RICHTECH ROBOTICS INC
For the period ended Mar 31, 2024. Filed May 15, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 15, 2024
RR$0.89+6.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-14.
0001213900-24-014132
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001213900-24-043063
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 70 current paragraphs.
36 unchanged; 14 reworded; 20 added; 5 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 14 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Standby Equity Purchase Agreement
Current report
On February 15, 2024, we entered into a Standby Equity Purchase Agreement (the “Purchase Agreement”) with YA II PN, Ltd. (the “Investor”), pursuant to which the Investor has agreed to purchase up to $50 million of the Company’s shares of Class B common stock over the course of 24 months after the date of the Purchase Agreement. The price of shares to be issued under the Purchase Agreement will be 96% of the lowest volume weighted average price (the “VWAP”) of the Company’s Class B common stock for the three trading days immediately following the delivery of each Advance notice by the Company (the “Pricing Period”). Each issuance and sale by the Company to the Investor under the Purchase Agreement (an “Advance”) is subject to a maximum amount equal to 100% of the daily trading volume of the Company’s Class B common stock, as reported by Bloomberg L.P., during the five trading days immediately preceding an Advance notice.
Current report
With respect to each Advance, the Company has the option to notify the Investor of a minimum acceptable price (“MAP”) by specifying the amount within an Advance notice. During any trading day within a Pricing Period, two conditions will trigger an automatic reduction to the amount of the Advance by one-third: either (i) the VWAP of the Class B common stock is below the MAP specified in the Advance notice, or (ii) there is no VWAP available (each such day, an “Excluded Day”). On each Excluded Day, an automatic one-third reduction is applied to the specified Advance amount in the Advance notice and that day will be excluded from the Pricing Period.
Current report
Each Advance is subject to certain limitations, including that the Investor cannot purchase any shares that would result in it beneficially owning more than 4.99% of the Company’s outstanding voting power of number of shares of Class B common stock at the time of an Advance or acquiring more than 19.99% of the Company’s outstanding shares of Class B common stock as of the date of the Purchase Agreement (the “Exchange Cap”). The Exchange Cap will not apply under certain circumstances, including, where the Company has obtained stockholder approval to issue in excess of the Exchange Cap in accordance with the rules of The Nasdaq Stock Market (“Nasdaq”) or such issuances do not require stockholder approval under Nasdaq’s “minimum price rule.”
Current report
The Purchase Agreement will terminate automatically on the earlier of February 16, 2025 or when the Investor has purchased an aggregate of $50 million of the Company’s shares of Class B common stock. The Company has the right to terminate the Purchase Agreement upon five trading days’ prior written notice to the Investor, subject to certain conditions.
Current report
In connection with and subject to the satisfaction of certain conditions set forth in the Purchase Agreement, upon the request of the Company, the Investor will pre-advance to the Company up to $3,000,000 of the $50,000,000 commitment amount (a “Pre-Advance”), with each Pre-Advance to be evidenced by a convertible promissory note (each, a “Note”). The first Pre-Advance, in the principal amount of $1,000,000, was advanced on February 15, 2024. The second Pre-Advance, in the principal amount of $1,000,000, was advanced on March 18, 2024. The third Pre-Advance, in the principal amount of $1,000,000, was advanced on April 15, 2024. Each Note is subject to a 4% discount to the principal amount of such Note.
Current report
Each Note will accrue interest on the outstanding principal balance at the rate of 8% per annum and has a maturity date of February 15, 2025 (as may be extended at the option of the Investor). Beginning in May 2024, the Company was required to pay, on a monthly basis, one-nineth of the outstanding principal amount of each Note, together with accrued and unpaid interest, either (i) in cash or (ii) by submitting an Advance notice pursuant to the Purchase Agreement and selling the Investor shares, or any combination of (i) or (ii) as determined by the Company. The initial repayment is due 90 days after the issuance of the first Note, followed by subsequent payments due every 30 days after the previous payment. Unless otherwise agreed to by the Investor, any funds received by the Company pursuant to the Purchase Agreement for the sale of shares will first be used to satisfy any payments due under an outstanding Note.
Current report
At the election of the Investor, all or a portion of the principal, interest, or other amounts outstanding under each Note (the “Conversion Amount”) may be converted into shares of Common Stock (the “Conversion Shares”), equal to: (x) the Conversion Amount, divided by (y) the Conversion Price. “Conversion Price” is defined as (i) $6.00 per share of Class B common stock, provided however, on May 28, 2024 (the “Reset Date”), the Conversion Price shall be adjusted (downwards only) to equal the average of the daily VWAPs for the 5 consecutive trading days immediately prior to the Reset Date, if such price is lower than the Conversion Price then in effect. The Conversion Shares are entitled to the registration rights set forth in the Purchase Agreement.
