adversely impact our business, and such legal requirements are evolving, uncertain and may require improvements in, or changes to, our policies and operations.
It may be time-consuming and expensive for us to alter our business operations to adapt to or comply with any such changes, and any failure to do so could have a material adverse effect on our business, financial condition and results of operations. 31 Failures, or perceived failures, to comply with privacy, data protection, and information security requirements in the variety of jurisdictions in which we operate may adversely impact our business, and such legal requirements are evolving, uncertain and may require improvements in, or changes to, our policies and operations.
Our Class B common stock has one (1) vote per share, and our Class A common stock has ten (10) votes per share. Our issued and outstanding share capital consists of 44,353,846 shares of Class A common stock and 17,855,563 shares of Class B common stock.
Our Class B common stock has one (1) vote per share, and our Class A common stock has ten (10) votes per share. Our issued and outstanding share capital consisted of 39,934,846 shares of Class A common stock and 72,117,398 shares of Class B common stock as of January 10, 2025.
If some investors find our Class B common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our Class B common stock and the price of our Class B common stock may be more volatile. 30 We are a “controlled company” within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.
If some investors find our Class B common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our Class B common stock and the price of our Class B common stock may be more volatile.
Furthermore, we cannot assure you that other stock indices will not take a similar approach to S&P Dow Jones or FTSE Russell in the future. Exclusion from indices could make our Class B common stock less attractive to investors and, as a result, the market price of our Class B common stock could be adversely affected.
Furthermore, we cannot assure you that other stock indices will not take a similar approach to S&P Dow Jones or FTSE Russell in the future.
While we are near profitability today, we intend to expand operations outside the United States and continue to invest in the research and development of our AI Cloud Platform.
Our business plans require a significant amount of capital. Future capital needs may require us to sell additional equity or debt securities that may dilute its stockholders. While we are near profitability today, we intend to expand operations outside the United States and continue to invest in the research and development of our AI Cloud Platform.
Our reliance on sole source suppliers involves a number of additional risks, including risks related to: ● supplier capacity constraints; ● price increases; ● timely delivery; ● component quality; and ● delays in, or the inability to execute on, a supplier roadmap for components and technologies. 23 We have a global supply chain and the COVID-19 pandemic, Russia’s aggression in Ukraine, the military conflict in the Middle East and other macroeconomic factors may adversely affect our ability to source components in a timely or cost-effective manner from our third-party suppliers due to, among other things, work stoppages or interruptions.
We have a global supply chain and global pandemics, the military conflicts in Ukraine and in the Middle East and other macroeconomic factors may adversely affect our ability to source components in a timely or cost-effective manner from our third-party suppliers due to, among other things, work stoppages or interruptions.
Such environments are prone to collisions, unintended interactions and various other incidents, regardless of our technology. Therefore, there is a possibility that our robots may be involved in a collision with any number of such obstacles or even a human being.
Therefore, there is a possibility that our robots may be involved in a collision with any number of such obstacles or even a human being. Our robots are equipped with advanced sensors that are designed to effectively prevent any such incidents and are intended to stop any motion at the detection of intervening objects.
As we increase our international cross-border business and expand our operations abroad, we may continue to engage with business partners and third-party intermediaries to market our services and to obtain necessary permits, licenses and other regulatory approvals.
We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors and other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities. 30 As we increase our international cross-border business and expand our operations abroad, we may continue to engage with business partners and third-party intermediaries to market our services and to obtain necessary permits, licenses and other regulatory approvals.
Our directors, executive officers and principal stockholders have substantial control over us and could delay or prevent a change of corporate control. Our directors, executive officers and holders of more than 5% of our Class B common stock, together with their affiliates, beneficially own, in the aggregate, approximately 94.52% of our outstanding common stock.
Our directors, executive officers and holders of more than 5% of our Class B common stock, together with their affiliates, beneficially own, in the aggregate, approximately 81.35% of our outstanding common stock as of January 10, 2025.
Unforeseen safety issues with our products could result in injuries to people which could result in adverse effects on our business and reputation. Our robots operate autonomously in environments, such as restaurants, hotels, casinos, and healthcare facilities, that are surrounded by various moving and stationary physical obstacles and by human and vehicles.
Our robots operate autonomously in environments, such as restaurants, hotels, casinos, and healthcare facilities, that are surrounded by various moving and stationary physical obstacles and by human and vehicles. Such environments are prone to collisions, unintended interactions and various other incidents, regardless of our technology.
As a result, you may not have the same protection afforded to stockholders of companies that are subject to these corporate governance requirements. We have identified a material weakness in our internal control over financial reporting as of September 30, 2023.
As a result, you may not have the same protection afforded to stockholders of companies that are subject to these corporate governance requirements. We incur significantly increased costs as a result of and devote substantial management time to operating as a public company.
This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. 33 The dual-class structure of our common stock has the effect of concentrating voting power, which may limit your ability to influence the outcome of important transactions, including a change in control.
A short squeeze could lead to volatile price movements in our shares that are not directly correlated to the performance or prospects of our company and could cause purchasers of our common shares to incur substantial losses. 36 The dual-class structure of our common stock has the effect of concentrating voting power, which may limit your ability to influence the outcome of important transactions, including a change in control.
We operate in an emerging industry that is subject to rapid technological change and will experience increasing competition. Our product offerings compete in a broad competitive landscape that include incumbent actors, and emerging players in the service robotics space, particularly in the cleaning and indoor delivery automation.
