RICHTECH ROBOTICS INC. (RR)

CIK: 0001963685. SIC: 3569 General Industrial Machinery & Equipment, NEC. Latest 10-K as of: 2026-01-20.

SIC breadcrumb: Manufacturing > Industrial And Commercial Machinery And Computer Equipment > SIC 3569 General Industrial Machinery & Equipment, NEC

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1963685. Latest filing source: 0001213900-26-005343.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-01-20. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001963685.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001963685.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001213900-26-015097.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-02-12. Report date: 2025-12-31.

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:

Three Months ended

December 31,

2025

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:

Three Month ended

December 31,

2025

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

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-01-20. Report date: 2025-09-30.

ITEM 7. 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 Securities and Exchange Commission filings. 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” 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.

39

Key Business Highlights for Fiscal Year 2025

Fiscal year 2025 was a transformative period
for us, defined by the accelerated execution of our strategic shift toward a high-margin, recurring revenue business model.

Strategic and Operational Milestones

●

RaaS
Contract Acceleration: Successfully secured 55 RaaS contracts, demonstrating strong market
adoption of our RaaS model and validating the long-term strategy to build a high-quality,
predictable recurring revenue base.

●

Expansion
of Hospitality Management Segment (AlphaMax): Launched strategic initiatives under the AlphaMax
subsidiary, including deployment of robots in restaurants in partnered with Walmart stores.
Twofranchise agreements were secured during the period to kickstart this expansion.

●

New
Brand Launch (Clouffee & Tea): Established our first self-owned robotic restaurant brand,
Clouffee & Tea, which serves as a scalable franchise blueprint, a live platform for technological
testing, and a new growth channel, with the inaugural location opening in Las Vegas in early
2025.

●

Corporate
Restructuring and Infrastructure: The Company purchased a new corporate headquarters in Las
Vegas, Nevada, optimizing its long-term operational footprint and accommodating organizational
growth.

●

New Data Services: We have
launched a new suite of services focused on producing robotic training datasets and embodied AI development.

Financial and Capital Milestones

●

Total Revenue Growth: Achieved a 19% increase in total net revenue,
rising to $5,045 thousand for fiscal year 2025, despite the short-term revenue impact caused by the strategic shift to the RaaS model.

●

Gross Margin Expansion: Drove significant margin improvement with a
21.65% increase in Gross Profit, driven by our shift from one-time hardware sales to leasing and recurring revenue. Under the model, robots
are recognized as long-lived assets and depreciated over the lease term, resulting in a structurally higher gross margin profile compared
to the traditional one-time sale model.

●

Balance
Sheet Strengthening (Subsequent Event): Subsequent to September 30, 2025, the Company successfully
utilized its At-The-Market (“ATM”) offering program to raise $71.6 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.

●

Deleveraging
and Cost Optimization: Executed decisive corporate finance activities, resulting in an 89.1%
reduction in net interest expenses, primarily through the pay-down and conversion of high-interest
debt, significantly improving the Company’s structural cost of capital.

40

●

Continued Investment in Research
and Development: Richtech Robotics remains dedicated to innovation and technological advancement, as evidenced by the increase in research
and development expenses during fiscal year 2025. These investments are focused on expanding our product portfolio, enhancing existing
offerings, and maintaining our competitive edge in the dynamic robotics market.

●

Expansion of Sales and Marketing
Efforts: To support the RaaS model and drive customer acquisition, the Company has significantly increased its investment in sales and
marketing initiatives. These efforts are crucial for educating potential customers about the benefits of leasing robotics solutions,
building brand awareness, and cultivating new customer relationships.

Recent Developments

New Product Launch - Dex Humanoid Robot

October 28, 2025, we announced
Dex, our next-generation humanoid robot. Built on the NVIDIA Jetson Thor platform, Dex integrates a comprehensive suite of advanced AI
capabilities designed to transform the industrial workforce. With sophisticated perception and manipulation abilities, Dex can interact
with and operate in real-world environments, enabling it to perform tasks once considered too complex to automate.

