# Richtech Robotics Inc. (RR) 10-Q SEC filing - Q1 FY2026
- Filed: Feb 11, 2026, 7:00 PM EST
- Fiscal quarter: Q1 FY2026
- Calendar quarter: Q4 2025
- Accession: 0001213900-26-015097
- OpenCapital page: https://www.opencapital.sh/filings/0001213900-26-015097
- Markdown URL: https://www.opencapital.sh/filings/0001213900-26-015097.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/1963685/0001213900-26-015097-index.htm
## Filing documents
- [10-Q (ea0276202-10q_richtech.htm)](https://www.sec.gov/Archives/edgar/data/1963685/000121390026015097/ea0276202-10q_richtech.htm)
---
## 10-Q
SEC source: [ea0276202-10q_richtech.htm](https://www.sec.gov/Archives/edgar/data/1963685/000121390026015097/ea0276202-10q_richtech.htm)
**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,
2025**
☐ **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**
**RICHTECH ROBOTICS INC.**
(Exact name of registrant as specified in its charter)
**Nevada** **88-2870106**
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
**2975 Lincoln Rd**
**Las Vegas, NV 89115**
(Address of principal executive offices) (Zip Code)
**(866) 236-3835**
(Registrant’s telephone number, including area code)
**4175 Cameron St Ste 1**
**Las Vegas, NV 89103**
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b)
of the Act:
**Title of Each Class:** **Trading Symbol(s):** **Name of Each Exchange on Which Registered:**
Class B Common Stock, par value $0.0001 per share RR The Nasdaq Stock Market LLC
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.
☐ Large accelerated filer ☐ Accelerated filer
☒ Non-accelerated filer ☒ Smaller reporting company
☒ Emerging growth company
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 11, 2026, there were 39,934,846 shares of our Class A common
stock and 183,661,127 shares of our Class B common stock issued and outstanding.
**RICHTECH ROBOTICS INC.**
**Quarterly Report on Form 10-Q**
**Table of Contents**
| [PART I. FINANCIAL INFORMATION](#k_001) | | |
| --- | --- | --- |
| Item 1. | [Financial Statements](#k_002) | 1 |
| | [Consolidated Balance Sheets as of December 31, 2025 (Unaudited) and September 30, 2025](#k_003) | 1 |
| | [Consolidated Statements of Operations for the Three Months ended December 31, 2025 and 2024 (Unaudited)](#k_004) | 2 |
| | [Consolidated Statements of Stockholders’ Equity for the Three Months ended December 31, 2025 and 2024 (Unaudited)](#k_006) | 4 |
| | [Consolidated Statements of Cash Flows for the three months ended December 31, 2025 and 2024 (Unaudited)](#k_007) | 5 |
| | [Notes to Consolidated Financial Statements](#k_008) | 6 |
| Item 2. | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#k_009) | 18 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#k_010) | 26 |
| Item 4. | [Controls and Procedures](#k_011) | 26 |
| [PART II. OTHER INFORMATION](#k_012) | | |
| Item 1. | [Legal Proceedings](#k_013) | 27 |
| Item 1A. | [Risk Factors](#k_014) | 27 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#k_015) | 27 |
| Item 3. | [Defaults Upon Senior Securities](#k_016) | 27 |
| Item 4. | [Mine Safety Disclosures](#k_017) | 27 |
| Item 5. | [Other Information](#k_018) | 27 |
| Item 6. | [Exhibits](#k_019) | 28 |
| [SIGNATURES](#k_020) | | 29 |
i
**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**
This Quarterly Report on Form
10-Q (this “Report”) contains “forward-looking statements” (as defined in Section 27A of the Securities Act of
1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) that reflect our current expectations and views of future events. The forward-looking statements are contained principally
in the section of this Report entitled “*Management’s Discussion and Analysis of Financial Condition and Results of Operations*.”
Readers are cautioned that significant known and unknown risks, uncertainties and other important factors (including those over which
we may have no control and others listed in this Report and in the “*Risk Factors*” section of our Annual Report on Form
10-K for the fiscal year ended September 30, 2025 (“2025 Annual Report”), as filed with the Securities and Exchange Commission
(the “SEC”) on January 20, 2026, may cause our actual results, performance or achievements to be materially different from
those expressed or implied by the forward-looking statements. You can identify some of these forward-looking statements by words or phrases
such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,”
“intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue”
or other similar expressions. We have based these forward-looking statements on our current expectations and projections about future
events that we believe may affect our financial condition, results of operations, business strategy and financial needs.
Our operations and business
prospects are always subject to risks and uncertainties including, among others:
- Our ability to secure raw materials and components to manufacture sufficient quantities of robots to match demand;
- Our ability to secure enterprise clients and deals in the face of growing competition;
- Assumptions around the speed of robotic adoption in service environments;
- Assumptions relating to the size of the market for our products and services;
- Unanticipated regulations of robots and automation that add barriers to adoption and have a negative effect on our business;
- Our ability to obtain and maintain intellectual property protection for our products;
- Investigations, claims, disputes, enforcement actions, litigation and/or other regulatory or legal proceedings, including with respect to our intellectual property and our technology;
- Level of product service failures that could lead our customers to use competitors’ services;
- Our estimates of expenses, future revenue, capital requirements and our needs for, or ability to obtain, additional financing
- Our ability to procure inventory and components from China may be affected by geopolitical tensions, conflict, tariffs, trade restrictions, public health issues, and other business interruptions;
- The possibility that we may be adversely affected by other economic, business, and/or competitive factors; and
- Other risks and uncertainties described under the section titled “Risk Factors” in the 2025 Annual Report.
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 2025 Annual Report. You should thoroughly read this Report and the documents that we refer to with the understanding
that our actual future results may be materially different from, and worse than, what we expect. We qualify all our forward-looking statements
by these cautionary statements.
The forward-looking statements
made in this Report relate only to events or information as of the date of this Report. Except as required by law, we undertake no obligation
to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after
the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this Report completely
and with the understanding that our actual future results may be materially different from what we expect.
ii
**PART I - FINANCIAL INFORMATION**
## ITEM 1. Financial Statements
**RICHTECH ROBOTICS INC.**
**Unaudited Consolidated Balance Sheets**
**(In thousands, except share and per share data)**
| Line item | December 31, 2025 | September 30, 2025 |
| --- | --- | --- |
| ASSETS | | |
| Current assets: | | |
| Cash and cash equivalents | $271,811 | $193,629 |
| Short term investment | 56,683 | 58,308 |
| Accounts receivable, (net of allowance for doubtful accounts) | 1,890 | 1,780 |
| Inventory | 1,878 | 1,380 |
| Prepaid expenses and other current assets | 322 | 429 |
| Total current assets | 332,584 | 255,526 |
| Property and equipment, net | 5,541 | 5,579 |
| Notes receivable | 528 | 523 |
| Operating lease right-of-use-assets | 607 | 731 |
| Intangible assets, Net | 9,477 | 9,761 |
| Other assets, non-current | 647 | 638 |
| Total assets | $349,384 | $272,758 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | |
| Current liabilities: | | |
| Accounts payable | $132 | $397 |
| Deferred revenue | 358 | 248 |
| Accrued expenses and other payables | 8,444 | 1,377 |
| Tax payables | 92 | 55 |
| Operating lease liabilities, current | 281 | 301 |
| Total current liabilities | 9,307 | 2,378 |
| Long-term payables | 112 | 118 |
| Operating lease liabilities, non-current | 326 | 429 |
| Total liabilities | 9,745 | 2,925 |
| Commitments and contingencies (Notes 7) | | |
| Stockholders’ equity: | | |
| Class A common stock, $0.0001 par, 100,000,000 shares authorized as of December 31, 2025 and September 30, 2025; 39,934,846 shares issued and outstanding as of September 30, 2025 and 2025. | $4 | $4 |
| Class B common stock, $0.0001 par, 1,000,000,000 and 200,000,000 shares authorized as of December 31, 2025 and September 30, 2025, respectively; 174,299,223 shares and 154,656,592 shares issued and outstanding as of December 31, 2025 and September 30, 2025, respectively. | 18 | 16 |
| Additional Paid-in Capital | 371,403 | 293,156 |
| Accumulated other comprehensive income | 356 | 393 |
| Retained earnings | (32,095) | (23,693) |
| Total controlling stockholders’ equity | 339,686 | 269,876 |
| Non-controlling interests | (47) | (43) |
| Total stockholder’s equity | 339,639 | 269,833 |
| Total liabilities and stockholders’ equity | $349,384 | $272,758 |
See accompanying Notes to Financial Statements
1
**RICHTECH ROBOTICS INC.**
**Unaudited Consolidated Statements of Operations**
**For the three months ended December 31, 2025
and 2024**
**(In thousands, except share and per share data)**
| Line item | 2025 | 2024 |
| --- | --- | --- |
| Revenue, net | $1,147 | $1,257 |
| Cost of revenue, net | 547 | 123 |
| Gross profit | 600 | 1,134 |
| Operating expenses: | | |
| Research and development | 448 | 484 |
| Sales and marketing | 188 | 245 |
| General and administrative | 11,773 | 4,303 |
| Total operating expenses | 12,409 | 5,032 |
| Income (loss) from operations | (11,809) | (3,898) |
| Non-operating income(expense): | | |
| Investment income | 3,401 | 333 |
| Interest expense, net | (2) | (4) |
| Total other expense | 3,399 | 329 |
| Loss before income tax expense | (8,410) | (3,569) |
| Income tax benefit/(expense) | - | - |
| Consolidated net loss | (8,410) | (3,569) |
| Less: Net loss attributable to non-controlling interest (“NCI”) | (8) | (21) |
| Net loss | (8,402) | (3,548) |
| Net loss attributable to common stockholders | $(8,402) | $(3,548) |
| Basic and diluted net loss per share of common stock | $(0.04) | $(0.04) |
| Weighted average shares used to compute basic and diluted net loss per share | 197,731,671 | 95,785,054 |
2
**RICHTECH ROBOTICS INC.**
**Consolidated statements of Comprehensive Income**
**For the three months ended December 31, 2025
and 2024**
**(In thousands, except share and per share data)**
| Line item | 2025 | 2024 |
| --- | --- | --- |
| Net loss | (8,402) | (3,548) |
| Other comprehensive income: | | |
| Unrealized net loss on investments, net of tax | (37) | - |
| Comprehensive loss | $(8,439) | $(3,548) |
See accompanying Notes to Financial Statements.