Our product offerings compete in a broad competitive landscape that include incumbent actors, and emerging players in the service robotics space, particularly in the cleaning and indoor delivery automation. Our competitor base may develop new technologies or products that provide superior features or are less expensive than our products.
Our robots are equipped with advanced sensors that are designed to effectively prevent any such incidents and are intended to stop any motion at the detection of intervening objects. Nevertheless, real-life environments, especially those in crowded areas, are unpredictable and situations may arise in which our robots may not perform as intended.
Nevertheless, real-life environments, especially those in crowded areas, are unpredictable and situations may arise in which our robots may not perform as intended. A highly publicized incident of our autonomous robots causing injuries to people could lead to negative publicity and subject us to lawsuits.
The COVID-19 pandemic may also intensify or exacerbate other risks described in these Risk Factors. 29 If we were to lose the services of members of our senior management team, we may not be able to execute our business strategy. Our success depends in large part upon the continued service of key members of our senior management team.
Our success depends in large part upon the continued service of key members of our senior management team.
Removed
If we are not able to compete effectively, our business, prospects, financial condition, and operating results will be negatively impacted. Our business plans require a significant amount of capital. Future capital needs may require us to sell additional equity or debt securities that may dilute its stockholders.
Added
We cannot be certain that this will happen.
Removed
A highly publicized incident of our autonomous robots causing injuries to people could lead to negative publicity and subject us to lawsuits. Such lawsuits or adverse publicity would negatively affect our band and harm our business, prospects, financial condition and operating results.
Added
We have limited experience in operating our robots in a variety of environments. Unforeseen safety issues with our products could result in injuries to people which could result in adverse effects on our business and reputation.
Removed
If our current or future third-party manufacturers/suppliers cannot perform as agreed, we may be required to replace such manufacturers/suppliers and we may be unable to replace them on a timely basis or at all.
Added
If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business and financial condition may be harmed.
Removed
We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors and other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities.
Added
Our reliance on sole source suppliers involves a number of additional risks, including risks related to: ● supplier capacity constraints; ● price increases; ● timely delivery; ● component quality; and ● delays in, or the inability to execute on, a supplier roadmap for components and technologies.
Removed
It may be time-consuming and expensive for us to alter our business operations to adapt to or comply with any such changes, and any failure to do so could have a material adverse effect on our business, financial condition and results of operations.
Added
We are subject to governmental export controls and sanctions laws and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in compliance with applicable laws.
Removed
The effects of the COVID-19 pandemic have had and could continue to have a material adverse effect on our business prospects, financial results, and results of operations. The COVID-19 pandemic has caused significant volatility and disruption globally.
Added
We are assessing the continually evolving privacy and data security regimes and measures we believe are appropriate in response.
Removed
The COVID-19 measures adopted by governments and businesses, including restrictions on travel and business operations and shelter in place and other quarantine orders, have affected and continue to affect our business, and could continue to adversely affect our business operations or the business operations of our customers and suppliers in the future.
Added
We are a “controlled company” within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.
Removed
A significant portion of our revenue is project driven and has thus been impacted by the COVID-19 pandemic as certain key airport, smart city, and security installations have been, and continue to be, pushed back.
Added
The market price and trading volume of our Class B common stock has fluctuated widely since the beginning of the calendar year.
Removed
Further, the pandemic has slowed prototype work and new product introduction efforts due to employees’ inability to access our facilities, and temporarily disrupted the operations of certain of our customers and suppliers.
Added
During the period from January 1, 2024 to the date of this Report, the trading price of our Class B common stock has fluctuated from an intra-day high of $12.29 on January 24, 2024 to an intra-day low of $0.30 on August 6, 2024.
Removed
The duration of the ongoing COVID-19 pandemic and the associated and ongoing business interruptions may continue to affect our sales, supply chain or the manufacture or distribution of products, which could result in a material adverse effect on our business prospects and financial condition. Our response to the ongoing COVID-19 pandemic may prove to be inadequate.
Added
The market price of our Class B common stock is affected by a variety of factors, including but not limited to: ● analyst reports that may be published about our company or our industry; ● our ability to execute our anticipated business plans and strategy; ● actual or anticipated fluctuations in our quarterly or annual operating results; ● our ability to obtain additional capital which will be necessary to continue our business and operations; ● changes in financial or operational estimates or projections; ● changes in the economic performance or market valuations of companies similar to ours; ● the impact of pandemics, inflation, war, other hostilities and other disruptive events on our business or that of our customers, partners, and supply chain or on the global economy; and ● our ability to comply with the continued listing requirements of The Nasdaq Stock Market LLC (“Nasdaq”) and maintain our listing on Nasdaq.
Removed
We may be unable to continue our operations in the manner that we did prior to the outbreak and we may endure interruptions, reputational harm, delays in product development and shipments, all of which could have an adverse effect on our business prospects, operating results, and financial condition.
Added
In addition, the trading price and trading volume of our Class B common stock has very recently and at certain other times in the past exhibited, and may continue to exhibit, extreme volatility, including within a single trading day. Such volatility could cause purchasers of our Class B common stock to incur substantial losses.