Dex is expected to be deployment-ready
for industrial applications by mid-2026, and we anticipate that it will become a significant driver of the company’s future growth.

R&D Collaboration

Subsequent to September 30,
2025, we entered into a non-commercial technology collaboration agreement with Microsoft Corporation through the Microsoft AI
Co-Innovation Lab to support the evaluation and development of certain artificial intelligence workflows.

Subsequent Capital Raise – At-The-Market
Offering

Subsequent to September
30, 2025, we utilized our at-the-market offering program (the “September ATM”) to issue and sell an aggregate of 15,156,685
shares of Class B common stock, receiving aggregate gross proceeds of $71,622,886.31. A portion of such proceeds was generated through
a direct sale of shares to a large institutional investor under the September ATM. We intend to use the proceeds to accelerate the build-out
of our RaaS asset fleet.

Charter Amendment

On November 10, 2025, we filed an Articles of Amendment to our Articles
of Incorporation, as amended, with the Nevada Secretary of State to effect an increase the number of shares of Class B common stock that
we are authorized to issue from 200,000,000 to 1,000,000,000, effective upon filing.

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;

41

●

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.

●

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 re-evaluated
on a regular basis.

Comparison of the fiscal years ended September
30, 2025 and 2024

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

Year ended September 30,

2025

2024

Change

Revenue, net

$

5,045

$

4,240

$

805

Cost of revenue, net

1,756

1,520

236

Gross profit

3,289

2,720

569

Operating expenses:

Research and development

2,432

2,021

411

Sales and marketing

1,262

1,315

(53

)

General and administrative

17,539

6,457

11,082

Total operating expenses

21,233

9,793

11,440

Loss from operations

(17,944

)

(7,073

)

(10,871

)

Non-operating income(expense):

Investment Income

2,177

13

2,164

Interest expenses, net

(83

)

(762

)

679

Total other expenses

2,094

(749

)

2,843

Loss before income tax expense

(15,850

)

(7,822

)

(8,028

)

Income tax benefit/(expense)

(12

)

(318

)

306

Net loss

(15,862

)

(8,140

)

(7,722

)

Less: Net loss Attributable to Non-Controlling Interest

(108

)

-

(108

)

Net loss

$

(15,754

)

$

(8,140

)

$

(7,614

)

42

Revenue

Revenue, net, increased by
$805 thousand, or approximately 19.0%, from $4,240 thousand for the year ended September 30, 2024, to $5,045 thousand for the year ended
September 30, 2025.

This significant
full-year growth demonstrates the effectiveness of our ongoing strategic initiatives and indicates a successful ramp-up in the latter
half of the fiscal year. This performance is consistent with the anticipated long-term benefits of our strategic shift towards a leasing
and recurring revenue model, which is designed to build a more stable and predictable revenue foundation. The overall increase, despite
transitional challenges, reflects strong underlying customer demand for our robotics solutions.

The breakdown of revenue is as follows:

Year ended September 30,

2025

2024

Change

Product Sale

$

2,309

$

1,357

$

952

Leasing/Service/Rental

1,429

2,624

(1,195

)

RaaS

692

-

692

Other

615

259

356

Total

$

5,045

$

4,240

$

805

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, the Company fundamentally
shifted its 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 increase in Product Sale percentage
in fiscal 2025 was primarily attributable to occasional, non-recurring customer orders for earlier-generation delivery robotic systems,
which temporarily increased one-time product sales. This activity does not reflect a shift in our long-term revenue strategy.

Our long-term focus remains on expanding
recurring revenue through service, rental, and leasing arrangements. The relative decreases in Service/Rental Sale and Leasing percentages
in fiscal 2025 compared to fiscal 2024 were largely attributable to the impact of these non-recurring product sales and certain prior-year
revenue reclassifications. Excluding these items, underlying adoption of recurring arrangements continues to increase.

Detailed Revenue Streams and Recognition

The Company’s 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 2025 increase was driven by increased demand for new robot models and strategic inventory
management, but the mix will shift away from this stream as the RaaS model matures.

