Richtech Robotics Inc.: Form 10-Q for the period ended Dec 31, 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 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

• 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.

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:

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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:

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.

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.

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.

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:

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Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, which consist of cash on hand and short-term investments that are readily convertible to cash. As of December 31, 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:

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.

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.

(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.

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.