Removed
We intend to take advantage of these reporting exemptions described above until we are no longer an “emerging growth company.” Under the JOBS Act, “emerging growth companies” can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Added
For example, on July 22, 2024, the trading price of our Class B common stock ranged from an intra-day high of $2.59 to an intra-day low of $1.31, on trading volume of approximately 100 million shares, and on August 7, 2024, the trading price of our Class B common stock ranged from an intra-day high of $0.728 to an intra-day low of $0.5413, on trading volume of approximately 188 million shares.
Removed
If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Added
With respect to certain such instances of trading volatility, we are not aware of any material changes in our financial condition or results of operations that would explain such price volatility or trading volume, which we believe reflect market and trading dynamics unrelated to our operating business or prospects and outside of our control.
Removed
We have identified a material weakness in our internal controls over financial reporting as of September 30, 2023 relating to the inadequate design and maintenance of effective general information technology controls over third-party information systems and applications that are relevant to the preparation of the Company’s financial statements.
Added
We are thus unable to predict when such instances of trading volatility will occur or how long such dynamics may last. Under these circumstances, we would caution you against investing in our Class B common stock unless you are prepared to incur the risk of incurring substantial losses.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. Properties Our principal executive offices are located at 4175 Cameron St Ste 1, Las Vegas, NV 89103. We lease office facilities under noncancelable operating lease agreements. We lease space for our corporate headquarters located at 4175 Cameron St Ste 1, Las Vegas, NV 89103 through August 2027, and a second office space in Austin, Taxes through April 2024.
Biggest changeITEM 2. Properties Our principal executive offices are located at 4175 Cameron St Ste 1, Las Vegas, NV 89103. We lease office facilities under a noncancelable operating lease agreement through August 2027. On October 4, 2024, the Company entered into a new lease agreement for retail space located at Space No.
Removed
We also lease space for our ClouTea store in Las Vegas, Nevada through January 2024.
Added
B187 in Town Square Las Vegas, 6587 Las Vegas Boulevard South, Las Vegas, Nevada 89119. This location will operate under the name “Clouffee and Tea.” The lease has a term of five (5) years and encompasses approximately 1,000 square feet. The store will be opened in late January 2025, at which time the lease rental commencement date will be confirmed.
Removed
After the ClouTea store lease term ends in January 2024, the new lease term will change to month-to-month, and landlord can choose to terminate the lease by sending a notice two month in advance. 36 The following table sets forth information as to the real property leased by us: Lessor Lessee Location Area (Square Feet) Annual Rent Current Term Expires Use Utopia Village, L.P.
Added
The following table sets forth information as to the real property currently leased by us: Lessor Lessee Location Area (Square Feet) Annual Rent FY2025 Current Term Expires Use Cameron Industrial Park, LLC Richtech Robotics Inc. 4175 Cameron St, Ste 1 & 2 & A1 &A2 & C & 5, Las Vegas, NV 89103 15,792 $ 209,041.68 August 31, 2027 HQ
Removed
Richtech Robotics Inc. 13706 Research Blvd, Suite 200, Austin, TX 78750 2,580 $ 37,200.00 April 30, 2024 Sales and Marketing Office Cameron Industrial Park, LLC Richtech Robotics Inc. 4175 Cameron St, Ste 1 & 2 & A1 & 5, Las Vegas, NV 89103 11,222 $ 139,554 August 31, 2027 HQ Forum Shops, LLC Richtech Robotics Inc. 3500 Las Vegas Blvd.
Removed
So. Unit 0R06A, Las Vegas, NV 89109 1,971 $ 60,002 January 31, 2024 Boba Tea store Forum Shops, LLC Richtech Robotics 3500 Las Vegas Blvd. So. Unit TT7, Las Vegas, NV 89109 100 $ 10,002 January 31, 2024 Boba Tea store

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of September 30, 2023, we are not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations. ITEM 4. Mine and Safety Disclosure Not applicable. 37 PART II
Biggest changeAs of September 30, 2024, other than as set forth below, we are not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations.
Added
On December 13, 2024, the Company received a Notice of Breach from AC Sunshine Securities LLC (“ACSS”), pursuant to which ACSS alleges that the Company breached an exclusivity provision in that certain Follow-On Offering Engagement Letter, by and between the Company and ACSS, and ACSS is seeking payment of fees and expenses.
Added
The Company is currently assessing the merits of ACSS’s claim. ITEM 4. Mine and Safety Disclosure Not applicable. 41 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWhen making their determination that a distribution is not prohibited by NRS 78.288, directors may consider: ● financial statements prepared on the basis of accounting practices that are reasonable in the circumstances; ● a fair valuation, including, but not limited to, unrealized appreciation and depreciation; and/or ● any other method that is reasonable in the circumstances. 38 Recent Sales of Unregistered Securities In October 2022, the Company effected a 4-for-1 forward stock split and concurrently designated two classes of common stock, designated as Class A common stock and Class B common stock (the “Stock Split”).
Biggest changeWhen making their determination that a distribution is not prohibited by NRS 78.288, directors may consider: ● financial statements prepared on the basis of accounting practices that are reasonable in the circumstances; ● a fair valuation, including, but not limited to, unrealized appreciation and depreciation; and/or ● any other method that is reasonable in the circumstances. 42 Securities Authorized for Issuance under Equity Compensation Plan The following table sets forth information concerning securities authorized under equity compensation plans as of September 30, 2024.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class B common stock trades on the Nasdaq Stock Market under the symbol “RR.” Holders of Record As of January 11, 2024, we had approximately 8 holders of record of our Class A common stock and 30 holders of record of our Class B common stock.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class B common stock trades on the Nasdaq Stock Market under the symbol “RR.” Holders of Record As of January 10, 2025, we had approximately 3 holders of record of our Class A common stock and 14 holders of record of our Class B common stock.
