RR Richtech Robotics Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to

Commission File No. 001-41866

(Address of principal executive offices) (Zip Code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of February 14, 2025, there were 39,934,846 shares of the Company’s Class A common stock and 74,568,935 shares of the Company’s Class B common stock issued and outstanding.

RICHTECH ROBOTICS INC.

Quarterly Report on Form 10-Q

Table of Contents   

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect our current expectations and views of future events. The forward-looking statements are contained principally in the section of this Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Readers are cautioned that significant known and unknown risks, uncertainties and other important factors (including those over which we may have no control and others listed in this Report and in the “Risk Factors” section of our Annual Report on Form 10-K/A for the fiscal year ended September 30, 2024 (“2024 Annual Report”), as filed with the Securities and Exchange Commission (the “SEC”) on February 7, 2025, may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs.

Our operations and business prospects are always subject to risks and uncertainties including, among others:

These forward-looking statements involve numerous and significant risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results of operations or the results of other matters that we anticipate herein could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” section contain in this Report and in the “Risk Factors” and other sections of the 2024 Annual Report. You should thoroughly read this Report and the documents that we refer to with the understanding that our actual future results may be materially different from, and worse than, what we expect. We qualify all our forward-looking statements by these cautionary statements.

The forward-looking statements made in this Report relate only to events or information as of the date of this Report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this Report completely and with the understanding that our actual future results may be materially different from what we expect.

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

RICHTECH ROBOTICS INC.

Unaudited Consolidated Balance Sheets

(In thousands, except share and per share data)

RICHTECH ROBOTICS INC.

Unaudited Consolidated statements of Operations

(In thousands, except share and per share data)

Richtech Robotics Inc.

Unaudited Consolidated Statements of Equity

For the three months ended December 31, 2024 and 2023

(In thousands except share data)

RICHTECH ROBOTICS, INC.

Consolidated Statements of Cash Flows

For the three months ended December 31, 2024 and 2023

(In thousands)

NOTES TO FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023

(Dollars in thousands, unless otherwise stated)

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Report and in our other filings with the Securities and Exchange Commission (the “SEC”). The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors” in our 2024 Annual Report and elsewhere in this Report. These risks could cause our actual results to differ materially from any future performance suggested below.

Overview

We are a leading provider of service robotic solutions by developing, manufacturing, and deploying novel products that address the growing need for automation in the service industry. We develop, manufacture, and deploy cutting-edge robots that streamline operations, enhance efficiency, and alleviate labor shortages across a diverse range of sectors, including restaurants, hotels, casinos, senior living facilities, and retail centers. Our commitment to technological advancement and customer-centric solutions has positioned us as a key player in the rapidly evolving robotics landscape.

Key Business Highlights for the First Quarter of Fiscal Year 2025

Recent Developments

On October 25, 2024, we received a notice from Nasdaq notifying us that, because the closing bid price for our Class B common stock had fallen below $1.00 per share for 30 consecutive business days, we no longer complied with the minimum bid price requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial compliance period of 180 calendar days, or until April 23, 2025, to regain compliance with the minimum bid price requirement. On January 6, 2024, we received a notice from Nasdaq that we had regained compliance with the minimum bid price requirement and the matter is closed.

In January 2025, we received warrant exercise notices from three investors, collectively exercising an aggregate of 3,814,611 warrants. As a result, we issued an aggregate of 3,814,611 shares of Class B common stock and received aggregate proceeds of $5,149,724.85. Rodman was paid a fee equal to 7% of the gross proceeds of the warrant exercises, pursuant to the Rodman Engagement Letter.

On February 10, 2025, we entered into a warrant exercise inducement offer letter with a holder of Existing Warrants exercisable for an aggregate of 2,699,797 shares of its Class B common stock, to exercise its Existing Warrants at the existing exercise price of $1.35 per share, generating gross proceeds of approximately $3,644,726 before deducting financial advisory fees. In consideration for the immediate exercise of the Existing Warrants, we issued to such holder 2,699,797 Inducement Warrants with an exercise price of $4.00 per share, which are immediately exercisable and valid for five years from issuance. The shares of Class B common stock underlying the Inducement Warrants are entitled to registration rights. In connection with the Armistice Warrant Inducement, and pursuant to the Rodman Engagement Letter, Rodman was paid a fee equal to 7% of the gross proceeds of the Existing Warrant exercises and will be entitled to 7% of the proceeds from any exercise of the Inducement Warrants. In addition, we issued to Rodman warrants to purchase an aggregate of 188,986 shares of Class B common stock at an exercise price of $5.00 per share, which are immediately exercisable and valid for five years from issuance, pursuant to the Rodman Engagement Letter.