3
**RICHTECH ROBOTICS INC.**
**Un****audited
Consolidated Statements of Equity**
**For the three months ended December 31, 2025
and 2024**
**(in thousands, except per share data)**
| Line item | Common stock* / Class A / Shares | Common stock* / Class A / Amount | Common stock* / Class B / Shares | Common stock* / Class B / Amount | Additional / Paid-in / Capital | Accumulated Other / Comprehensive / Income | Retained earnings / (Accumulated / deficit) | NCI | Total / Shareholders’ / equity |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Balance at September 30, 2025 | 39,934,846 | 4 | 154,656,592 | 16 | 293,156 | 393 | (23,693) | (43) | 269,833 |
| Issuance of shares upon exercise of warrants for cash | - | - | 4,485,946 | 0 | 9,184 | - | - | - | 9,184 |
| Issuance of new shares for cash | - | - | 15,156,685 | 2 | 69,063 | - | - | - | 69,065 |
| Net loss attributable to NCI | - | - | - | - | - | - | - | (8) | (8) |
| Capital contribution from NCI | - | - | - | - | - | - | - | 4 | 4 |
| Other comprehensive loss | - | - | - | - | - | (37) | - | - | (37) |
| Net loss | - | - | - | - | - | - | (8,402) | - | (8,402) |
| Balance at December 31, 2025 | 39,934,846 | 4 | 174,299,223 | 18 | 371,403 | 356 | (32,095) | (47) | 339,639 |
| Line item | Common stock* / Class A / Shares | Common stock* / Class A / Amount | Common stock* / Class B / Shares | Common stock* / Class B / Amount | Additional / Paid-in / Capital | Retained / earnings / (Accumulated / deficit) | Total / Shareholders’ / equity |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Balance at September 30, 2024 | 39,934,846 | $4 | 53,795,254 | $6 | $49,667 | $(7,939) | $41,738 |
| Issuance of shares of common stock for Intangible asset acquisition | - | - | 4,088,000 | - | 2,454 | - | 2,454 |
| Issuance of shares upon exercise of warrants for cash | | | 5,973,667 | 1 | 8,064 | | 8,065 |
| Shares issued to employees and directors | - | - | 3,395,153 | - | 867 | - | 867 |
| Shares issued for services | | | 371,631 | | 314 | - | 314 |
| Non-controlling interests | - | - | - | - | - | (21) | (21) |
| Net loss | - | | - | - | - | (3,548) | (3,548) |
| Balance at December 31, 2024 | 39,934,846 | $4 | 67,623,705 | $7 | $61,366 | $(11,508) | $49,869 |
See accompanying Notes to Financial Statements.
4
**RICHTECH ROBOTICS, INC.**
**Unaudited Consolidated Statements of Cash Flows**
**For the three months ended December 31, 2025
and 2024**
**(In thousands)**
| Line item | 2025 | 2024 |
| --- | --- | --- |
| Cash flows from operating activities: | | |
| Net loss | $(8,402) | $(3,548) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | |
| Accounts receivable | (110) | (755) |
| Inventory | (498) | (248) |
| Prepaid expenses and other current assets | 107 | (20) |
| Right-of-use asset | 124 | (167) |
| sAccounts payable | (265) | 380 |
| Deferred revenue | 110 | - |
| Tax payable | 37 | 26 |
| Accrued expenses and other payable | (1,222) | 73 |
| Depreciation and amortization | 353 | 513 |
| Stock based compensation | 8,284 | |
| Operating lease liabilities, current | (20) | 60 |
| Operating lease liabilities, non- current | (103) | 108 |
| Net cash used by operating activities | (1,605) | (3,599) |
| Cash flows from investing activities: | | |
| Purchase of property and equipment | (71) | (78) |
| Purchase of short-term investments | (454) | (127) |
| Purchase of long-term investments | (9) | (175) |
| Proceeds from maturities and sales of short-term investments | 2,079 | - |
| Notes receivable | (5) | - |
| Net cash provided by investing activities | 1,540 | (380) |
| Cash flows from financing activities: | | |
| Contributions from non-controlling interests | 4 | (21) |
| Proceeds from warrants exercise | 9,184 | - |
| Loans received from third parties | (6) | (4) |
| Proceeds from issuance of ordinary shares | 69,065 | 9,244 |
| Net cash provided by financing activities | 78,247 | 9,240 |
| Net change in cash and cash equivalents | 78,182 | 5,261 |
| Cash and cash equivalents at beginning of the period | $193,629 | $14,566 |
| Cash and cash equivalents at end of the period | $271,811 | $19,827 |
See accompanying Notes to Financial Statements.
5
### **NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **NOTE 1: Nature of Business**
***Description of Business***
Richtech Robotics Inc. (“we”,
“us”, “our” or “Richtech”), is a C-Corporation registered in Nevada. Richtech was originally established
as Richtech Creative Displays, LLC in Nevada on July 19, 2016, and converted to a Nevada corporation on June 22, 2022. We completed our
initial public offering on November 21, 2023, and shares of our Class B common stock began trading on the Nasdaq Capital Market on November
17, 2023 under the symbol “RR.”
We are a robotics and artificial
intelligence (“AI”) technology company focused on developing advanced embodied AI systems that aim to improve the efficiency
and productivity of U.S. businesses. Richtech trains proprietary artificial intelligence models on in-house data to operate advanced
robotic systems in the real world. We design, engineer, manufacture, and deploy next generation embodied AI systems to serve a wide range
of industries—including food service, retail, industrial manufacturing, automotive, healthcare, and hospitality. Our robots are
designed to be user friendly, reliable, and highly customizable, with the goal of driving tangible profit and loss (“P&L”)
improvements for our customers.
***Risk and Uncertainties***
Our business and
operations are sensitive to general business and economic conditions worldwide. These conditions include short-term and long-term
interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the world economy and geopolitical instability, such as the military conflicts in Ukraine, the Middle East and Venezuela. A host
of factors beyond our control could cause fluctuations in these conditions. Adverse developments in these general business and
economic conditions could have a material adverse effect on our financial condition and the results of our operations.