We may pay dividends in the future if the Company realizes good profits and the board of directors determines that dividends are advisable, taking into account the Company’s financial and development needs.
Dividend Policy We have never paid or declared any cash dividends on our Class B common stock. We may pay dividends in the future if the Company realizes good profits and the board of directors determines that dividends are advisable, taking into account the Company’s financial and development needs.
Plan Category Number of securities to be issued upon exercise of outstanding options Weighted-average exercise price of outstanding options Number of granted restricted stock unit awards outstanding Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders - $ - - - Equity compensation plans not approved by security holders - - - - - $ - - - Dividend Policy We have never paid or declared any cash dividends on our Class B common stock.
Plan Category Number of securities to be issued upon exercise of outstanding options Weighted-average exercise price of outstanding options Number of granted restricted stock unit awards outstanding Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders - $ - - 525,274 Equity compensation plans not approved by security holders - - - - - $ - - 525,274 Recent Sales of Unregistered Securities None that have not already been disclosed in a prior Quarterly Report on Form 10-Q or Current Report on Form 8-K.
Removed
Securities Authorized for Issuance under Equity Compensation Plan The following table sets forth information concerning securities authorized under equity compensation plans as of September 30, 2023.
Removed
All of the then-outstanding shares of common stock were redesignated as shares of Class A common stock in connection with the Stock Split.
Removed
As a result of the Stock Split, Zhengqiang Huang held 7,892,000 shares of Class A common Stock, Zhenwu Huang held 31,508,000 shares of Class A common stock, and Renmeng LLC held 600,000 shares of Class A common stock.
Removed
Immediately after the Stock Split, Renmeng LLC and the Company entered into a Conversion Agreement, dated as of October 21, 2022, pursuant to which Renmeng LLC converted all of its shares of Class A common stock into an equal number of shares of Class B common stock (the “Renmeng Conversion”).
Removed
As a result of the Renmeng Conversion, Renmeng LLC holds 600,000 shares of Class B common stock. In December 2022, Zhenwu Huang transferred 1,200,000 shares of Class A common stock to Phil Zheng, in exchange for a payment of $30,000 from Phil Zheng.
Removed
Immediately after the transfer, Phil Zheng and the Company entered into a Conversion Agreement, dated as of December 2, 2022, pursuant to which Phil Zheng converted all of his shares of Class A common stock into an equal number of shares of Class B common stock (the “Zheng Conversion”).
Removed
As a result of the Zheng Conversion, Phil Zheng holds 1,200,000 shares of Class B common stock.
Removed
In December 2022 and January 2023, the Company issued the following shares of its common stock to the listed holders, in each case the consideration being services rendered: Name of Holder Number of Shares Class of Common Stock Date of Issuance King Bliss Limited 6,153,846 Class A Common Stock 12/20/2022 Practical Excellence Limited 1,600,000 Class B Common Stock 12/12/2022 Robust Century Ventures Limited 1,400,000 Class B Common Stock 12/13/2022 Tower Luck Group Limited 1,350,000 Class B Common Stock 12/15/2022 Broad Elite Ventures Limited 1,800,000 Class B Common Stock 12/16/2022 Normanton Tech PTE.
Removed
LTD. 466,000 Class B Common Stock 1/15/2023 Pre-IPO Private Placement In June and July 2023, the Company entered into share purchase agreements with twelve accredited investors for the issuance of an aggregate of 166,000 shares of Class B common stock, at $5.00 per share (the “Private Placement Shares”).
Removed
Each of the investors has agreed to a 180 day lock-up with respect to such shares. The Private Placement Shares are not subject to registration rights.
Removed
The number of Private Placement Shares issued to each investor is set forth below: Name of Holder Number of Shares Class of Common Stock Date of Issuance Thanh Chi Nguyen 100,000 Class B Common Stock 6/8/2023 The Jenkins Family Trust 5,000 Class B Common Stock 6/12/2023 Jerry L.
Removed
Marti 25,000 Class B Common Stock 6/26/2023 Greg Meagher 5,000 Class B Common Stock 6/27/2023 Joseph Walker and Kimberly Spight Walker 2,000 Class B Common Stock 6/28/2023 The Zeno Family Trust 5,000 Class B Common Stock 6/28/2023 Theresa Wilson-McCray 2,000 Class B Common Stock 6/28/2023 Jae H. Lim, Jr. 10,000 Class B Common Stock 7/27/2023 Jessica M.
Removed
Alexander 2,000 Class B Common Stock 7/28/2023 Richard On 2,500 Class B Common Stock 7/30/2023 Chinese Restaurant Foundation 5,000 Class B Common Stock 7/30/2023 Alex Pang 2,500 Class B Common Stock 7/30/2023 39 Convertible Notes In November and December 2022, the Company issued nine promissory notes (as amended, the “Convertible Notes”) to nine investors, in an aggregate principal amount of $1,400,000, for the provision of consulting, advisory and technical support services to the Company.
Removed
The Convertible Notes each bear an interest of 16% per annum and have a maturity date of 18 months after issuance (“Maturity Date”).