43

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 reflects the reclassified rental income from 2024. Organic growth is expected
to continue as the total installed unit base expands, increasing the high-margin service
revenue stream.

3. RaaS Revenue

●

Description:
Revenue from long-term operating agreements for the robotics fleet.

●

Recognition:
Recognized over the term of the lease agreement.

●

Impact:
While showing a reported decrease due to a prior-period reclassification adjustment, this
stream represents the primary long-term growth engine. Its accelerated adoption will drive
predictable, recurring revenue growth, which is 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 $602 thousand in total revenue in 2025. This revenue is non-robotics
related, and the performance of this segment is subject to factors impacting the broader
hospitality and restaurant industry.

Strategic Initiatives and Growth Channels

The following initiatives demonstrate
the Company’s active execution of its long-term growth and franchise model strategy:

Expansion of Robotic Restaurant Locations
in Walmart Stores

The Company is actively executing
a strategic plan to integrate its robotics technology into high-traffic retail environments through franchise agreements.

On October 17, 2024, the Company announced
plans to launch a total of 20 robotic restaurant locations within Walmart stores across the country. This initiative is designed to demonstrate
the scalability and reliability of our technology in a demanding, quick-service retail setting, thereby generating both recurring revenue
and acting as a high-visibility marketing platform. As of the date of this report, two locations within Walmart stores are currently
in operation. We intend to prudently evaluate the performance of these existing locations and, based on operating results, selectively
pursue potential collaboration opportunities at additional locations.

Clouffee & Tea Restaurant Brand

Clouffee & Tea is our first self-owned
restaurant brand, designed to showcase our robotics-as-a-service model directly to consumers. The concept seamlessly blends innovative
robotic technology with a vibrant coffee and tea culture to create an engaging customer experience.

Strategic Purpose:

●

Scalable
Franchise Blueprint: The robotic operation presents a uniquely scalable franchise model.
Clouffee & Tea will serve as a successful blueprint for integrating robotics into coffee
and tea shop operations, which the Company intends to replicate through future franchising
efforts.

●

Technological
Application and Iteration: Beyond redefining the beverage experience, Clouffee & Tea
functions as a dynamic platform for technological application. It allows us to utilize real-world,
high-volume scenarios for testing new robotic technologies and iterating on system performance.

●

Revenue
Growth Channel: The brand opens an additional revenue channel for the Company. Clouffee &
Tea opened its inaugural franchise store in Las Vegas, Nevada, in January 2025, adding another
dimension to our growth strategy and enhancing the recurring revenue profile of the AlphaMax
segment.

44

Cost of Revenue

Cost of revenue, net, increased
by $236 thousand, or approximately 15.5%, from $1,520 thousand in 2024 to $1,756 thousand in 2025. This increase was driven by an overall
increase in net revenue of $805 thousand and significant growth in Product Revenue.

Depreciation of Rental Assets:
For the fiscal year ended September 30, 2025, depreciation expense attributable to our RaaS fleet was $79 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 increased by
$569 thousand, or approximately 20.9%, from $2,720 thousand in 2024 to $3,289 thousand in 2025.

The resulting expansion of our gross margin
is a direct reflection of the full-year impact of the strategic shift to a RaaS model. By capitalizing the cost of leased assets rather
than recognizing them as immediate cost of goods sold, our gross margin profile has significantly improved, leading to a higher gross
profit despite the ongoing business model transition.

We anticipate that this
trend of improved gross margin will continue as the recurring revenue from our leasing portfolio matures. 

Research and Development Expenses

Research and development
(R&D) expenses increased by $411 thousand, or approximately 20.3%, from $2,021 thousand in 2024 to $2,432 thousand in 2025. This
increased investment demonstrates our commitment to maintaining technological leadership and fueling future growth. The increase is primarily
attributable to:

Increased Headcount and
Compensation: Higher personnel costs, including the hiring of specialized engineers, data scientists, and AI developers necessary to
support complex platform upgrades and new product development like ADAM and TITAN. We also undertook compensation adjustments to ensure
retention of key talent in a competitive market.