In addition, we compete with many companies that currently have extensive and well-funded projects, marketing and sales
operations. We may be unable to compete successfully against these companies. Our industry is characterized by rapid changes in
technology and market demands. As a result, our products, services, or expertise may become obsolete or unmarketable. Our future
success will depend on our ability to adapt to technological advances, anticipate customer and market demands, and
enhance our current technology under development.
***Emerging Growth Company Status***
We are an emerging growth
company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth
companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as
those standards apply to private companies.
We have elected to use this
extended transition period for complying with new or revised accounting standards that have different effective dates for public and private
companies until the earlier of the date that we are (1) no longer an emerging growth company or (2) affirmatively and irrevocably opt
out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies
that comply with the new or revised accounting pronouncements as of public company effective dates.
We will remain an emerging
growth company until the earliest of (1) the last day of the first fiscal year (A) following the fifth anniversary of the completion
of our initial public offering on November 21, 2023, (B) in which our total annual gross revenue is at least $1.235 billion or (C) when
we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds
$700.0 million as of our most recently completed second fiscal quarter and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
6
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **NOTE 2: Summary of Significant Accounting Policies**
***Basis of Presentation***
These financial statements
and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”),
pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany accounts and transactions
have been eliminated in consolidation.
***Use of Estimates***
The preparation of the financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.
***Segment Reporting***
Operating segments are identified
as components of an enterprise about which separate financial information is available for evaluation by the chief operating decision-maker
in making decisions regarding resource allocation and assessing performance. We view our operations and manage our business as one operating
segment.
***Cash and Cash Equivalents***
We consider all highly liquid
investments purchased with an original maturity of three months or less to be cash equivalents. We place our cash and cash equivalents
in highly liquid instruments with, and in the custody of, financial institutions with high credit ratings.
***Investments***
Investments may be comprised
of a combination of marketable securities, including U.S. government securities, corporate debt securities, commercial paper, time deposits,
and certain certificates of deposit, which are all designated as available-for-sale and reported at estimated fair value, with unrealized
gains and losses recorded in accumulated other comprehensive income which is included within stockholders’ equity.
Available-for-sale marketable
securities with maturities greater than three months at the date of purchase are included in short-term investments in our consolidated
balance sheets. Interest, dividends, amortization and accretion of purchase premiums and discounts on these investments are included within
interest income in our consolidated statements of operations.
The cost of available-for-sale
investments sold is based on the specific identification method. Realized gains and losses on the sale of available-for-sale investments
are recorded in other income (expense), net.
We regularly review all of
our investments for declines in fair value. The review includes but is not limited to (i) the consideration of the cause of the decline,
(ii) any currently recorded expected credit losses and (iii) the creditworthiness of the respective security issuers. The amortized cost
basis of our investments approximates its fair value.
7
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **NOTE 2: Summary of Significant Accounting Policies** (cont.)
***Accounts Receivable***
Our accounts receivable primarily
consist of trade receivables, which represent amounts owed to us by customers for products and services provided. These receivables are
presented net of any rebates, price protection adjustments, and an allowance for credit losses. In addition to trade receivables, our
accounts receivable also include unbilled receivables. These primarily relate to work completed on development services for which revenue
has been recognized but not yet invoiced to customers. We expect these unbilled receivables to be billed and collected within twelve months.
We actively manage our exposure
to customer credit risk through various measures, including credit limits, credit lines, ongoing monitoring procedures, and credit approvals.
We perform in-depth credit evaluations of all new customers and periodically reassess the creditworthiness of existing customers. If deemed
necessary, we may require letters of credit, bank or corporate guarantees, or advance payments to mitigate credit risk.
To account for
potential losses from uncollectible accounts, we maintain an allowance for credit losses. This allowance considers both specific
troubled accounts and an overall estimate of potential uncollectible receivables based on historical experience and current credit
quality assessments. As of December 31, 2025, the allowance for credit losses was $99, compared to $103 as of December 31, 2024.
We believe that our rigorous credit risk management practices and the allowance for credit losses adequately address the
potential risks for uncollectible accounts.
***Inventories***
We value inventory at standard
cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about future demand and market
conditions. In determining excess or obsolescence reserves for our products, we consider assumptions such as changes in business and economic
conditions, other-than-temporary decreases in demand for our products, and changes in technology or customer requirements. In determining
the lower of cost or net realizable value reserves, we consider assumptions such as recent historical sales activity and selling prices,
as well as estimates of future selling prices. We fully reserve for inventories and non-cancellable purchase orders for inventory deemed
obsolete. We perform periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable
purchase orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer
demand diminish further or market conditions become less favorable than those projected by us, additional inventory carrying value adjustments
may be required.
8
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **NOTE 2: Summary of Significant Accounting Policies** (cont.)
***Intangible Assets***
Our intangible assets consist
of multiple systems purchased for our robotic product. These assets are amortized using the straight-line method over their estimated
useful life of 10 years.
We assess our intangible
assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may
not be recoverable. In addition, a formal review is performed at each fiscal year-end. If such indicators are present, we perform a recoverability
test by comparing the asset’s carrying amount to the estimated undiscounted future cash flows expected to be generated by the asset
or the asset group to which it belongs. If the carrying amount exceeds the estimated undiscounted future cash flows, an impairment loss
is recognized for the amount by which the carrying amount exceeds the asset’s fair value. Fair value is typically determined based
on discounted cash flow models or, when available, observable market data.
***Rights and Privileges of Common Stock***
Pursuant to our second amended and restated articles of incorporation,
as amended, our authorized capital stock consists of an aggregate of 110,000,000 shares of common stock, including 100,000,000 shares
of Class A common stock and 1,000,000,000 shares of Class B common stock, and 10,000,000 shares of “blank check” preferred
stock. The following description summarizes the material terms of our securities registered under Section 12 of the Exchange Act and does
not purport to be complete. It is subject to, and qualified in its entirety by reference to, our second amended and restated articles
of incorporation and our amended and restated bylaws.
Except as otherwise required
by Nevada Revised Statutes (“NRS”), each holder of Class A common stock is entitled to ten (10) votes in respect of each
share of Class A common stock held by him, her, or it of record on our books, and each holder of Class B common stock is entitled to one (1) vote in respect of each share of Class B common stock held by him, her, or it of record on our books, in connection with the
election of directors and on all matters submitted to a vote of our stockholders. Each share of Class A common stock is convertible into
one share of Class B common stock at any time at the option of the holder, but Class B common stock shall not be convertible into Class
A common stock under any circumstances. Holders of our common stock do not have preemptive, subscription, or redemption rights.
9
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **NOTE 2: Summary of Significant Accounting Policies** (cont.)
***Revenue Recognition***
Revenue is recognized when
we transfer promised goods or services to our customers, in amounts that reflect the consideration that we expect to receive in exchange
for those goods or services. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under each
agreement, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of
whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract;
(iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price
to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. We only apply the
five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or
services we transfer to the customer.
For arrangements that bundle
robotic products, maintenance, and technical support services, we exercise significant judgment in determining whether these items are
distinct. Robotic products are typically considered distinct performance obligations as customers can benefit from the product
on its own. Maintenance and technical support services, which may include scheduled inspections, repairs, remote troubleshooting,
and spare parts provisions, are generally considered distinct performance obligations when they are separately priced, optional, and can
be performed by another vendor. However, when these services are embedded as a mandatory component of a bundled contract (e.g., a RaaS
arrangement) and are integral to the promised continuous operational capability, they are not considered distinct and are combined with
the overall service promise as a single performance obligation. We allocate the transaction price to each distinct performance obligation
based on its relative standalone selling price, which is determined based on observable standalone sales or, if not available, estimated
using expected cost-plus-margin approaches.
We recognize revenue when
control of a promised good or service transfers to a customer. Control can transfer at a point in time or over time. Revenue from the
sale of robotic products is recognized at a point in time, typically upon shipment or delivery when legal title and the significant
risks and rewards of ownership have transferred to the customer. This is assessed based on the terms of sale (e.g., Free On Board shipping point
or Free On Board destination) and when the customer obtains physical possession, bears the risk of loss, and has an unconditional obligation to
pay. Revenue from Robotics-as-a-Service (“RaaS”) arrangements is recognized over time, as the customer simultaneously receives and
consumes the benefits of our continuous provision of robotic functionality, maintenance, and technical support services. We use the
straight-line method of recognition over the contract term as the most faithful depiction of the transfer of services, unless evidence
suggests another method better reflects the pattern of performance. The assessment of whether control transfers over time is based on
the criteria in ASC 606, including whether (a) the customer simultaneously receives and consumes benefits as we perform, or (b) our performance
does not create an asset with an alternative use to us and we have an enforceable right to payment for performance completed
to date.