Removed
On December 17, 2022, the Company amended the Convertible Notes and entered into promissory note conversion agreements with each Convertible Note holder, pursuant to which the outstanding balance of principal and accrued interest of each Convertible Note were converted into an aggregate of 9,231,000 shares of Class B common stock (“Conversion Shares”).
Removed
On June 25, 2023, each of the holders of the Convertible Notes agreed to waive any registration rights in connection with their Conversion Shares (the “Waiver”). On October 27, 2023, seven of the original holders of the Convertible Notes and the converted shares transferred their respective shares to each of seven new investors.
Removed
Each of the transferees agreed to the terms of the Waiver. The shares of common stock described above were issued in transactions not involving a public offering in reliance upon an exemption from registration provided by Section 3(a)(9) or Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeHigher 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. 40 Results of Operations Comparison of the years ended September 30, 2023 and 2022 The following table summarizes our results of operations (in thousands) for the years ended September 30, 2023 and 2022, together with the dollar change in those items from period to period: Year ended September 30, 2023 2022 Change Revenue, net $ 8,759 $ 6,049 $ 2,710 Cost of revenue, net 2,744 2,098 646 Gross profit 6,015 3,951 2,064 Operating expenses: Research and development 1,979 1,772 207 Sales and marketing 238 297 (59 ) General and administrative 3,509 2,258 1,251 Total operating expenses 5,726 4,327 1,399 Loss from operations 289 (376 ) 665 Other income (expense): Interest expense, net (734 ) (18 ) (716 ) Total other expense (734 ) (18 ) (716 ) Loss before income tax expense (445 ) (394 ) (51 ) Income tax benefit/(expense) 106 (113 ) 219 Net loss $ (339 ) $ (507 ) $ 168 Revenue The total revenue for the fiscal years ended September 30, 2023, and 2022, was $8,759 thousand and $6,049 thousand, respectively.
Biggest changeResults of Operations Comparison of the fiscal years ended September 30, 2024 and 2023 The following table summarizes our results of operations (in thousands) for the fiscal years ended September 30, 2024 and 2023, together with the dollar change in those items from period to period: Year ended September 30, 2024 2023 Change Revenue, net $ 4,240 $ 8,759 $ (4,519 ) Cost of revenue, net 1,520 2,744 (1,224 ) Gross profit 2,720 6,015 (3,295 ) Operating expenses: Research and development 2,021 1,979 42 Sales and marketing 1,315 238 1,077 General and administrative 6,457 3,509 2,948 Total operating expenses 9,793 5,726 4,067 Gain/(loss) from operations (7,073 ) 289 (7,362 ) Non-operating income(expense): Investment Income 13 - 13 Interest expenses, net (762 ) (734 ) (28 ) Total other expenses (749 ) (734 ) (15 ) Loss before income tax expense (7,822 ) (445 ) (7,377 ) Income tax benefit/(expense) (318 ) 106 (424 ) Net loss $ (8,140 ) $ (339 ) $ (7,801 ) 44 Revenue The total revenue for the fiscal year ended September 30, 2024 and 2023, was $4,240 thousand and $8,759 thousand, respectively.
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 will 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 increase in the future as a result of increased costs associated with being a public company.
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 will 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 being a public company.
The cash flow impact from changes in net operating assets and liabilities was primarily driven by increases in accounts receivable of $3,919 thousand, deferred tax asset of $518 thousand and current operating lease liabilities of $108 thousand, partially offset by decreases in inventory of $551 thousand, right-of-use asset of $67 thousand and increase in accounts payable and tax payable of $951 thousand and $344 thousand, respectively.
The cash flow impact from changes in net operating assets and liabilities was primarily driven by increases in accounts receivable of $3,919 thousand, deferred tax asset of $518 thousand and current operating lease liabilities of $108 thousand, partially offset by decreases in inventory of $551 thousand, right-of-use asset of $67 thousand and increase in accounts payable and tax payable of $951thousand and $344 thousand, respectively.
We raised $2,230 thousand from issuance of ordinary shares, received proceeds of $200 thousand from related party debt, and obtained short-term loans with a net balance of $845 from third parties as of September 30, 2023, offset by $247 thousand payment of related party debt.
We raised $2,230 thousand from issuance of ordinary shares, received proceeds of $200 thousand from related party debt, and obtained loans with a net balance of $845 from third parties as of September 30, 2023, offset by $247 thousand payment of related party debt.
Trend Information Other than as disclosed elsewhere in this registration statement, particularly with respect to government regulations relating to nicotine and cannabis, 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.
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. 47 Seasonality Seasonality does not materially affect our business or the results of our operations.
Seasonality K 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 audited financial statements included elsewhere in this Form 10-K for more information.
Off-Balance Sheet Arrangements We do not have off-balance sheet arrangements. Recent Accounting Pronouncements Not Yet Adopted See Note 2 to our audited financial statements included elsewhere in this Form 10-K for more information.
See Note 2 to our audited financial statements included elsewhere in this Form 10-K for more information. 44 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.
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.
These amounts primarily consisted of payments made for purchase of property and equipment, sale of property and equipment, cash used for lending to related parties, and cash collected from loan to related parties for both years. Financing Activities Net cash provided by financing activities totaled $3,028 thousand for the year ended September 30, 2023.