On February 13, 2025, we entered into a Settlement Agreement with ACSS, pursuant to which the parties agreed to mutually release and all claims against each other arising out of that certain engagement letter, dated as of July 2, 2024, by and between the Company and ACSS. Pursuant to the Settlement Agreement, we agreed to pay to ACSS a sum of $430,000.

Factors and Trends Affecting Our Business and Results of Operations

The following trends and uncertainties either affected our financial performance historically or are likely to impact our results of operations in the future:

Results of Operations

Comparison of the three months ended December 31, 2024 and 2023

The following table summarizes our results of operations (in thousands) for the three month ended December 31, 2024 and 2023, together with the dollar change in those items from period to period:

Revenue

For the three months ended December 31, 2024, total revenue was $1,257 thousand, compared to $1,106 thousand for the same period in 2023, reflecting an increase of $151 thousand, or 14%. This positive performance is primarily attributed to the strategic expansion of our service and leasing offerings, particularly our RaaS model.

The RaaS model allows us to provide our advanced robotic solutions to a wider range of customers by reducing the barrier to entry associated with high upfront costs. Instead of requiring customers to purchase the robots outright, the RaaS model allows them to lease the robots and pay for their use on a subscription basis. This not only makes our cutting-edge automation technology more accessible to businesses with limited capital budgets but also aligns with the growing trend towards subscription-based services across various industries.

We believe this strategic shift towards RaaS offers several key advantages:

The positive impact of our RaaS model is already evident in our results for the quarter ended December 31, 2024, and we anticipate continued growth in service and leasing revenue as we further expand our RaaS offerings and market reach. We are confident that this strategic initiative, combined with our commitment to innovation and customer service, will strengthen our position in the rapidly evolving robotics market.

Our Revenue (in thousands) for the three months ended December 31, 2024 and 2023 is shown below:

Cost of Revenue, Net

Cost of revenue saw a substantial decrease in the three months ended December 31, 2024, dropping to $123 thousand compared to $497 thousand in the same period of 2023. This significant reduction of $374 thousand, or 75%, is primarily attributed to the ongoing transition towards the RaaS model and favorable changes in our product costs.

Under the RaaS model, we lease our robots to customers rather than selling them outright. This shift in revenue recognition has a direct impact on cost of revenue. When a robot is leased, the associated costs are not immediately recognized in full. Instead, they are spread out over the lease term, resulting in a lower cost of revenue in the current period.

In addition to the impact of RaaS, we also benefited from lower product costs during the quarter. Due to the increase in robot volume, we were able to negotiate better pricing with our suppliers, which resulted in a reduction in the cost of goods sold for our product sales.

To provide a clearer understanding of the dynamics affecting our revenue and cost of revenue, below is the breakdown of our revenue streams:

Product Revenue: Product revenue increased significantly, from $187 thousand in the quarter ended December 31, 2023 to $750 thousand in the quarter ended December 31, 2024. This growth reflects a growing demand for our robotic solution.

Service/Rental Revenue: Service and rental revenue decreased significantly, from $799 thousand in the quarter ended December 31, 2023 to $133 thousand in the quarter ended December 31, 2024. This decline is primarily due to the ongoing shift towards the RaaS model, as customers transition from service and rental agreements to leasing arrangements.

Leasing Revenue: Leasing revenue increased substantially, from $13 thousand in the quarter ended December 31, 2023 to $138 thousand in the quarter ended December 31, 2024. This growth highlights the successful adoption of our RaaS model and the increasing popularity of leasing arrangements among our customers.

Gross Profit

Gross profit reached $1,134 thousand in the three months ended December 31, 2024, compared to $609 thousand for the same period in 2023, marking a substantial increase of $526 thousand, or 86%. This strong performance is primarily driven by the considerable reduction in cost of revenue, which we discussed earlier.

The gross margin, which represents the percentage of revenue remaining after deducting cost of revenue, also saw a notable improvement. In the quarter ended December 31, 2024, the gross margin was 90%, compared to 55% in the quarter ended December 31, 2023. This higher gross margin indicates enhanced profitability and operational efficiency.