The transaction price is
the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer. Our
contracts contain fixed consideration. We do not offer variable consideration elements such as usage-based fees, price concessions,
rebates, penalties, or performance bonuses. Therefore, the transaction price for all contracts equals the fixed, non-refundable amount
stated in the contract.
At contract inception, we
assess the customer’s ability and intent to pay the promised consideration. A contract is only accounted for under ASC 606 if it
is probable we will collect substantially all of the consideration to which it is entitled. This collectability assessment involves evaluating
the customer’s creditworthiness using both quantitative and qualitative factors. For new customers, this includes reviewing credit
ratings (if available), financial statements, and payment history with other parties. For existing customers, we review historical payment
patterns, current financial health, and the impact of prevailing economic conditions. If, after contract inception, a significant deterioration
in a customer’s creditworthiness indicates that collectability of substantially all of the remaining consideration is no longer
probable, we cease to recognize additional revenue and assess the need for a credit loss provision on any recognized contract assets
or receivables.
10
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **NOTE 2: Summary of Significant Accounting Policies** (cont.)
*Product Revenue*
We generate revenue through
the sale of our branded robotic products directly to customers. We consider customer purchase orders, which in some cases are governed
by master sales agreements, to be the contracts with our customers. There is a single performance obligation in all our contracts, which
is our promise to transfer our product to customers based on specific payment and shipping terms in the arrangement. The entire transaction
price is allocated to this single performance obligation. Product revenue is recognized when a customer obtains control of our product,
which occurs at a point in time and may be upon shipment or delivery, based on the terms of the contract.
*Revenue from Robots-as-a-Service (RaaS)*
As part of our evolving business
model, we generate revenue through our Robots-as-a-Service (RaaS) offerings, which provide customers with ongoing access to our robotic
solutions under long-term contracts. For RaaS agreements, revenue is recognized over time on a monthly basis as the services are provided
and the customer benefits from the use of the robotic solutions.
The transaction price is
typically fixed and allocated evenly across the contract term. Revenue recognition begins once the robots are installed and operational
at the customer’s site. We account for RaaS arrangements under ASC 606, Revenue from Contracts with Customers. These contracts
provide customers with continuous usage of our robotic products, maintenance, and technical support services, in exchange for a fixed
fee. We have determined that these are service contracts, as the customer is contracting for an integrated service output and we
retain substantial ownership risks and control over the deployed robotic assets, including responsibility for maintenance, upgrades,
and ensuring uptime. The customer does not have the right to direct the use of, nor obtain substantially all the economic benefits from,
a specifically identified asset. Revenue from these fixed-fee contracts is recognized on a straight-line basis over the contractual service
period as the customer simultaneously receives and consumes the benefits.
*Remaining Performance Obligations*
Remaining performance obligations
represent the aggregate amount of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations as of
the balance sheet date. This amount relates primarily to the fixed consideration in non-cancelable RaaS contracts
for which revenue is recognized over time.
As of December 31, 2025,
the total amount of the transaction price allocated to remaining performance obligations was $1,722. Of this amount, $870 is
expected to be recognized as revenue within the next 12 months, $575 is expected to be recognized between 13 and 24 months,
and the remaining $277 is expected to be recognized beyond 24 months.
*Contract assets and contract liabilities*
We maintain contract-related
balance sheet accounts under ASC 606, *Revenue from Contracts with Customers*, which primarily arise from RaaS arrangements.
Contract Assets (Unbilled
Receivables) represent revenue recognized for performance obligations satisfied but not yet billed as of the balance sheet date.
These assets are generated when revenue is recognized over time under RaaS contracts, while invoicing occurs on a periodic or milestone
basis. Contract assets are reclassified to accounts receivable when the right to payment becomes unconditional.
Contract Liabilities (Deferred
Revenue) consist of payments received from customers in advance of performance. These liabilities relate primarily to advance payments
for RaaS subscriptions and are recognized as revenue as the related services are provided over the contract term. As of December 31,
2025, the balance of contract liabilities was $358.
11
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **NOTE 2: Summary of Significant Accounting Policies** (cont.)
*Other Revenue Policies*
Sales, value add, and other
taxes collected on behalf of third parties are excluded from revenue.
We do not assess whether
a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the
customer and the transfer of the promised products to the customer will be one year or less, which is the case with substantially all
customers.
We recognize the incremental
costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized
is one year or less. These costs are included in selling expenses.
We account for shipping
and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. We
record the related costs within cost of goods sold.
***Research and Development Costs***
Research and development
costs primarily consist of employee-related expenses, including salaries and benefits, facilities costs, depreciation, and other allocated
expenses. Research and development costs are expensed as incurred.
***Income Taxes***
We account for income taxes
in accordance with income tax accounting guidance (Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740,
Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income
tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable
income or excess of deductions over revenues. We determine deferred income taxes using the liability (or balance sheet) method. Under
this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of
assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax
expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance
if, based on the weight of evidence available, it is more likely than not some portion or all of a deferred tax asset will not be realized.
Tax positions are recognized
if it is more likely than not, based on the technical merits, the tax position will be realized or sustained upon examination. The term
“more likely than not” means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution
of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially
and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement
with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met
the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and
is subject to management’s judgment.
We recognize interest and penalties on income taxes as a component
of income tax expense.
***Recent Accounting Pronouncements***
In February 2016, the FASB
issued Accounting Standards Update (“ASU”) 2016-02, *Leases* (“Topic 842”). The guidance in this ASU supersedes
the leasing guidance in Topic 840, *Leases*. Under the new guidance, lessees are required to recognize lease assets and lease liabilities
on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification
affecting the pattern of expense recognition in the statement of operations. The standard is effective for public business entities for
fiscal years beginning after December 15, 2018. As an emerging growth company, we adopted the new standard on January 1, 2022. For our
years ended September 30, 2024 and 2025, we had operating leases for which we were required to recognize a right-of-use asset and lease
liability.
In December 2019, the FASB
issued ASU 2019-12, *Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes*, which amends the approaches and methodologies
in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard allows
certain exceptions, including an exception to the use of the incremental approach for intra-period tax allocation, when there is a loss
from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim
period, when a year-to-date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially
based on income to be reported as income tax and to reflect the effects of enacted changes in tax laws or rates in the annual effective
tax rate computation from the date of enactment. Lastly, in any future acquisition, we would be required to evaluate when the step-up
in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction. The standard
was effective for us beginning January 1, 2022, with early adoption of the amendments permitted. The adoption of ASU 2019-12 did not have
a material impact on our financial statements and disclosures.
12
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **NOTE 2: Summary of Significant Accounting Policies** (cont.)
In May 2020, the FASB issued
ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation
(Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain
Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance
for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another topic.
ASU 2021-04 is effective for fiscal years beginning after December 15, 2021. We have determined the adoption of ASU 2021-04 did not have
a material impact on our financial statements and disclosures.
### **Note 3: Fair Value of Financial Instruments**
ASC 820, Fair Value
Measurements (“ASC 820”) states that fair value is an exit price, representing the amount that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based
measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The
three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, is comprised of: (Level I) observable
inputs such as quoted prices in active markets; (Level II) inputs other than quoted prices in active markets that are observable either
directly or indirectly and (Level III) unobservable inputs for which there is little or no market data. The fair value hierarchy requires
the use of observable market data when available in determining fair value. Our assets and liabilities that were measured at fair
value on a recurring basis were as follows:
| Line item | December 31, 2025 / Fair Value | December 31, 2025 / Level I | December 31, 2025 / Level II | December 31, 2025 / Level III | September 30, 2025 / Fair Value | September 30, 2025 / Level I | September 30, 2025 / Level II | September 30, 2025 / Level III |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| U.S. government securities | $17,000 | - | $17,000 | - | $17,000 | - | $17,000 | - |
| Certificates of deposit | 39,683 | - | 39,683 | - | 41,308 | - | 41,308 | - |
| Money market funds | 5,572 | 5,572 | - | - | 5,518 | 5,518 | - | - |
| Total | $62,255 | $5,572 | $56,683 | - | $63,826 | $5,518 | $58,308 | - |
Our U.S. government securities
and certificates of deposit are classified within Level II of the fair value hierarchy and the market approach was used to determine fair
value of these investments.