Net cash used for investing activities was $26 thousand net cash used for investing activities for year ended September 30, 2023, primarily consisted of cash used for lending to related parties, and cash collected from loan to related parties Financing Activities Net cash provided by financing activities totaled $41,925 thousand for the year ended September 30, 2024.
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.
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 Form 10-K for more information.
Comparison of the years ended September 30, 2023 and 2022 The following table summarizes our cashflow information (in thousands) for the years ended September 30, 2023 and 2022, together with the dollar change in those items from period to period: Year ended September 30, 2023 2022 Change Net cash provided by (used in): Operating activities $ (2,909 ) $ (2,646 ) (263 ) Investing activities (13 ) (44 ) 31 Financing activities 3,028 1,664 1,364 Net increase (decrease) in cash $ 106 $ (1,026 ) 1,132 Operating Activities Net cash used in operating activities for the year ended September 30, 2023 was $2,909 thousand, primarily due to a net loss of $339 thousand and a decrease of $2,570 thousand in net operating assets and liabilities.
This increase was partially offset by cash used in operating activities, primarily due to our net loss and investments in working capital. 46 Comparison of the years ended September 30, 2024 and 2023 The following table summarizes our cash flow information (in thousands) for the years ended September 30, 2024 and 2023, together with the dollar change in those items from period to period: Year ended September 30, 2024 2023 Change Net Cash provided by (used in): Operating activities $ (5,061 ) $ (2,896 ) (2,165 ) Investing activities (22,731 ) (26 ) (22,705 ) Financing Activities 41,925 3,028 38,897 Net increase (decrease) in cash $ 14,133 $ 106 14,027 Operating Activities Net cash used in operating activities for the year ended September 30, 2024 was $5,061 thousand, primarily due to a net loss of $8,140 thousand an increase of $3,079 thousand in net operating assets and liabilities.
The cash flow impact from changes in net operating assets and liabilities was primarily driven by increases in accounts receivable of $1,612 thousand, inventories of $389 thousand, Right-of-use asset of $382 thousand and a decrease in accounts payable of $305 thousand, partially offset by increases in current and non-current operating lease liabilities of $387 thousand and tax payable of $108 thousand.
The cash flow impact from changes in net operating assets and liabilities was primarily driven by decrease in accounts receivable of $4,217 thousand, deferred tax asset of $518 thousand and operating lease liabilities of $404 thousand, partially offset by decreases in accounts payable of $976 thousand, tax payable of $456 thousand, right-of-use asset of $405 thousand and increase in inventory of $326 thousand respectively.
Our revenue (in thousands) by product for the fiscal years ended September 30 is shown below: Year ended September 30, 2023 2022 Change Robotics Product revenue $ 5,665 $ 2,981 $ 2,684 Service revenue 2,602 1,876 726 Leasing revenue 197 441 (244 ) Total Robotics revenue 8,464 5,298 3,166 Smart hardware 7 562 (555 ) Interactive system 198 189 9 Cloutea* 90 — 90 Total $ 8,759 $ 6,049 $ 2,710 Notes: * Cloutea is the revenue generated from our boba tea store opened in May 2023, in order to further develop our business model.
Year ended September 30, 2024 2023 Change Robotics Product revenue $ 1,251 $ 5,665 $ (4,414 ) Service revenue 1,830 2,602 (772 ) Leasing revenue 786 197 589 Total Robotics revenue 3,867 8,464 (4,597 ) Smart hardware 16 7 9 Interactive system 101 198 (97 ) Cloutea* 256 90 166 Total $ 4,240 $ 8,759 $ (4,519 ) * Cloutea is the revenue generated from our boba tea store opened in May, 2023.
For the increase in accounts receivable of $3,919 thousand, we have collected majority of this amount as of the report date. 43 Net cash used in operating activities for the year ended September 30, 2022 was $2,646 thousand, primarily due to a net loss of $507 thousand and a decrease of $2,196 thousand in net operating assets and liabilities, partially offset by a non-cash item of $57 thousand.
Net cash used in operating activities for the year ended September 30, 2023 was $2,896 thousand, primarily due to a net loss of $339 thousand and a decrease of $2,557 thousand in net operating assets and liabilities.
Net cash provided by financing activities totaled $1,664 thousand for the year ended September 30, 2022. We received $1,500 thousand from stockholder capital injection and $190 thousand from related party debt. These sources of cash were offset by $26 thousand of payments for long-term loans.
We received $33,566 thousand from issuance of common stock, raised approximately $9,286 thousand from issuance of ordinary shares, received loans with a net balance of $3,102 from third parties, offset by $238 thousand payment of related party debt. Net cash provided by financing activities totaled $3,028 thousand for the year ended September 30, 2023.
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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 and provide service automation solutions that directly address the labor shortage problem affecting the US service industry.
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Overview Richtech Robotics, Inc. is a leading innovator and provider of advanced robotics solutions designed to 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.
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Our solutions include delivery, commercial cleaning, food & beverage service, and customization and development service, which has 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.
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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 Fiscal Year 2024 ● Strategic Transition to Robotics-as-a-Service: The Company has embarked on a strategic transition from a traditional product sales model to a RaaS model.
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Many of our clients see our robotic solutions as crucial to expanding and scaling their businesses. Our product family was designed to provide labor-intensive businesses with robotic automation solutions. Hospitality is the most labor-intensive industry, which is why we have deployed our robots across restaurants, hotels, casinos, hospitals, bars, event spaces, and senior living homes.
