Richtech Robotics Inc.: Form 10-Q for the period ended Jun 30, 2025

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 2024 Annual Report and elsewhere in this Report. These risks could cause our actual results to differ materially from any future performance suggested below.

Overview

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

Recent Developments

In July 2025, the Company was approved to join the NVIDIA Connect program. The program offers developer resources, training, and preferred pricing on select NVIDIA technologies, which we expect to use to support product development.

As of August 11, 2025, subsequent to the period ended June 30, 2025, the Company issued an additional 11,226,521 shares of Class B common stock under the ATM program, for gross proceeds of approximately $22,565 thousand. After deducting fees of approximately $716 thousand, the Company received net proceeds of approximately $21,849 thousand.

Key Business Highlights for the Third Quarter of Fiscal Year 2025

On May 15, 2025, we completed the purchase of an approximately 20,000 sq. ft. property at 2975 Lincoln Road, Las Vegas, NV, for $4.1 million, funded with cash on hand, and relocated our headquarters to the site. The facility is intended to further integrate domestic sourcing and expand assembly and manufacturing operations.

On June 27, 2025, we were added to the FTSE Russell 2000® and Russell 3000® Indexes as part of the 2025 Russell U.S. Indexes reconstitution; we were also added to the appropriate growth and value style indexes.

Continued Expansion of RaaS Model

We continued to expand our RaaS model in the third quarter of fiscal year 2025. We executed a Master Services Agreement (“MSA”) in April 2025 with a U.S. car retailer/dealership group, pursuant to which we have commenced implementation and completed installations of our Titan robots at five dealership locations during the quarter. Additional locations are in the installation queue under this MSA and deployments are expected to increase in the fourth quarter. In parallel, we broadened our RaaS footprint beyond automotive services into factory manufacturing, initiating customer engagements to address in-plant transport of materials and components as part of our intralogistics solutions.

Continued Investment in Research and Development

We continued to expand our RaaS model in the third quarter of fiscal year 2025. We executed a master services agreement (“MSA”) in April 2025 with a U.S. car retailer/dealership group, pursuant to which we have commenced implementation and completed installations of our Titan robots at five dealership locations during the quarter. Additional locations are in the installation queue under this MSA and deployments are expected to increase in the fourth quarter. In parallel, we broadened our RaaS footprint beyond automotive services into factory manufacturing, initiating customer engagements to address in-plant transport of materials and components as part of our intralogistics solutions.

Expansion of Sales and Marketing Efforts

During the third quarter of fiscal year 2025, we prioritized global commercial expansion and enterprise channels. In May, we exhibited at the National Restaurant Association (NRA) Show in Chicago, expanding our pipeline of key customer prospects and industry partnerships. On June 24, 2025, our majority-owned subsidiary Boyu Artificial Intelligence (Beijing) Technology Co., Ltd. entered into a Product Sales and Technical Services Agreement with Beijing Kaiwu Tongchuang Technology Development Co., Ltd. for approximately $4.2 million of products, services, software and licensing; implementation of orders under this agreement began in the fourth quarter of fiscal 2025. In addition, on June 27, 2025, we signed a Strategic Cooperation Agreement with Beijing City of Design Development Co., Ltd., via Boyu, focused on joint R&D, selective vertical commercialization, and industry incubation to support market development in China.

Results of Operations

Comparison of the nine months ended June 30, 2025 and 2024

The following table summarizes our results of operations (in thousands) for the nine months and the three months ended June 30, 2025 and 2024, together with the dollar change in those items from period to period:

Revenue

For the nine months ended June 30, 2025, net revenue decreased by $114 thousand, or approximately 3.1%, to $3,601 thousand, compared to $3,715 thousand for the same period in 2024.

For the three months ended June 30, 2025, net revenue decreased by $266 thousand, or approximately 18.4%, to $1,177 thousand, compared to $1,443 thousand for the same period in 2024.

This year-over-year change primarily reflects our strategic shift to an RaaS model, in line with our long-term growth plan. Under this approach, we focus on building recurring revenue through multi-year service agreements rather than one-time product sales. While this transition reduces upfront product revenue in the short term due to the timing of revenue recognition, it steadily increases our base of contracted recurring revenue. We expect that, as our installed base continues to expand, we will approach a scale where recurring revenue can cover a substantial portion of our operating cost base, providing a more stable foundation for long-term growth.