Our cash, cash equivalents
and investments classified by security type as of December 31, 2025 and September 30, 2025 consisted of the following:
_December 31, 2025_
| Line item | Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Investments |
| --- | --- | --- | --- | --- | --- | --- |
| Cash | $266,239 | - | - | $266,239 | $266,239 | - |
| U.S. government securities | 16,644 | 356 | - | 17,000 | - | 17,000 |
| Certificates of deposit and time deposits | 39,683 | - | - | 39,683 | - | 39,683 |
| Money market funds | 5,572 | - | - | 5,572 | 5,572 | - |
| Total cash, cash equivalents and short-term investments | $328,138 | $356 | - | $328,494 | $271,811 | $56,683 |
13
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **Note 3: Fair Value of Financial Instruments** (cont.)
_September 30, 2025_
| Line item | Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Investments |
| --- | --- | --- | --- | --- | --- | --- |
| Cash | $188,111 | - | - | $188,111 | $188,111 | - |
| U.S. government securities | 16,607 | 393 | - | 17,000 | - | 17,000 |
| Certificates of deposit and time deposits | 41,308 | - | - | 41,308 | - | 41,308 |
| Money market funds | 5,518 | - | - | 5,518 | 5,518 | - |
| Total cash, cash equivalents and short-term investments | $251,544 | $393 | - | $251,937 | $193,629 | $58,308 |
As of December 31, 2025,
all of our short-term investments had contractual maturity dates within one year.
Disclosure of Fair Values
Our financial instruments
that are not re-measured at fair value include accounts receivable, notes receivable, other receivables, accounts payable, accrued expenses,
short-term loan and long-term payables. The carrying values of these financial instruments materially approximate their fair values.
### **NOTE 4: Accounts Receivable**
Accounts receivable as of
December 31, 2025 and September 30, 2025 are as follows:
| Line item | December 31, 2025 | September 30, 2025 |
| --- | --- | --- |
| Accounts receivable, gross | $1,989 | $1,919 |
| Allowance for doubtful accounts | (99) | (139) |
| Accounts receivable, net | $1,890 | $1,780 |
As of December 31, 2025, the allowance for doubtful
accounts was $99, compared to $103 as of December 31, 2024. We believe that our rigorous credit risk management practices and the allowance
for credit losses adequately address the potential for uncollectible accounts.
### **NOTE 5: Inventories**
Inventory as of December
31, 2025 and September 30, 2025 are as follows:
| Line item | December 31, 2025 | September 30, 2025 |
| --- | --- | --- |
| Raw materials | $1,109 | $811 |
| Finished goods | 769 | 569 |
| Total inventories | $1,878 | $1,380 |
Finished goods inventory
includes products-in-transit to fulfill customer orders and robotic products available for sale. We write-down inventory for any excess
or obsolete inventory or when we believe that the net realizable value of inventory is less than the carrying value. During the three
months ended December 31, 2025 and 2024, we recorded inventory write-downs of nil for both periods.
14
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **Note 6: Property, and Equipment**
Property and equipment, net
is stated at cost less accumulated depreciation and amortization and is depreciated using the straight-line method over the estimated
useful lives of the assets. Estimated useful lives of equipment are two to six years, and leasehold improvements are measured by the shorter
of the remaining terms of the leases or the estimated useful economic lives of the improvements.
Property and equipment, as
of December 31, 2025 and September 30, 2025 are as follows:
| Line item | December 31, 2025 | September 30, 2025 |
| --- | --- | --- |
| Furniture, fixtures & equipment | $1,455 | $1,435 |
| Equipment held for lease | 332 | 281 |
| Leasehold improvements | 4 | 4 |
| Building | 3,842 | 3,842 |
| Land | 240 | 240 |
| | 5,873 | 5,802 |
| Accumulated depreciation | (332) | (223) |
| Property and equipment, net | $5,541 | $5,579 |
Depreciation expense for the three months ended
December 31, 2025 and 2024 were $109 and $9, respectively.
### **NOTE 7: Intangible Asset**
Intangible Asset, as of December
31, 2025 and September 30, 2025 are as follows:
| Line item | December 31, 2025 | September 30, 2025 |
| --- | --- | --- |
| Intangible Asset | $11,938 | $11,978 |
| Accumulated Amortization | (2,461) | (2,217) |
| Intangible Asset, net | $9,477 | $9,761 |
Amortization expense was
$244 and $499 for the three months ended December 31, 2025 and 2024, respectively.
Estimated amortization expense
related to existing finite-lived intangible assets for each of the next five years is as follows: 2026 – $2,189; 2027 - $2,189;
2028 - $2,189; 2029 - $2,189; 2030 - $1,401.
For the three months ended
December 31, 2025, we concluded that no impairment indicators were identified, and no impairment loss was recognized.
### **Note 8: Stockholders’ Equity**
We had 100,000,000 shares of class A common stock authorized as of December
31, 2025 and September 30, 2025, 39,934,846 shares of class A common stock issued and outstanding as of December 31, 2025 and September
30, 2025. We had 1,000,000,000 and 200,000,000 shares of class B common stock authorized as of December 31, 2025 and September 30, 2025,
respectively, and 174,299,223 shares and 154,656,592 shares of class B common stock issued and outstanding as of December 31, 2025 and
September 30, 2025, respectively. During the three months ended December 31, 2025, we issued an aggregate of 19,642,631 shares of Class
B common stock and no shares of Class A common stock, including an aggregate of 15,156,685 shares of Class B common stock through our
at-the-market (“ATM”) offering program and 4,485,946 shares of Class B common stock pursuant to the exercise of investor warrants.
15
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **NOTE 9: Earnings/Loss per Share**
Because we reported a net
loss for all periods presented, no potentially dilutive securities have been included in the computation of diluted net loss per share.
| Line item | Three Months Ended September 30 / 2025 | Three Months Ended September 30 / 2024 |
| --- | --- | --- |
| Numerators: | | |
| Net loss attributable to common stockholders | $(8,402) | $(3,548) |
| Denominator: | | |
| Weighted Average ordinary shares used in computing | 197,731,671 | 95,785,054 |
| Basic and diluted net loss per share (in each dollar) | $(0.04) | $(0.04) |
### **NOTE 10: Income Taxes**
In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment.
Based upon the level of historical losses and projections for future taxable
losses over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will not
realize the benefits of these deductible differences. Accordingly, we have have maintained a full valuation allowance against its net
deferred tax assets as of December 31, 2025. As a result of the full valuation allowance, there was no income tax benefit or expense recognized
in the consolidated statements of operations, and no net deferred tax asset or liability recorded on the consolidated balance sheets for
the three months ended December 31, 2025.
16
**NOTES TO FINANCIAL STATEMENTS**
**FOR THE THREE MONTHS ENDED DECEMBER 31, 2025
AND 2024**
(Dollars in thousands, unless otherwise stated)
### **Note 11: Commitments and Contingencies**
*Lease*
We lease office facilities
and retail space under noncancelable operating lease agreements. Following the purchase of the new corporate headquarters in April 2025,
the existing facilities at 4175 Cameron St, Las Vegas, Nevada, continue to be leased and are now utilized for dedicated Research and Development
(“R&D”) laboratory space and overflow administrative support. We closed our second office space in Austin, Texas, in April 2024. The
total operating lease liabilities primarily relate to the Cameron Street R&D facility and the Clouffee & Tea retail space (Town
Square Las Vegas).
The components of leases
and lease costs are as follows (in thousands):
| Operating leases | As of December 31, 2025 | As of September 30, 2025 |
| --- | --- | --- |
| Operating lease right-of use assets | $607 | $731 |
| Operating lease liabilities, current portion | $281 | $301 |
| Operating lease liabilities, non-current portion | 326 | 429 |
| Total operating lease liabilities | $607 | $730 |
Future minimum lease payments
under these leases as of December 31, 2025, are approximately as follows:
| Fiscal Year | Amount |
| --- | --- |
| 2026 | 210 |
| 2027 | 231 |
| 2028 | 54 |
| 2029 | 56 |
| 2030 | 14 |
| Total future minimum lease payments | $565 |
### **Note 12: Subsequent Events**
On January 27, 2026, we entered into a securities purchase agreement (the
“Purchase Agreement”) with an institutional investor. Pursuant to the Purchase Agreement, we agreed to issue and sell to the
investor, and the investor agreed to purchase from us, in a private placement (the “Private Placement”), 8,500,000 shares
of our Class B common stock, at a purchase price of $4.55 per share, for aggregate gross proceeds of $38,675,000, prior to deducting placement
agent’s fees and other offering expenses payable by us. The Private Placement closed on January 29, 2026. The net proceeds from
the Private Placement were approximately $36.2 million, after deducting placement agent fees and estimated offering expenses payable by
us. We intend to use the net proceeds for working capital, general corporate purposes, including the further development of our product
capabilities, and the procurement of inventory, specifically for robotic hardware.