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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. ● Significant RaaS Contracts Secured: As of September 30, 2024, the Company has secured significant RaaS contracts, including a notable agreement for the deployment of 25 ADAM units, representing a total contract value of $5,250,000.00, to be recognized over a 60-month period.
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The market is currently in the phase where end-users and system integrators are still gaining experience in adoption and implementation of nonindustrial service robots. In North America, the primary driver for adoption will be the ongoing trend to automate menial or non-value-adding-tasks. These tasks include cleaning, transport and delivery, and food preparation.
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These contracts, totaling $5,862,765.00, will contribute to revenue generation incrementally over lease terms ranging from 36 to 72 months. 43 ● Continued Investment in Research and Development: Richtech Robotics remains dedicated to innovation and technological advancement, as evidenced by the increase in research and development expenses during fiscal year 2024.
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The $2,710 thousand increase, or 45%, increase in revenue in 2023 was a result of the continuous expansion of our customer base and increased revenue from existing customers.
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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, the Company has significantly increased its investment in sales and marketing initiatives.
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This is our model store of interactive robot barista by utilizing our ADAM robot. 41 For the fiscal years ended September 30, 2023 and 2022, our overall robotics revenue was $8,464 thousand and $5,298 thousand, respectively.
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These efforts are crucial for educating potential customers about the benefits of leasing robotics solutions, building brand awareness, and cultivating new customer relationships.
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The $3,166 thousand increase, or 60%, was brought on by the official launch of our ADAM robot, the culmination of several enterprise deals, and the generally increased adoption rate among medium to small business. Cost of Revenue, Net Cost of revenue, net was $2,744 thousand and $2,098 thousand for the years ended September 30, 2023 and 2022, respectively.
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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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The $646 thousand increase, or 31%, was due primarily to the increase of our robotics revenue in 2023. Gross Profit Gross profit as a percentage of total revenue was 69% for the year ended September 30, 2023 compared to 65% for the year ended September 30, 2022.
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The $4,519 thousand decrease, or 51%, for fiscal year 2024 is primarily attributed to the strategic transition to the RaaS model, which impacts the timing of revenue recognition. While this transition may initially reduce revenue, it is expected to generate a more predictable and recurring revenue stream over the long term.
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The increase in the gross profit percentage in 2023 was driven primarily by the occurrence and recognition of our robotic service revenue, which has a higher margin. Research and Development Expenses Research and development expenses were $1,979 thousand and $1,772 thousand for the years ended September 30, 2023 and 2022, respectively.
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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 will open in a new location in Las Vegas in January 2025. In 2024, the Company generated $4.2 million in total revenue, a decrease from $8.8 million in 2023.
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The $207 thousand increase, or 12%, from 2022 to 2023 was due primarily to our increased expenditure in developing new products. Sales and Marketing Expenses Sales and marketing expenses were $238 thousand and $297 thousand for the years ended September 30, 2023 and 2022, respectively.
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This decrease was primarily driven by a decline in product revenue within our Robotics category, partially offset by an increase in leasing revenue. The shift towards service and leasing reflects the ongoing transition to our Robot-as-a-Service model, which is expected to generate more predictable and recurring revenue streams in the long term.
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This reduction of $59, or 20%, in marketing costs was primarily due to better efficiency in our ability to target ideal customers by concentrating marketing efforts on the highest return on investment (ROI) activities. In addition, the success of our marketing efforts in 2022 had already put us at capacity in terms of manufacturing and installations for 2023.
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The following table summarizes the RaaS sales numbers (in thousand): Current Sales (RaaS adjusted to sale model) FY24 FY24 Sales Product revenue $ 1,235 $ 7,208 Service revenue 1,830 1,830 Leasing revenue 786 742 Others 389 389 Total $ 4,240 $ 10,168 * If the RaaS revenue is treated as product sales, the gross revenue for fiscal year 2024 would be $10,210. * This transition aligns with the Company’s long-term growth strategy, aiming to create a more stable and recurring revenue stream while reducing the upfront financial burden for our customers.
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General and Administrative Expenses General and administrative expenses were $3,509 thousand and $2,258 thousand for the years ended September 30, 2023 and 2022, respectively.
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We believe the RaaS model enhances customer retention and positions the Company competitively in an evolving market. 45 Cost of Revenue Our gross profit decreased significantly in 2024, declining by 55% from $6.0 million in 2023 to $2.7 million in 2024, our gross margin remained relatively stable.
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The $1,251 thousand increase, or 55%, from 2022 to 2023 was due primarily to an increase in professional service fees related to prepare for the initial public offering, and an increase in commission expenses caused by the higher sales.
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Our gross margin was 64% in 2024, compared to 69% in the prior year. This slight decrease in gross margin is primarily attributed to adjustments and write-offs related to our inventory. During the year, we conducted a thorough review of our inventory and identified certain obsolete and slow-moving items that required adjustments and write-offs.
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Other Income (Expense) Total other expense was $734 thousand and $18 thousand for the years ended September 30, 2023 and 2022, respectively. The $716 thousand, or 3,978%, net increase in total other expense was primarily due to the interest expense occurred incurred within the twelve months ended September 30, 2023.
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These adjustments impacted on our cost of goods sold and, consequently, our gross margin. We have implemented measures to improve our inventory management practices and minimize the risk of future inventory obsolescence. Despite this slight margin compression, we are pleased with the overall stability of our gross margin, which reflects the inherent profitability of our business model.