Current report
On March 14, 2024, the Company and the Investor entered into a letter agreement (the “Letter Agreement”) to amend the terms of each Note as follows: (i) the Company may redeem early a portion or all amounts (including principal and accrued and unpaid interest) outstanding under the Note with at least 10 trading days’ prior written notice by the Company to the Investor. The outstanding principal balance being redeemed by the Company shall be subject to a 10% cash redemption premium. After receipt of the Redemption Notice, the Investor shall have 10 trading days to elect to convert all or any portion of the Note; and (ii) the Conversion Price shall not be lower than $1.50 per share of Class B common stock.
Current report
The Company paid a subsidiary of the Investor a structuring fee in the amount of $25,000 and in April 2024, issued to the Investor 259.350 shares of Class B common stock (the “Commitment Shares”) as a commitment fee. The Company and the Investor made certain representations and warranties to each other that are customary for transactions similar to this one, subject to specified exceptions and qualifications. Each of the Company and the Investor also agreed to indemnify the other.
Current report
The foregoing descriptions of the Purchase Agreement and the Notes and the transactions contemplated thereby are qualified in their entirety by reference to the full text of the Purchase Agreement and the Notes, a copy or a form of which are attached hereto as Exhibits 10.1 and 4.1, respectively, each of which is incorporated herein in its entirety by reference.
Current report
Revere Agreements
Current report
In connection with the execution of the Purchase Agreement, the Company entered into two agreements with Revere Securities, LLC (“Revere”): (i) a financial services agreement, dated as of January 22, 2024 (the “Financial Services Agreement”), pursuant to which the Company agreed to pay Revere $25,000 per month on an accrual basis for six months, with payments commencing upon the execution of the Purchase Agreement, for general financial advisory services provided by Revere, and (ii) a finder’s fee agreement, dated as of January 22, 2024 (the “Finder’s Fee Agreement”), pursuant to which the Company agreed to pay Revere (a) cash compensation equal to 7% of total proceeds from Pre-Advances raised under the Purchase Agreement, plus (b) cash compensation equal to 4% of any Advance under the Purchase Agreement, paid upon 3 business days after the closing of such Advance.
Current report
The foregoing descriptions of the Financial Services Agreement and the Finder’s Fee Agreement are qualified in their entirety by reference to the full text of the Financial Services Agreement and the Finder’s Fee Agreement, copies of which are attached hereto as Exhibits 10.6 and 10.7, respectively, each of which is incorporated herein in its entirety by reference.
Current report
Comparison of the six months ended March 31, 2024 and 2023
Current report
For the six months ended March 31, 2024 and 2023, our overall robotics revenue was approximately $2,272 thousand and $2,054 thousand, respectively. The increase of approximately $218 thousand, or 11%, was brought on primarily by our increased service revenue of approximately $642 thousand, or 250%, partially offset by the decrease in product revenue of approximately $953 thousand, or 59%. We are currently upgrading our product line to ensure we remain at the forefront of robotics technology. The RaaS model allows us to build stronger customer relationships, generate recurring revenue streams, and potentially achieve higher margins through premium services. We anticipate a temporary decrease in product sales during this transition, which we expect to last for the remainder of this year. This will be mitigated by the launch of our new product line later this year.
Current report
Research and development expenses were approximately $1,247 thousand for the six months ended March 31, 2024, representing a decrease of $25 thousand compared to the same period in 2023. This decrease reflects our ongoing efforts to optimize R&D spending while continuing to invest in developing innovative new products.
Current report
Total other expenses were approximately $660 thousand and approximately $1 thousand for the six months ended March 31, 2024 and 2023, respectively. The approximately $659 thousand, net increase in total other expenses was primarily due to the interest expense incurred within the six months ended March 31, 2024. In February and March 2024, we issued two Notes with the Investor, totaling $2,000,000. The Notes were issued in connection with the Purchase Agreement, pursuant to which we issued 259,350 Commitment Shares to the Investor in April 2024. The short-term loan balance was approximately $2,053 thousand.
Current report
Comparison of the six months ended March 31, 2024 and 2023
Current report
Net cash provided by financing activities totaled approximately $10,339 thousand for the six months ended March 31, 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 $2 million from the Investor, as discussed above.
Removed paragraphs (5)
Previous report
Comparison of the three months ended December 31, 2023 and 2022
Previous report
For the three months ended December 31, 2023 and 2022, our overall robotics revenue was approximately $999 thousand and $936 thousand, respectively. The increase of approximately $63 thousand, or 7%, was brought on primarily by our increased service revenue of approximately $567 thousand, or 244%, partially offset by the decrease in product revenue of approximately $426 thousand, or 69%. We were upgrading our product line during the first quarter of 2024. We have taken the initiative to reduce the proportion of robotic product sales and leasing robotics, and have been focusing instead on robot services such as event activities and customized development. However, after the upgrading of the product line, it is expected that both product and leasing revenue will return to growth.