In addition to continuing deployments with single-location clients, we have strengthened our presence in the large enterprise segment. We are signing and advancing MSAs with more large dealership groups and other major customers. While these larger clients typically begin with a limited number of priority installations and then take one to two quarters to evaluate returns on investment before committing to broader rollouts, feedback to date has been positive. We understand that the pace of deployment with large customers is generally slower than with smaller clients, but as more of them enter trial and pilot phases, we believe this will create stronger foundations and greater opportunities for future growth.

* Cloutea is the revenue generated from Clouffee and Tea, our boba tea store in Las Vegas, Nevada. We opened this store as a model to further develop the concept of an interactive robot barista utilizing our ADAM robot. Clouffee and Tea was rebranded from “Cloutea” in February 2025.

* Alphamax Management LLC, a wholly-owned subsidiary of the Company (“Alphamax”), was established to spearhead our expansion into the food and beverage sector. As a consulting and management company, Alphamax oversees the operation of our innovative food and beverage concepts, including the interactive robot barista cafe. This initiative will serve as a model for future development and expansion within the food and beverage industry, showcasing the potential of our advanced robotic technologies in revolutionizing customer experiences and streamlining operations.

Product Revenue

For the nine months ended June 30, 2025, product revenue increased by $315 thousand, or approximately 25.2%, from $1,252 thousand in 2024 to $1,567 thousand in 2025.

For the three months ended June 30, 2025, product revenue decreased significantly by $429 thousand, or approximately 73.7%, from $582 thousand in 2024 to $153 thousand in 2025.

Service/Rental Revenue

For the nine months ended June 30, 2025, service/rental revenue decreased by $359 thousand, or approximately 23.8%, from $1,510 thousand in 2024 to $1,151 thousand in 2025.

For the three months ended June 30, 2025, service/rental revenue increased by $107 thousand, or approximately 17.5%, from $611 thousand in 2024 to $718 thousand in 2025.

Cost of Revenue

Net cost of revenue decreased for both the nine and three months ended June 30, 2025.

For the nine months ended June 30, 2025, the net cost of revenue was $877 thousand, a decrease of $534 thousand, or approximately 37.7%, compared to $1,411 thousand for the nine months ended June 30, 2024. This substantial decrease in the cost of revenue is primarily attributed to our strategic shift towards increased leasing arrangements. Under this model, the cost of the robot is capitalized as property and equipment on our balance sheet and recognized as depreciation expense within cost of revenue over the asset's useful life, rather than being recognized entirely as cost of goods sold at the time of an outright sale.

For the three months ended June 30, 2025, the net cost of revenue was $300 thousand, a decrease of $129 thousand, or approximately 30.1%, compared to $429 thousand for the three months ended June 30, 2024. This decrease is generally in line with the decline in net revenue, reflecting lower sales volume associated with our strategic shift towards increased leasing arrangements.

Leasing Revenue

For the nine months ended June 30, 2025, leasing revenue decreased by $224 thousand, or approximately 37.1%, from $604 thousand in 2024 to $380 thousand in 2025. This decrease is primarily due to a reclassification of event rental income, which was included in leasing income in 2024 but has been reclassified to service/rental revenue starting in 2025 to provide a more accurate representation of our revenue streams. This reclassification impacts the comparability of the periods.

For the three months ended June 30, 2025, leasing revenue increased by $20 thousand, or approximately 17.4%, from $115 thousand in 2024 to $135 thousand in 2025.

Gross Profit

Gross profit experienced mixed trends for the nine and three months ended June 30, 2025.

For the nine months ended June 30, 2025, gross profit was $2,724 thousand, an increase of $420 thousand, or approximately 18.2%, compared to $2,304 thousand for the nine months ended June 30, 2024.

For the three months ended June 30, 2025, gross profit was $877 thousand, a decrease of $137 thousand, or approximately 13.5%, compared to $1,014 thousand for the three months ended June 30, 2024.

The increase in gross profit for the nine-month period is primarily due to the decrease in cost of revenue, net, as discussed in the preceding section, coupled with the shift in our business model to the RaaS offerings. However, the decrease in gross profit for the three-month period was influenced by the higher proportional decline in revenue compared to the reduction in cost of revenue for that specific quarter.