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During 2023, we entered into ten short-term loan agreements with different financial entities for the total principal amount of $1,853. As of September 30, 2023, the short-term loan balance was $845. The majority of these loans have been paid off, and the remaining balance was $55 as of the reporting date.
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We believe that our strategic shift towards an RaaS model, with its higher-margin recurring revenue streams, will further enhance our profitability in the long term. Gross Profit Despite the decrease in revenue, our gross profit remained relatively stable, decreasing from $6.0 million in 2023 to $2.7 million in 2024.
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Income Tax Benefit/(Expense) There was an income tax benefit of $106 thousand for the year ended September 30, 2023, and there was an income tax expense of $113 thousand, for the years ended September 30, 2022. The $219 thousand difference was primarily due to the loss before income tax generated in 2023.
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This resulted in a gross margin of 64% in 2024, compared to 69% in the prior year. This slight decrease in gross margin is primarily attributed to a shift in our revenue mix. As we transition towards a Robot-as-a-Service (RaaS) model, a higher proportion of our revenue is now generated from service and leasing arrangements.
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The income tax benefit and/or expenses recorded for both of the year ended September 30, 2023 and 2022 differ from the U.S. federal statutory tax rate of 21% due primarily to the tax impact of state income taxes, non-deductible officers’ compensation, and transportation fringe benefits. 42 Liquidity and Capital Resources We believe that our existing cash as of the date of this Report will fund our current operating plans through at least the next twelve months from the date of this Report.
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These arrangements generally have lower gross margins compared to product sales, as they involve ongoing service costs and the amortization of the robot’s cost over the contract term. However, we believe this strategic shift towards RaaS will benefit us in the long run by creating more predictable recurring revenue streams and fostering stronger customer relationships.
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Although we have operating cash outflows of $2,909 thousand for the year ended September 30, 2023 and $2,646 thousand for the year ended September 30, 2022, our working capital is in net asset position with $4,092 thousand as of September 30, 2023 and 2,764 thousand as of September 30, 2022.
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Research and Development Expenses We remain committed to investing in research and development to drive innovation and maintain our competitive edge. R&D expenses increased from $1.9 million in 2023 to $2.0 million in 2024 was due primarily to our increased expenditure in developing new products.
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We launched a new line of robotics products at the end of 2021, which increased our accounts receivable to $5,576 thousand as of September 30, 2023 and $1,656 thousand as of September 30, 2022. We expect to collect the majority of these cash payments within the next twelve months from the date of this Report.
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Sales and Marketing Expenses Our sales and marketing expenses increased significantly, from $238,000 in 2023 to $1.3 million in 2024. This increase is directly related to our strategic initiatives to expand our market reach and promote our RaaS (Robot-as-a-Service) offerings.
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In addition, if needed, we expect to finance our future cash needs within the next twelve months from the date of this Report through founder investment, public or private equity or debt financings, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches.
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General and Administrative Expenses As a newly public company, we incurred higher general and administrative expenses, which increased from $3.5 million in 2023 to $6.4 million in 2024. This increase is primarily due to an increase in professional service fees associated with operating as a public company.
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We will continue seeking additional capital to expand our operations, advance our products and scale our sales and marketing capabilities. We will continue seeking additional financing sources to meet our working capital requirements, make investment in research and development and make capital expenditures needed to maintain and expand our business.
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Other Income (Expense) Our total other expenses increased in 2024, rising from $734,000 in 2023 to $749,000 in 2024. This increase is mainly attributed to higher interest expenses incurred on outstanding debt. As we scaled our operations and invested in working capital to support our growth, our interest expense increased.
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If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock, including shares of common stock sold in this offering.
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However, we made a strategic decision to prioritize debt reduction and paid off a significant portion of our outstanding loans in the middle of 2024.
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The non-cash adjustments to net loss was an increase of $57 thousand of non-controlling interest. Investing Activities Net cash position for investing activities were $13 thousand and $44 thousand net cash used for investing activities for year ended September 30, 2023 and 2022, respectively.
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This proactive approach to debt management will reduce our interest burden going forward, improve our overall financial position, and provide us with greater financial flexibility to pursue future growth opportunities Income Tax Benefit/(Expense) We recorded an income tax expense of $318 thousand in 2024. This is primarily driven by the removal of deferred tax benefits.
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Management determined that it is more likely than not that the Company will be unable to realize the benefits of these deductible temporary differences in the future. 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.
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As of September 30, 2024, our cash and cash equivalents totaled $14.6 million. This represents a significant increase from $433,000 at the end of the prior fiscal year.
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The substantial increase in our cash position is primarily attributable to the net proceeds of $40.2 million received from our initial public offering completed in November 2023 and subsequent financing as described in “ITEM 1.
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Business – Recent Developments – Registered Offering.” These proceeds significantly strengthened our balance sheet and provided us with the 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.
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For the increase in accounts receivable of $3,919 thousand, we have collected majority of this amount as of the report date.
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Investing Activities Net cash used for investing activities was $22,731 thousand net cash used for investing activities for year ended September 30, 2024, primarily driven by $15,940 thousand on purchase of short-term investments, $5,470 thousand on purchase of intangible assets, $730 thousand on purchase of long-term investments and $725 thousand on purchase of equipment.

Other RR 10-K year-over-year comparisons