The strategic shift towards the RaaS model has played a key role in driving this improvement. As a higher proportion of revenue comes from leasing arrangements, the cost of revenue is spread out over the lease term, resulting in a lower cost of revenue and a higher gross margin in the current period.

Additionally, the decrease in product costs due to favorable negotiations with suppliers further contributed to the improvement in gross profit and gross margin.

This strong gross profit performance provides a solid foundation for our continued growth and profitability. As we further expand our RaaS offerings and optimizes our cost structure, we anticipate continued improvement in gross profit and gross margin in the coming quarters.

Sales and Marketing Expenses

Sales and marketing expenses decreased substantially in the period ended December 31, 2024, falling from $595 thousand in December 31, 2023 to $245 thousand in December 31, 2025. This represents a decrease of $350 thousand, or 59%.

This significant decrease is primarily due to the success of our referral program and other cost-saving measures. Our referral program incentivizes existing customers to refer new customers, generating high-quality leads at a lower cost than traditional advertising. This strategy has allowed us to reduce our overall spending on marketing and advertising while maintaining a strong pipeline of potential customers.

In addition to the referral program, we have also implemented other cost-saving measures in our sales and marketing operations. We have streamlined our marketing processes, leveraged digital marketing channels more effectively, and focused on targeted campaigns that deliver higher returns on investment. These initiatives have allowed us to reduce our overall spending while maintaining the effectiveness of our sales and marketing efforts.

We are also investing in new sales and marketing tools and technologies to improve our efficiency and effectiveness. This includes implementing a customer relationship management system to better manage customer interactions and track sales leads, as well as investing in marketing automation software to streamline our marketing campaigns and personalize customer communications.

Furthermore, we are expanding our sales and marketing team to support our growth initiatives. We have hired experienced sales professionals with expertise in the robotics industry, as well as marketing specialists with a proven track record of success in promoting technology solutions. We believe that this investment in human capital will enable us to reach a wider audience and build stronger relationships with our customers.

Finally, we are actively exploring new partnerships and collaborations to expand our market reach and promote our robotic solutions. This includes partnering with industry associations, participating in trade shows and conferences, and collaborating with other technology companies to offer integrated solutions to our customers.

We believe that our continued investment in sales and marketing, combined with our focus on cost optimization and strategic partnerships, will enable us to achieve our growth objectives and solidify our position as a leader in the robotics market.

General and Administrative Expenses

General and administrative expenses were $4,301 thousand and $1,443 thousand for the three months ended December 31, 2024 and 2023, respectively. The $2,858 thousand increase, or 198%, was primarily due to two key factors:

In addition to these two primary factors, other contributing factors to the increase in general and administrative (“G&A”) expenses include:

While the increase in G&A expenses is a natural consequence of our growth and transition to becoming a public company, we are committed to managing these expenses effectively. We are actively implementing cost optimization measures, streamlining processes, and leveraging technology to improve efficiency and control costs.

We believe that our strategic investments in human capital, infrastructure, and compliance are essential to support our long-term growth objectives. As we continue to scale our operations and expand our market presence, we anticipate that G&A expenses will continue to increase, but we are committed to managing these costs prudently and ensuring that they align with our overall financial performance.

Other Income (Expense)

Total other income was $329 thousand for the three months ended Decembers 31, 2024, the total other expense was $486 thousand for the three months ended December 31, 2023. The $815 thousand, or 168%, net decrease in total other income was primarily due to two key factors:

The combination of higher investment income and lower interest expenses has significantly enhanced our non-operating income, contributing positively to our overall financial results.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, which consist of cash on hand and short-term investments that are readily convertible to cash. As of December 31, 2024, our cash and cash equivalents totaled $19.8 million. This represents about 5.2 million increase from $14.6 million at the end of the prior fiscal year. The substantial increase in our cash position is primarily attributable to the net proceeds of $9.2 million received from the issuance of new shares. These proceeds significantly strengthened our balance sheet and provided us with financial flexibility to invest in our growth initiatives, including the expanding our R&D team, purchase of property and equipment to support our expanding operations. This increase was partially offset by cash used in operating activities, primarily due to our net loss and investments in working capital. 