Research and Development Expenses

R&D expenses experienced mixed trends for the nine and three months ended June 30, 2025

For the nine months ended June 30, 2025, R&D expenses decreased by $296 thousand, or approximately 18.1%, from $1,633 thousand in 2024 to $1,337 thousand in 2025.

For the three months ended June 30, 2025, R&D expenses increased by $147 thousand, or approximately 38.1%, from $386 thousand in 2024 to $533 thousand in 2025.

This due to a shift in the timing of intensity for our R&D activities, with a higher concentration in the current quarter but a lower overall spend year-to-date.

Sales and Marketing Expenses

Sales and marketing expenses showed mixed trends for the nine and three months ended June 30, 2025, largely due to the timing and volume of trade shows and event-based marketing.

For the nine months ended June 30, 2025, sales and marketing expenses decreased by $121 thousand, or approximately 11.8%, from $1,024 thousand in 2024 to $903 thousand in 2025.

For the three months ended June 30, 2025, sales and marketing expenses increased by $51 thousand, or approximately 21.5%, from $237 thousand in 2024 to $288 thousand in 2025.

Overall, sales and marketing spending has shown moderate variation, with quarterly results may fluctuate with seasonality and the timing and mix of industry events and campaigns. We are continuously evaluating the effectiveness of our sales and marketing investments to ensure they align with our strategic objectives and drive sustainable revenue growth.

General and Administrative Expenses

General and administrative expenses saw a dramatic increase for the nine and three months ended June 30, 2025.

For the nine months ended June 30, 2025, general and administrative (“G&A”) expenses increased by $10,077 thousand, or approximately 268.7%, from $3,750 thousand in 2024 to $13,827 thousand in 2025.

For the three months ended June 30, 2025, G&A expenses increased by $3,276 thousand, or approximately 256.4%, from $1,286 thousand in 2024 to $4,562 thousand in 2025.

The increase in general and administrative expenses for the current period was primarily driven by the following factors:

• Increased personnel costs: Increased salaries expenses related to hiring additional personnel to support our growth. This expansion includes key hires in engineering, finance and accounting, legal and compliance, and human resources.
• Professional fees: Higher professional fees for external services such as legal counsel, independent auditors, and consulting engagements. These increased fees are related to compliance with public company reporting requirements and ongoing legal matters.
• Furthermore, the increase was impacted by costs associated with our move to a new office in June 2025.

We are dedicated to carefully managing our G&A expenses while making sure we have everything needed to support our Company’s growth and meet our commitments. It’s natural for G&A expenses to increase as we grow and transition to a public company. However, we are actively implementing measures to optimize costs, streamline processes, and use technology to improve efficiency and control these expenses. We believe our strategic investments in people, infrastructure, and compliance are vital for our long-term growth. As we continue to expand, we expect G&A expenses to rise. Even so, we are committed to managing these costs prudently and ensuring they align with our overall financial performance.

Interest Expenses

Interest expenses decreased significantly for both the nine and three months ended June 30, 2025.

For the nine months ended June 30, 2025, interest expenses, net, decreased by $733 thousand, or approximately 96.3%, from $761 thousand in 2024 to $28 thousand in 2025.

For the three months ended June 30, 2025, interest expenses, net, decreased by $82 thousand, or approximately 81.2%, from $101 thousand in 2024 to $19 thousand in 2025.

The significant decrease in both periods is primarily due to the full repayment of our outstanding third-party loans.

Investment Income

Investment income increased substantially for both the nine and three months ended June 30, 2025.

For the nine months ended June 30, 2025 investment income increased by $1,143 thousand, from $0 thousand in 2024 to $1,143 thousand in 2025.

For the three months ended June 30, 2025, investment income increased by $423 thousand, from $0 thousand in 2024 to $423 thousand in 2025.

This significant increase in investment income is primarily due to the higher cash balances from the net proceeds from the issuance of Class B common stock and the exercise of warrants during the period. These funds were strategically invested in short-term certificates of deposit (CDs) and U.S. Treasury bills with maturities of one year or less to earn interest, resulting in a substantial increase in investment income compared to the prior year period.