17
## 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 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 2025 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 robotics company
focused on the development of embodied AI systems for manufacturing, retail, hospitality, and other sectors. We develop proprietary hardware
and software that employ the latest robotics and AI innovations. Our goal is to deploy robotics at scale in business operations across
our target markets.
**Recent Developments**
On January 27, 2026, we entered
into the Purchase Agreement with an institutional investor. Pursuant to the Purchase Agreement, we agreed to issue and sell to the investor,
and the investor agreed to purchase from us, in the Private Placement, 8,500,000 shares of our Class B common stock, at a purchase price
of $4.55 per share, for aggregate gross proceeds of $38,675,000, prior to deducting placement agent’s fees and other offering expenses
payable by us. The Private Placement closed on January 29, 2026. The net proceeds from the Private Placement were approximately $36.2
million, after deducting placement agent fees and estimated offering expenses payable by us. We intend to use the net proceeds for working
capital, general corporate purposes, including the further development of our product capabilities, and the procurement of inventory,
specifically for robotic hardware.
**Key Business Highlights for the First Quarter of Fiscal Year 2026**
Strategic and Operational
Milestones
- RaaS Contract Acceleration: Successfully expanded our Robots-as-a-Service (RaaS) footprint, demonstrating continued market adoption of our recurring revenue model. This growth validates our long-term strategy to shift away from one-time hardware sales toward a high-quality, predictable revenue base.
- Continued Investment in Research and Development: During the first quarter of fiscal year 2026, we continued to invest in research and development focused on artificial intelligence, system autonomy, and intelligent human-machine interaction across our robotic platforms. As a member of the NVIDIA Connect program, we have continued to utilize NVIDIA-based AI computing platforms and robotics software frameworks to enhance real-time perception, decision-making, and on-device autonomy.
In addition, during the quarter, we continued development activities under a previously disclosed non-commercial technology collaboration agreement with Microsoft Corporation through the Microsoft AI Co-Innovation Lab, supporting the evaluation and development of certain artificial intelligence workflows. Subsequent to the end of the quarter, Microsoft published a blog post on its website referencing this engagement.
These efforts are intended to enhance product functionality and support scalable commercial deployment across multiple industry verticals.
- Expansion of Hospitality Management Segment (AlphaMax): Advanced the strategic rollout of our proprietary hospitality concepts by commencing development of a new Clouffee and Tea location in the San Francisco Financial District. Site preparation and operational workflows are currently in progress, with the location scheduled to officially commence operations in the second quarter of fiscal year 2026.
Financial and Capital Milestones
- Net loss attributable to common stockholders was $(8.4) million for the quarter, compared to $(3.5) million in the prior year period. Excluding stock-based compensation expenses, the Adjusted Net Loss Attributable to Common Stockholders was $(0.1 million), a substantial improvement compared to the $(3.5 million) Adjusted Net Loss in the prior year period. On a per-share basis, the Adjusted Basic and Diluted Net Loss was $0.00, compared to $(0.04) per share in the prior year quarter.
- Balance Sheet Strengthening: We successfully utilized our ATM offering program and exercise of warrants to raise $46.5 million in gross proceeds, substantially strengthening our liquidity and providing capital to accelerate the build-out of the RaaS asset fleet. A portion of these proceeds was generated through a direct sale of shares to a large institutional investor under the ATM program.
18
**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 could enter the market, which may lead to price competition and a decline in profit margins;
- A recession could lead to a decline in customer demand in our robotic products and services;
- Some of the products are currently assembled by suppliers in China, which may delay the supply if they are affected by international shipping, epidemic, geopolitical conflicts and other factors;
- We anticipate that our general and administrative expenses will continue to increase in the future as a result of increased costs associated with being a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, attorneys, and accountants, and personnel-related stock-based compensation costs, among other expenses, and, in the case of public company-related expenses, services associated with strengthening our internal control over financial reporting, maintaining compliance with Nasdaq listing and SEC reporting requirements, director and officer liability insurance costs, and investor and public relations costs, among other expenses; and
- 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 be re-evaluated on a regular basis.
**Results of Operations**
***Comparison of the three months ended December 31, 2025 and 2024***
The following table summarizes
our results of operations (in thousands) for the three months ended December 31, 2025 and 2024, together with the dollar change in those
items from period to period:
| Line item | Three Months ended December 31, 2025 | Three Months ended December 31, 2024 | Change |
| --- | --- | --- | --- |
| Revenue, net | $1,147 | $1,257 | $(110) |
| Cost of revenue, net | 547 | 123 | 424 |
| Gross profit | 600 | 1,134 | (534) |
| Operating expenses: | | | |
| Research and development | 448 | 484 | (36) |
| Sales and marketing | 188 | 245 | (57) |
| General and administrative | 11,773 | 4,303 | 7,463 |
| Total operating expenses | 12,409 | 5,032 | 7,370 |
| Loss from operations | (11,809) | (3,898) | (7,904) |
| Non-operating income(expense): | | | |
| Investment Income | 3,401 | 333 | 3,068 |
| Interest expense, net | (2) | (4) | 2 |
| Total other expenses | 3,399 | (329) | 3,726 |
| Loss before income tax expense | (8,410) | (3,569) | (4,836) |
| Consolidated net loss | (8,410) | (3,569) | (4,836) |
| Less: Net loss Attributable to Non-Controlling Interest | (8) | (21) | 13 |
| Net loss attributable to common stockholders | $(8,402) | $(3,548) | $(4,849) |
| Adjusted net loss attributable to common stockholders (non-GAAP ) | (118) | (3,548) | 3,435 |
| Adjusted basic and diluted net loss per share (in each dollar, non-GAAP) | $0.00 | $(0.04) | $(0.04) |
19
Adjusted net loss attributable to common stockholders and adjusted
basic and diluted net loss per share are non-GAAP financial measures. Refer to the Non-GAAP Financial Measures section below for a reconciliation
of our financial results reported in accordance with GAAP to non-GAAP financial results.
*Revenue*
Revenue, net, for the three
months ended December 31, 2025 was $1.14 million, a decrease of $110 thousand, or approximately 8.8%, compared to $1.25 million for the
three months ended December 31, 2024.
This decrease was primarily
due to a reduction in one-time product sales and other revenue, partially offset by significant growth in our recurring revenue streams,
including leasing, services, and RaaS.
The breakdown of revenue is as follows:
| Line item | Three Month ended December 31, 2025 | Three Month ended December 31, 2024 | Change |
| --- | --- | --- | --- |
| Product Sale | $357 | $538 | $(181) |
| Leasing/Service/Rental | 405 | 133 | 272 |
| RaaS | 319 | 243 | 76 |
| Other | 66 | 343 | (277) |
| Total | $1,147 | $1,257 | $(110) |
*Business Model Transition and Revenue
Recognition*
Historically, we generated revenue
primarily through Product Revenue (outright hardware sales), resulting in immediate revenue and immediate Cost of Revenue recognition.
During fiscal 2025, we fundamentally shifted our approach to emphasize
long-term relationships and recurring revenue through leasing and service arrangements.
This strategic change significantly
impacts the financial statements:
1. Revenue: Upfront product revenue is reduced.
2. Assets: The cost of leased robots is capitalized as a long-term asset (Assets held for Lease), not immediately expensed.
3. Profitability: This results in a materially lower Cost of Revenue and an expanded Gross Margin, as the cost is recognized over the lease term via depreciation instead of immediate Cost of Goods Sold.
The decrease in Product Sale revenue
for the three months ended December 31, 2025, compared to the same period in 2024, was directly attributable to our strategic focus on
reducing one-time hardware transactions in favor of recurring contracts. This activity aligns with our long-term revenue strategy.