Previous report
Research and development expenses were approximately $834 thousand and approximately $855 thousand for the three months ended December 31, 2023 and 2022, respectively. Our expenditure in developing new products has been consistent for both periods. We anticipate that our R&D expenses will increase by approximately 20-30% in 2024 and 2025
Previous report
Total other expense was approximately $486 thousand and approximately $1 thousand for the three months ended December 31, 2023 and 2022, respectively. The approximately $485 thousand, or 48,500%, net increase in total other expense was primarily due to the interest expense occurred incurred within the three months ended December 31, 2023. During 2023, we entered into ten short-term loan agreements with different financial entities for the total principal amount of approximately $1,853 thousand. As of December 31, 2023, the short-term loan balance was approximately $50 thousand.
Previous report
Comparison of the three months ended December 31, 2023 and 2022
Reworded paragraphs (14)
Previous wording
The following discussion should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Report and in our other filings with the Securities and Exchange Commission. The 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 annual report on form 10-K for the year ended September 30, 2023 and elsewhere in this Report. These risks could cause our actual results to differ materially from any future performance suggested below.
Current wording
The following discussion should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Report and in our other filings with the Securities and Exchange Commission (the “SEC”). The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors” in our annual report on form 10-K for the year ended September 30, 2023 filed with the SEC on January 11, 2024 and amended on March 27, 2024 and elsewhere in this Report. These risks could cause our actual results to differ materially from any future performance suggested below.
Previous wording
The following table summarizes our results of operations (in thousands) for the three months ended December 31, 2023 and 2022, together with the dollar change in those items from period to period:
Current wording
The following table summarizes our results of operations (in thousands) for the six months ended March 31, 2024 and 2023, together with the dollar change in those items from period to period:
Previous wording
The total revenue for the three months ended December 31, 2023, and 2022, was approximately $1,106 thousand and $946 thousand, respectively. The approximate $160 thousand, or 20%, increase in revenue in the three months ended December 31, 2023 was a combined result of our continuous expansion of customer base and changing of our sales mode. Our revenue (in thousands) by product for the three months ended December 31 is shown below:
Current wording
The total revenue for the six months ended March 31, 2024, and 2023, was approximately $2,272 thousand and $2,054 thousand, respectively. The approximate $218 thousand, or 11%, increase in revenue in the six months ended March 31, 2024 was a combined result of our continuous expansion of customer base and changing of our sales mode. Our revenue (in thousands) by product for the six months ended March 31 is shown below:
Previous wording
Cost of revenue, net, was approximately $496 thousand and approximately $446 thousand for the three months ended December 31, 2023 and 2022, respectively. The approximately $50 thousand increase, or 11%, was due primarily to the increase of our robotics service revenue in 2023. Robotic service revenue has a higher margin comparing to other revenue streams.
Current wording
Cost of revenue, net, was approximately $982 thousand and approximately $908 thousand for the six months ended March 31, 2024 and 2023, respectively. The approximately $74 thousand increase, or 8%, was due primarily to the increase of our robotics service revenue in 2024. Robotic service revenue has a higher margin compared to other revenue streams.
Previous wording
Gross profit as a percentage of total revenue was approximately 61% for the three months ended December 31, 2023 compared to approximately 53% for the three months ended December 31, 2022. The increase in the gross profit percentage in 2023 was driven primarily by the occurrence and recognition of our robotic service revenue, which has a higher margin.
Current wording
Gross profit as a percentage of total revenue was approximately 57% for the six months ended March 31, 2024 compared to approximately 56% for the six months ended March 31, 2023.
Previous wording
Sales and marketing expenses were approximately $595 thousand and approximately $79 thousand for the three months ended December 31, 2023 and 2022, respectively. The increase of approximately $516, or 653%, in marketing costs was primarily due to our increased expenditure in large screen advertisement and social media marketing for our products in November and December 2023.
Current wording
Sales and marketing expenses were approximately $787 thousand and approximately $166 thousand for the six months ended March 31, 2024 and 2023, respectively. The increase of approximately $621 thousand, or 374%, in marketing costs was primarily due to our increased expenditure in large screen advertisement and social media marketing for our products in November and December 2023.
Previous wording
General and administrative expenses were approximately $1,443 thousand and approximately $767 thousand for the three months ended December 31, 2023 and 2022, respectively. The approximately $676 thousand increase, or 88%, was due primarily to an increase in professional service fees and related expenses to maintain a public company status.
Current wording
General and administrative expenses were approximately $2,464 thousand and approximately $1,586 thousand for the six months ended March 31, 2024 and 2023, respectively. The approximately $878 thousand increase, or 55%, was due primarily to an increase in professional service fees and related expenses to maintain a public company status.
Previous wording
Income tax benefit/(expense) were nil for both three months ended December 31, 2023, and 2022.