Factors That May Adversely Affect our Results of Operations

Our results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our results of operations could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, fluctuations in interest rates, increases in tariffs, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our results of operations.

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 June 30, 2025, our cash and cash equivalents totaled $32.9 million. This represents about 18.3 million increase from $14.6 million at the end of the prior fiscal year. The substantial increase in our cash position is primarily attributable to the net proceeds of $48.6 million received from issuance of shares of Class B common stock, and the net proceeds of $9.2 million received 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, 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.

Operating Activities

Net cash used in operating activities was $11,163 thousand for the nine months ended June 30, 2025, compared to $2,121 thousand for the same period in 2024. The increase in cash outflows was primarily due to a higher net loss of $12,160 thousand in the current period, compared to a net loss of $5,181 thousand in the prior-year period, partially offset by changes in working capital and non-cash adjustments.

Significant non-cash adjustments included depreciation and amortization of $1,635 thousand in 2025, up from just $7 thousand in the prior year, driven primarily by an increase in depreciable assets. Additionally, operating lease liabilities, current and non-current, contributed $130 thousand and $160 thousand, respectively, compared to $34 thousand and $253 thousand in 2024. These changes reflect the continued expansion of leased operational assets.

Net cash used in operating activities for the nine months ended June 30, 2024 was approximately $2,121 thousand, primarily due to a net loss of approximately $5,181 thousand offset by an increase of approximately $3,060 thousand in net operating assets and liabilities. The cash flow impact from changes in net operating assets and liabilities was primarily driven by decreases in accounts receivable of approximately $2,448 thousand, decreases in deferred tax assets of $518 thousand and inventory of approximately $424 thousand, partially offset by the increase in tax payable of $197 thousand and accounts payable of $111 thousand.

Investing Activities

Net cash used for investing activities was $41,532 thousand for the nine months ended June 30, 2025, primarily due to $36,676 thousand on purchase of short-term investments and $4,509 thousand on equipment.

Net cash used in investing activities was approximately $135 thousand for the nine months ended June 30, 2024. This amount consisted of cash used for lending to related parties. No related-party balances were outstanding as of June 30, 2025.

Financing Activities

Net cash provided by financing activities totaled $71,022 thousand for the nine months ended June 30, 2025, the increase was primarily due to $71,053 thousand cash inflow from the issuance of Class B common stock and the exercise of warrants during the period.

Net cash provided by financing activities totaled approximately $10,754 thousand for the nine months ended June 30, 2024. We raised approximately $9,278 thousand from issuance of Class B common stock and obtained short-term loans in the form of convertible Notes totaling $3 million from the Investor.

(a) Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

These controls include policies and procedures that:

• Maintain accurate and reliable financial records: We have implemented comprehensive policies and procedures to ensure that our financial records accurately and fairly reflect the transactions and dispositions of our assets. These procedures include robust record-keeping practices, regular reconciliations, and independent reviews to verify the accuracy and completeness of our financial data.
• Ensure GAAP-compliant financial reporting: Our financial reporting process is designed to ensure that our financial statements are prepared in accordance with GAAP. We have established detailed procedures for revenue recognition, expense accrual, and asset valuation, among other areas, to ensure that our financial reporting is accurate, complete, and compliant with all applicable accounting standards.
• Authorize and control transactions: We have implemented a system of authorizations and approvals to ensure that all transactions are properly reviewed and approved by authorized personnel. This system includes segregation of duties, authorization limits, and multi-level approvals for significant transactions to mitigate the risk of unauthorized or fraudulent activity.
• Prevent and detect fraud: This includes implementing robust internal controls, conducting regular audits, and providing comprehensive training for employees. Additionally, continuously monitoring financial transactions and promptly addressing any discrepancies can help safeguard the integrity of our financial reporting. By taking these measures, we can mitigate potential risks and maintain stakeholder confidence in our financial management practices.

Under the supervision and with the participation of our management, including our chief executive officer, chief financial officer and VP of Finance (the “Certifying Officers”), we carried out an evaluation of 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 Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were effective as of June 30, 2025.

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

(b) Changes in Internal Control over Financial Reporting

There has not been any change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our fiscal quarter ended June 30, 2025 that has materially affected, or is likely to materially affect, our internal control over financial reporting.

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