New Product Development
and Platform Upgrades: Significant expenses related to the development and successful launch of the DEX product line and substantial
core robotics platform enhancements. This includes costs for prototyping, testing environments, and integration of cutting-edge components.

Technology Licensing and
Infrastructure: Increased investment in new R&D equipment, advanced simulation software licenses, and expanded cloud computing services
necessary for concurrent and rapid product development cycles. This infrastructure spending is designed to shorten time-to-market for
future iterations.

Our sustained R&D investment
is critical to maintaining a long-term competitive advantage, driving product innovation, and expanding the functional capabilities of
our robotics fleet. 

Sales and Marketing Expenses

Sales and marketing (S&M)
expenses decreased by $53 thousand, or approximately 4.0%, from $1,315 thousand in 2024 to $1,262 thousand in 2025. This slight decrease,
despite an overall increase in net revenue, is primarily the result of:

Strategic Shift Efficiency:
A reduced need for high-cost, upfront sales campaigns typically associated with achieving single large product sales. Resources were
strategically reallocated to focus on the lower-cost, recurring customer acquisition model required for leasing. The marketing focus
shifted from volume-based lead generation to quality, relationship-based lead nurturing.

45

Marketing Optimization and
Digital Focus: Successful optimization of digital marketing channels, yielding better results at a lower cost-per-acquisition. We reduced
expenditures on less effective traditional advertising formats while increasing investment in targeted digital platforms and content
marketing efforts, resulting in a more efficient spend.

We anticipate S&M expenses
to remain relatively stable as a percentage of revenue in the near term as we balance recurring revenue growth with the need for efficient
new customer acquisition. 

General and Administrative Expenses

General and administrative
(G&A) expenses increased dramatically by $11,082 thousand, or approximately 171.6%, from $6,457 thousand in 2024 to $17,539 thousand
in 2025. This significant surge is primarily attributed to non-recurring and foundational investments required to transition the Company
into a scalable public enterprise:

●

Public
Company Readiness and Compliance Costs: The increase primarily reflects incremental legal,
audit, and consulting costs associated with ongoing SEC reporting, SOX compliance, and expanded
internal control requirements as a public company.

●

Increased
D&O Insurance Premiums: We incurred a material increase in premiums for our Directors
and Officers (D&O) liability insurance. This increase reflects broader market pricing
trends for newly public companies and the necessity of securing higher coverage limits to
attract and retain qualified independent directors. We expect these premium costs to remain
a recurring component of our operating expenses.

●

Expanded
Infrastructure and Staffing: A large portion of the expenditure supported essential corporate
infrastructure expansion and personnel scaling. This includes costs related to the purchase
of the new corporate headquarters and the subsequent move, which incurred significant one-time
expenses for facility build-out, IT integration, and relocation services. Crucially, the
increase reflects the necessary expansion of the back-office staff—specifically Finance,
Legal, and Human Resources—to support the increased complexity of public reporting
and the accelerated growth rate of the business, particularly the compliance demands of the
leasing portfolio.

Investment Income

Investment income increased
from $13 thousand in fiscal 2024 to $2,177 thousand in fiscal 2025, primarily due to higher average cash and investment balances resulting
from funds received through various financing transactions, as discussed in Liquidity and Capital Resources.

Other Income (Expense)

Interest expense, net, decreased
from $762 thousand in fiscal 2024 to $83 thousand in fiscal 2025, primarily due to the repayment of outstanding interest-bearing debt
during the fiscal year.

Income Tax Benefit/(Expense)

Income
tax expense for the year was $12 thousand, compared to an income tax expense of $318 thousand in 2024, this
is primarily driven by the removal of deferred tax benefits in 2024, management determined that it is more likely than not that the Company
will be unable to realize the benefits of these deductible temporary differences in the future.

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 September 30, 2025, our cash and cash equivalents
totaled $193.6 million. This represents a significant 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 $219.8 million received from issuance of shares of Class
B common stock, and the net proceeds of $16.3 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.