Comparison of the three months ended December 31, 2024 and 2023

The following table summarizes our cash flow information (in thousands) for the three months ended December 31, 2024 and 2023, together with the dollar change in those items from period to period:

Operating Activities

Net cash used in operating activities for the three months ended December 31, 2024 was $3,598 thousand, primarily due to a net loss of $3,569 thousand an decrease of $30 thousand in net operating assets and liabilities. The cash flow impact from changes in net operating assets and liabilities was primarily driven by decrease in accounts receivable of $755 thousand and inventory of $248 thousand, partially offset by increase in accounts payable of $380 thousand.

Net cash used in operating activities for the three months ended December 31, 2023 was approximately $1,212 thousand, primarily due to a net loss of approximately $2,748 thousand and an increase of approximately $1,539 thousand in net operating assets and liabilities. The cash flow impact from changes in net operating assets and liabilities was primarily driven by decreases in accounts receivable of approximately $2,432 thousand and inventory of approximately $167 thousand, partially offset by decreases in accounts payable of approximately $1,066 thousand. 

Investing Activities

Net cash used for investing activities was $375 thousand for the three months ended December 31, 2024, primarily due to $175 thousand on purchase of long-term investments and $127 thousand on short-term investments.

Net cash used for investing activities was $28 thousand for the three months ended December 31, 2023, primarily due to $28 thousand on cash used for lending to related parties.

Financing Activities

Net cash provided by financing activities totaled $9,240 thousand for the year ended December 31, 2024. We received $9,244 thousand from issuance of common stock.

Net cash provided by financing activities totaled approximately $8,339 thousand for the three months ended December 31, 2023. We raised approximately $9,286 thousand from issuance of ordinary shares, offset by approximately $152 thousand payment of related party debt and approximately $795 thousand payment of short-term loans.

Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Trend Information

Other than as disclosed elsewhere in this registration statement, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

Seasonality

Seasonality does not materially affect our business or the results of our operations.

Off-Balance Sheet Arrangements

We do not have off-balance sheet arrangements.

Recent Accounting Pronouncements Not Yet Adopted

See Note 2 to our unaudited financial statements included elsewhere in this Report for more information.

Critical Accounting Policies and Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Management bases its estimates on historical experience, market and other conditions, and various other assumptions it believes to be reasonable. See Note 2 to our audited financial statements included elsewhere in this Report for more information.

JOBS Act

Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period.

For as long as we remain an “emerging growth company” under the recently enacted JOBS Act, we will, among other things:

Although we are still evaluating the JOBS Act, we currently intend to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an “emerging growth company,” including the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act. Among other things, this means that our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected. Likewise, so long as we qualify as an emerging growth company, we may elect not to provide you with certain information, including certain financial information and certain information regarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate our company. As a result, investor confidence in our company and the market price of our common stock may be materially and adversely affected.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures

Our management, under the supervision and with the participation of our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and VP of Finance, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2024, to ensure that information required to be disclosed in our Exchange Act reports is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures. Our internal control over financial reporting is a process designed by, or under the supervision of, our CEO, CFO, and VP of Finance. It is affected by our Board of Directors, management, and other personnel to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements in accordance with generally accepted accounting principles (GAAP).

These controls include policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

(b) Changes in Internal Control over Financial Reporting

There has not been any change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our fiscal quarter ended December 31, 2024 that has materially affected, or is likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

To the knowledge of our management team, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property. 

Item 1A. Risk Factors.

As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. However, as of the date of this Report, there have been no material changes with respect to those risk factors previously disclosed in our (i) registration statement for our initial public offering and (ii) 2024 Annual Report. Any of these factors could result in a significant or material adverse effect on the results of our operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial business combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

In connection with the Armistice Warrant Inducement, and pursuant to the Rodman Engagement Letter, Rodman was paid a fee equal to 7% of the gross proceeds of the Existing Warrant exercises and will be entitled to 7% of the proceeds from any exercise of the Inducement Warrants. In addition, the Company issued to Rodman warrants to purchase an aggregate of 188,986 shares of Class B common stock at an exercise price of $5.00 per share, which are immediately exercisable and valid for five years from issuance, pursuant to the Rodman Engagement Letter.

On February 13, 2025, the Company entered into the Settlement Agreement with ACSS, pursuant to which the parties agreed to mutually release and all claims against each other arising out of that certain engagement letter, dated as of July 2, 2024, by and between the Company and ACSS. Pursuant to the Settlement Agreement, the Company agreed to pay to ACSS a sum of $430,000.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.