Our long-term focus remains on expanding recurring revenue through service,
rental, and leasing arrangements. The increases in Leasing, Service, and RaaS revenue during the three months ended December 31, 2025,
were driven by the successful deployment of robots under these recurring models. Underlying adoption of these recurring arrangements continues
to increase, validating our transition away from capital-intensive direct sales.
20
*Detailed Revenue Streams
and Recognition*
Our revenue is classified into four primary
streams:
1. Product Revenue
- Description: Revenue from traditional, outright sales of hardware where the customer takes ownership.
- Recognition: Recognized at a point in time (transfer of control, per ASC 606).
- Impact: The decrease for the three months ended December 31, 2025, was driven by our strategic shift away from one-time hardware sales. We anticipate this mix will continue to stabilize at lower levels as we prioritize long-term recurring revenue models.
2. Leasing/Service/Rental Revenue
- Description: Revenue from short-term rentals, maintenance contracts, subscriptions, and installation services.
- Recognition: Recognized over time or at a point in time, based on contract specifics.
- Impact: This category experienced substantial growth, increasing to $405 thousand for the three months ended December 31, 2025. The increase was primarily attributable to the expansion of our event robot rental services, as we supported a higher volume of short-term deployments across promotional and commercial events.
3. RaaS Revenue
- Description: Revenue from long-term operating agreements for the robotics fleet.
- Recognition: Recognized over the term of the lease agreement.
- Impact: This stream increased to $319 thousand for the three months ended December 31, 2025, demonstrating accelerated adoption. As our primary long-term growth engine, RaaS continues to drive predictable, recurring revenue, central to our long-term value creation strategy.
4. AlphaMax (Cloutea)
- Description: Revenue generated from the AlphaMax subsidiary, which operates as a hospitality management company overseeing various cafes and restaurants.
- Recognition: Recognized according to the performance obligations outlined in the specific management or operating contracts.
- Impact: This segment contributed $66 thousand in total revenue for the three months ended December 31, 2025. This revenue is non-robotics related, and the decrease compared to the prior year period reflects fluctuations in the specific hospitality operations managed by this subsidiary.
Clouffee and Tea Restaurant
Brand
Clouffee and Tea is our first self-owned
restaurant brand, designed to showcase our RaaS model directly to consumers. The concept seamlessly blends innovative
robotic technology with a vibrant coffee and tea culture to create an engaging customer experience. We are currently in the process of
opening a new store in the San Francisco Financial District, which is scheduled to officially open in the second quarter of fiscal 2026.
21
*Cost of Revenue*
Cost of revenue, net, increased by
$424 thousand, or approximately 344.7%, from $123 thousand for the three months ended December 31, 2024 to $547 thousand for the three
months ended December 31, 2025. This increase was primarily driven by the expansion of our service and support infrastructure to support
the growing RaaS fleet, as well as increased depreciation expenses associated with deployed assets.
Depreciation of Rental Assets: For
the three months ended December 31, 2025, depreciation expense attributable to our RaaS fleet was approximately $47 thousand. We expect
this non-cash expense to increase in future periods as our installed base of leased robots expands, creating a predictable cost structure
that scales with recurring revenue. We continue to focus on optimizing our manufacturing and supply chain processes to maintain a competitive
cost structure.
*Gross Profit*
Gross profit decreased by $534 thousand,
or approximately 47.1%, to $600 thousand for the three months ended December 31, 2025, from $1,134 thousand for the three months ended
December 31, 2024. Gross margin was 52.3% for the three months ended December 31, 2025, compared to 90.2% for the three months ended December
31, 2024.
The variance in gross margin is primarily
attributable to the structural difference in our operating model between the two fiscal periods:
- **Comparison to Prior Year Low Cost Base:** The gross margin in the first quarter of fiscal 2025 (ended December 31, 2024) was exceptionally high, reflecting a leaner cost structure with minimal fixed overhead. During that period, revenue was derived primarily from direct sales that did not require the extensive service, support, and fleet maintenance infrastructure we have since established.
- **Current Period Infrastructure Investment:** In the current quarter (fiscal 2026), our Cost of Revenue includes significant upfront investments in the technical support and field service teams necessary to support our growing Robots-as-a-Service (RaaS) fleet. While these costs dampen margins in the near term, they are essential scalability investments that do not scale linearly with revenue.
We expect gross margins to remain below the exceptional levels seen in the first quarter of fiscal 2025 as we continue to scale our RaaS
operations. However, we anticipate margin stabilization and improvement over the long term as our recurring revenue base grows to absorb
these expanded infrastructure costs.
*Research and Development Expenses*
R&D expenses decreased by $36 thousand, or approximately 7.4%, to $448
thousand for the three months ended December 31, 2025, from $484 thousand for the three months ended December 31, 2024. This slight decrease
reflects our continued focus on optimizing development resources as we transition from initial hardware prototyping to refining our RaaS
software platform and integration capabilities.
*Sales and Marketing Expenses*
Sales and marketing (S&M) expenses
decreased $57 thousand, or approximately 23.3%, to $188 thousand for the three months ended December 31, 2025, from $245 thousand for
the three months ended December 31, 2024. This decrease was primarily due to a strategic realignment of our marketing efforts toward targeted
B2B outreach for our RaaS program, rather than broad-based brand awareness campaigns.
22
*General and Administrative Expenses*
General and administrative (G&A)
expenses increased substantially by $7.5 million, or approximately 173.60%, to $11.8 million for the three months ended December
31, 2025, from $4.3 million for the three months ended December 31, 2024.
The increase was primarily
attributable to:
- **Stock-Based Compensation:** We recognized approximately $6.8 million in stock-based compensation expense related to equity grants for employees, reflecting our commitment to retaining top talent and aligning employee incentives with shareholder value.
- **Professional Services:** We incurred approximately $1.4 million in contract and consultant service fees, driven by increased requirements for legal, audit, and strategic consulting services associated with our status as a public company and our ongoing business transformation.
*Investment Income*
Investment income increased significantly by $3,068 thousand to $3,401
thousand for the three months ended December 31, 2025, from $333 thousand for the three months ended December 31, 2024. This increase
was primarily driven by higher returns on our cash equivalents and short-term investment holdings, reflecting the effective management
of our capital resources following recent financing activities.
*Other Income (Expense)*
Interest expense, net, decreased
from $4 thousand for the three months ended December 31, 2024 to $2 thousand for the three months ended December 31, 2025, primarily due
to the repayment of outstanding interest-bearing debt during the fiscal year.
**Non-GAAP Financial Measures**
Adjusted net loss attributable
to common stockholders and adjusted basic and diluted net loss per share are non-GAAP financial measures which exclude share-based compensation
for employees from general and administrative expense. Share-based compensation is considered non-cash expenses. We believe these non-GAAP
measures aid investors by providing additional insight into our financial performance and help clarify trends affecting our business.
For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business
performance. These non-GAAP financial measures presented should not be considered a substitute for, or superior to, the measures of financial
performance prepared in accordance with GAAP.
The following table reconciles
our financial results reported in accordance with GAAP to non-GAAP financial results:
| Line item | Three Months Ended September 30 / 2025 | Three Months Ended September 30 / 2024 |
| --- | --- | --- |
| Numerators: | | |
| Net loss attributable to common stockholders | $(8,402) | $(3,548) |
| Stock based compensation expense | 8,284 | - |
| Adjusted net loss attributable to common stockholders (non-GAAP) | (118) | (3,548) |
| Denominator: | | |
| Weighted Average ordinary shares used in computing | 197,731,671 | 95,785,054 |
| Basic and diluted net loss per share (in each dollar) | (0.04) | (0.04) |
| Adjusted basic and diluted net loss per share (in each dollar, non-GAAP) | $0.00 | $(0.04) |
23
**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, 2025, our cash and cash equivalents totaled $271.8 million. This represents a significant increase from
$19.8 million at the end of December 31, 2024. The substantial increase in our cash position is primarily attributable to the net
proceeds received from issuance of shares of Class B common stock and from the exercise and issuance of warrants. These proceeds
significantly strengthened our balance sheet and provided us with financial flexibility to invest in our growth initiatives,
including expanding our R&D team, and 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.
During the three months
ended December 31, 2025, we issued an aggregate of 15,156,685 shares of Class B common stock through our ATM offering program for
aggregate proceeds of $69.1 million, and 4,485,946 shares of Class B common stock pursuant to the exercise of investor warrants for
aggregate proceeds of $9.2 million.