Current wording
Income tax benefit/(expense) were zero for both six months ended March 31, 2024, and 2023.
Previous wording
We believe that our existing cash as of the date of this Report will fund our current operating plans through at least the next twelve months from the date of this Report. Although we have operating cash outflows of $1,212 thousand for the three months ended December 31, 2023 and $1,237 thousand for the three months ended December 31, 2022, our working capital is in net asset position with $10,665 thousand as of December 31, 2023 and 4,092 thousand as of December 31, 2022. In addition, if needed, we expect to finance our future cash needs within the next twelve months from the date of this Report through founder investment, public or private equity or debt financings, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock, including shares of common stock sold in this offering.
Current wording
We believe that our existing cash as of the date of this Report will fund our current operating plans through at least the next twelve months from the date of this Report. Although we have operating cash outflows of $2,543 thousand for the six months ended March 31, 2024 and $,1,667 thousand for the six months ended March 31, 2023, our working capital is in net asset position with $9,500 thousand as of March 31, 2024 and $4,092 thousand as of September 30, 2023. In addition, if needed, we expect to finance our future cash needs within the next twelve months from the date of this Report through founder investment, public or private equity or debt financings, the Purchase Agreement, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock, including shares of common stock sold in this offering.
Previous wording
The following table summarizes our cash flow information (in thousands) for the three months ended December 31, 2023 and 2022, together with the dollar change in those items from period to period:
Current wording
The following table summarizes our cash flow information (in thousands) for six months ended March 31, 2024 and 2023, together with the dollar change in those items from period to period:
Previous wording
Net cash used in operating activities for the three months ended December 31, 2023 was approximately $1,212 thousand, primarily due to a net loss of approximately $2,748 thousand and an increase of approximately $1,536 thousand in net operating assets and liabilities. The cash flow impact from changes in net operating assets and liabilities was primarily driven by decreases in accounts receivable of approximately $2,432 thousand and inventory of approximately $167 thousand, partially offset by decreases in accounts payable of approximately $1,066 thousand.
Current wording
Net cash used in operating activities for the six months ended March 31, 2024 was approximately $2,543 thousand, primarily due to a net loss of approximately $3,868 thousand and an increase of approximately $1,325 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 $1,823 thousand and inventory of approximately $530 thousand, partially offset by the increase in accounts payable of approximately $969 thousand.
Previous wording
Net cash used in operating activities for the three months ended December 31, 2022 was approximately $1,237 thousand, primarily due to a net loss of approximately $1,202 thousand and a decrease of approximately $35 thousand in net operating assets and liabilities. The cash flow impact from changes in net operating assets and liabilities was primarily driven by increases in accounts receivable of approximately $284 thousand, and a decrease in accounts payable of approximately $127 thousand, tax payable of approximately $113 thousand, and current operating lease liabilities of approximately $108 thousand, partially offset by decrease in inventory of approximately $477 thousand, and increases in non-current operating lease liabilities of approximately $93 thousand.
Current wording
Net cash used in operating activities for the six months ended March 31, 2023 was approximately $1,667 thousand, primarily due to a net loss of approximately $1,879 thousand and an increase of approximately $212 thousand in net operating assets and liabilities. The cash flow impact from changes in net operating assets and liabilities was primarily driven by increases in inventory of approximately $584 thousand and an increase in and current operating lease liabilities of approximately $127 thousand, partially offset by decrease in accounts receivable of approximately $201 thousand, a decrease in accounts payable of $111 thousand, and decrease in tax payable of approximately $91 thousand.
Previous wording
Net cash used for investing activities was approximately $25 thousand and approximately $21 thousand for investing activities for the three months ended December 31, 2023 and 2022, respectively. These amounts consisted of sale of property and equipment and/or cash used for lending to related parties for both periods.
Current wording
Net cash used for investing activities was approximately $34 thousand and approximately $18 thousand for the six months ended March 31, 2024 and 2023, respectively. These amounts consisted of the cash used for lending to related parties slightly offset by sales of property in both periods.
Previous wording
Net cash provided by financing activities totaled approximately $8,339 thousand for the three months ended December 31, 2023. We raised approximately $9,286 thousand from issuance of ordinary shares, offset by approximately $152 thousand payment of related party debt and approximately $795 thousand payment of short-term loans.
Current wording
Net cash provided by financing activities totaled approximately $1,808 thousand for the six months ended March 31, 2023. We raised approximately $1,400 thousand from issuance of Class B common stock and obtained short-term loans with a net balance of $459 thousand from third parties, partially offset by approximately $51 thousand payment of related party debt.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net cash provided by financing activities totaled approximately $1,489 thousand for the three months ended December 31, 2022. We raised approximately $1,400 thousand from issuance of ordinary shares, and received proceeds of approximately $89 thousand from related party debt.