During the fiscal year ended
September 30, 2025, the Company raised capital through three at-the-market offering agreements. On May 16,
2025, the Company entered into the May ATM Agreement with Rodman & Renshaw LLC, H.C. Wainwright & Co., LLC, and BTIG, LLC. Under this
agreement, the Company issued and sold 45,636,983 shares of Class B common stock, generating gross proceeds of $99,998,023.72. On August
28, 2025, the Company entered into the August ATM Agreement with Rodman & Renshaw LLC and H.C. Wainwright & Co., LLC, which effectively
replaced the May ATM Agreement. The Company issued and sold 27,322,000 shares of Class B common stock under this agreement, generating
gross proceeds of $99,995,480.96. On September 23, 2025, the Company entered into the September ATM Agreement with Rodman & Renshaw
LLC and H.C. Wainwright & Co., LLC for an aggregate offering price of up to $1.0 billion. During the fiscal year ended September
30, 2025, the Company issued and sold 6,282,472 shares under this agreement, generating gross proceeds of $26,773,037.95. For more information on the at-the-market offering agreements, please see “ITEM 1. Business –
Material Contracts – ATM Agreements.”

46

Comparison of the years ended September 30,
2025 and 2024

The following table summarizes
our cash flow information (in thousands) for the years ended September 30, 2025 and 2024, together with the dollar change in those items
from period to period:

Year ended September 30,

2025

2024

Change

Net Cash provided by (used in):

Operating activities

$

(9,043

)

$

(5,060

)

(3,983

)

Investing activities

$

(47,996

)

(22,731

)

(25,265

)

Financing Activities

$

236,102

41,923

194,179

Net increase (decrease) in cash

$

179,063

$

14,132

164,931

Operating Activities

Net cash used in operating
activities for the year ended September 30, 2025 was $9,043 thousand, primarily driven by a net loss of $15,754 thousand, partially offset
by non-cash charges of $6,043 thousand and a net change in operating assets and liabilities of $668 thousand. Non-cash charges primarily
included $2,319 thousand of depreciation and amortization, $2,635 thousand of professional service expenses, and $1,089 thousand of incentive
compensation settled in shares of common stock. The cash flow impact from changes in net operating assets and liabilities was mainly driven
by an increase in accrued expenses and other payable of $1,280 thousand, which was significantly offset by increases in accounts receivable
of $421 thousand, inventory of $232 thousand, and prepaid expenses and other current assets of $396 thousand.

Net cash used in
operating activities for the year ended September 30, 2024 was $5,060 thousand, primarily due to a net loss of $8,140 thousand
partially offset by increase of $3,080 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 $4,218 thousand, deferred tax asset of
$518 thousand and operating lease liabilities of $202 thousand, partially offset by decreases in accounts payable of $976 thousand,
tax payable of $456 thousand, right-of-use asset of $191 thousand and increase in inventory of $326 thousand respectively.

Investing Activities

Net cash used for investing
activities was $47,996 thousand for the year ended September 30, 2025, primarily driven by $41,975 thousand on purchase of short-term
investments, $5,009 thousand on purchase of property and equipment, and $591 thousand on purchase of intangible assets.

Net cash used for investing
activities was $22,731 thousand net cash used for investing activities for year ended September 30, 2024, primarily driven by $15,940
thousand on purchase of short-term investments, $5,470 thousand on purchase of intangible assets, $730 thousand on purchase of long-term
investments and $725 thousand on purchase of equipment.

Financing Activities

Net cash provided by financing activities totaled $236,102 thousand
for the year ended September 30, 2025, mainly due to $219,808 thousand from issuance of ordinary shares and $16,266 thousand from proceeds
from warrants exercise.

Net cash provided by financing activities totaled $41,924 thousand
for the year ended September 30, 2024. We received $39,468 thousand from issuance of common stock, which included $9,286 thousand from
our initial public offering, received loans with a net balance of $3,102 from third parties, offset by $3,792 payment of loans received
from third parties and $238 thousand payment of related party debt.

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.

47

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 Form 10-K 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 Form 10-K 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.