**Comparison of the three months ended December 31, 2025 and 2024**
The following table summarizes
our cash flow information (in thousands) for the three months ended December 31, 2025 and 2024, together with the dollar change in those
items from period to period:
| Line item | Three Months ended December 31, 2025 | Three Months ended December 31, 2024 | Change |
| --- | --- | --- | --- |
| Net Cash provided by (used in): | | | |
| Operating activities | $(1,605) | $(3,599) | 1,994 |
| Investing activities | $1,540 | (380) | 1,920 |
| Financing Activities | $78,247 | 9,240 | 69,007 |
| Net increase (decrease) in cash | $78,182 | $5,261 | 72,921 |
*Operating Activities*
Net cash used in operating
activities for the three months ended December 31, 2025 was $1,605 thousand, primarily driven by a net loss of $8,402 thousand,
significantly offset by non-cash charges of $8,637 thousand and a net change in operating assets and liabilities of $1,840 thousand. Non-cash
charges primarily included $8,284 thousand stock based compensation, and $353 thousand of depreciation and amortization expense. The cash
flow impact from changes in net operating assets and liabilities was mainly driven by a decrease in accrued expenses and other payable
of $1,222 thousand, inventory of $498 thousand, and accounts payable of $265 thousand, which was partially offset by decreases in right-of-use
assets of $124 thousand and increase in deferred revenue of $110 thousand.
Net cash used in operating
activities for the three months ended December 31, 2024 was $3,599 thousand, primarily due to a net loss of $3,569 thousand
and a 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.
*Investing Activities*
Net cash provided by investing
activities was $1,540 thousand for the three months ended December 31, 2025, primarily driven by $2.1 million on proceeds from maturities
and sales of short-term investments, partially offset by $454 thousand on purchase of short-term investment, and $71 thousand on purchase
property and equipment.
Net cash used for investing
activities was $380 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.
*Financing Activities*
Net cash provided by financing
activities totaled $78.2 million for the three months ended December 31, 2025, mainly due to $69.1 million from issuance of ordinary shares
and $9.2 million from proceeds from warrants exercise.
24
Net cash provided by financing
activities totaled $9.2 million for the year ended December 31, 2024. We received $9.2 million from issuance of common stock.
**Contractual Obligations**
We are a smaller reporting
company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
**Trend Information**
Other than as disclosed elsewhere
in this report, 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 audited
financial statements included elsewhere in this report for more information.
**Critical Accounting Policies and Estimates**
The preparation of the financial
statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and
the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Management
bases its estimates on historical experience, market and other conditions, and various other assumptions it believes to be reasonable.
See Note 2 to our audited financial statements included elsewhere in this Report for more information.
**JOBS Act**
Section 107 of the JOBS Act
also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies. We have
elected to avail ourselves of this extended transition period.
For as long as we remain
an “emerging growth company” under the recently enacted JOBS Act, we will, among other things:
- be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act, which requires that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal controls over financial reporting;
- be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure concerning executive compensation; and
- be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.
Although we are still evaluating
the JOBS Act, we currently intend to take advantage of some or all of the reduced regulatory and reporting requirements that will be available
to us so long as we qualify as an “emerging growth company,” including the extension of time to comply with new or revised
financial accounting standards available under Section 102(b) of the JOBS Act. Among other things, this means that our independent registered
public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial
reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies in our internal
control over financial reporting go undetected. Likewise, so long as we qualify as an emerging growth company, we may elect not to provide
you with certain information, including certain financial information and certain information regarding compensation of our executive
officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more difficult for
investors and securities analysts to evaluate our company. As a result, investor confidence in our company and the market price of our
common stock may be materially and adversely affected.
25
## 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, with the
participation of our Chief Executive Officer, Chief Financial Officer, and Vice President of Finance (our “Certifying
Officers”), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2025.
In our Annual Report on
Form 10-K for the fiscal year ended September 30, 2025 (“2025 Annual Report”), management concluded that our disclosure controls and procedures were not
effective due to a material weakness in internal control over financial reporting. This weakness related to the design and operation
of controls over complex accounting judgments and transaction processing, specifically in the areas of revenue recognition,
inventory, investments, intangible assets, and certain payroll processes.
Based on the evaluation performed
as of December 31, 2025, and the remediation measures implemented during the quarter as described below, our Certifying Officers have
concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.
**(b) Changes in Internal Control over Financial
Reporting**
During the fiscal quarter
ended December 31, 2025, we implemented the following remediation measures to address the material weaknesses previously identified in
our 2025 Annual Report:
Revenue Recognition and Deferred
Revenue: We enhanced our contract review process and management oversight of significant judgments to ensure that transaction prices are
appropriately allocated to performance obligations for our Robots-as-a-Service (RaaS) model. Controls now ensure revenue is recognized
over time only after robotic solutions are fully operational at the customer site.
Inventory and Asset Valuation:
We implemented more rigorous reconciliation procedures and periodic reviews to support the valuation of inventory and the carrying value
of intangible assets, ensuring these estimates are supported by current market conditions and anticipated usage.
Technical Accounting Oversight:
We strengthened our financial closing process by increasing the depth of technical review for complex or non-routine transactions, particularly
those involving entity-level judgments.
Other than the remediation
activities described above, there were no changes in our internal control over financial reporting during the quarter ended December 31,
2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
26
**PART II - OTHER INFORMATION**
## Item 1. Legal Proceedings.
On June 2, 2025, a civil action was filed against Richtech and certain
of our officers in the Supreme Court of the State of New York, County of Kings (Index No. 517888/2025). The complaint asserts claims for
breach of contract, breach of express and implied warranties, fraud, and joint venture liability. The plaintiff seeks damages in excess
of $600,000, including compensatory and punitive damages. On September 26, 2025, we filed a motion to dismiss the case. We believes the
claims are meritless and are vigorously defending the action. While the outcome of litigation is inherently uncertain, we do not believe
this matter will have a material adverse effect on our financial condition, results of operations, or cash flows.
On February 2, 2026, a putative securities class action lawsuit was filed against Richtech and certain of its officers in the United States
District Court for the District of Nevada, captioned Luiz Gonzalez Diez v. Richtech Robotics Inc., et al., No. 2:26-cv-00231 (D. Nev.).
The complaint asserts claims for alleged violations of federal securities laws related to statements made in a press release issued by
Richtech on January 27, 2026. The plaintiff seeks to represent a class of persons and entities who purchased or otherwise acquired Richtech’s
publicly traded securities during the period from January 27, 2026 through 12:00 PM EST on January 29, 2026 and seeks unspecified damages
and other relief. We dispute the allegations in the complaint and intend to defend the case vigorously. The case is at an early stage
and we cannot reasonably estimate the amount of any potential financial loss or cost that could result from this lawsuit.
## 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) 2025 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
**Trading Arrangements**
No director or Section 16
officer adopted or terminated a trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a “non-Rule
10b5-1” trading arrangement during the periods reported in this Report.
**Other Information**
None.
27
## Item 6. Exhibits
The following exhibits are
filed as part of, or incorporated by reference into, this Report.
| No. | Description of Exhibit |
| --- | --- |
| 3.1 | Articles of Amendment to Articles of Incorporation of Richtech Robotics Inc. (incorporated by reference to Exhibit 3.1 to Richtech’s Current Report on Form 8-K filed on November 17, 2025). |
| 10.1 | Second Amended and Restated Richtech Robotics Inc. 2023 Stock Option Plan (incorporated by reference to Exhibit 10.1 to Richtech’s Current Report on Form 8-K filed on November 17, 2025). |
| 31.1* | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2* | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS* | Inline XBRL Instance Document. |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
\* Filed herewith.
\*\* Furnished.
# Certain portions of this exhibit have been omitted because the omitted information is (i) not material and (ii) would likely cause competitive harm to Richtech if publicly disclosed.
28
**SIGNATURES**
In accordance with the requirements
of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
**RICHTECH ROBOTICS INC.**
Date: February 11, 2026 By: /s/ Zhenwu Huang
Name: Zhenwu Huang
Title: Chief Executive Officer
(Principal Executive Officer)
Date: February 11, 2026 By: /s/ Zhenqiang Huang
Name: Zhenqiang Huang
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)
29