RICHTECH ROBOTICS INC. 10-K

ITEM 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures In connection with the preparation of this Report, our management conducted an assessment of the effectiveness of our internal controls over financial reporting as of the end of the period covered by this report (under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”)). Based on that assessment, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were effective. Management’s Annual Report on Internal Controls over Financial Reporting Our internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO and effected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of our Board and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Under the supervision and participation of our management, including our CEO, we evaluated the effectiveness of our internal control over financial reporting based on the framework set forth in Internal Control - Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. As part of our assessment of the effectiveness of our internal control over financial reporting as of September 30, 2024, management has performed adequate testing to conclude that the material weakness identified in the prior fiscal year has been remediated as of September 30, 2024. Management had identified a material weakness in the prior year related to the Company’s IT general controls over third-party information systems and applications. This material weakness was related to: ● Complementary User Entity Controls: Controls were not fully documented responding to all of the Complementary User Entity Controls forwarded through Software as a Service vendor audit reports in the design and implementation of suggested controls. ● Information Produced by the Entity (IPE): There were not always appropriate IT controls related to information produced by the entity (IPE), including spreadsheets, that are relevant to the preparation of our consolidated financial statements. Management has taken the following actions to remediate this material weakness: ● Robust Controls for SaaS Reports: Established more specific controls to effectively address Complementary User Entity Controls arising from SaaS vendor audits. ● Enhanced IT Governance: Expanded management oversight and controls within our IT systems. ● Improved Access Management: Implemented a role-based access control system for all IT systems, including regular reviews of user access rights and timely removal of access for terminated employees. This ensures that only authorized personnel have access to sensitive financial data. These remediation actions have been in place for a sufficient period of time, and management has performed adequate testing to conclude that the material weakness has been remediated as of September 30, 2024. This Report does not include an attestation report of our internal controls from our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act. 49 Ongoing Monitoring Management recognizes the importance of ongoing monitoring and continuous improvement of our internal control over financial reporting. We have established a process for regularly evaluating the effectiveness of our controls, including periodic self-assessments, internal audits, and ongoing monitoring activities. This process allows us to identify and address any emerging risks or control deficiencies in a timely manner. Changes in Internal Control over Financial Reporting During the fiscal year ended September 30, 2024, the Company underwent a significant transition as it became a publicly traded company. As a private company, we were not previously subject to the Sarbanes-Oxley Act of 2002, including the requirements for management’s assessment of internal control over financial reporting. To comply with these new requirements, we have undertaken substantial efforts to develop and implement a comprehensive system of internal control over financial reporting in accordance with the 2013 Committee of Sponsoring Organizations of the Treadway Commission framework. These efforts included: ● Documentation of key controls: We have documented our significant processes and controls, including those related to financial reporting, IT systems, and operational activities. ● Implementation of new controls: We have implemented new controls to address areas where deficiencies were identified, particularly in IT general controls and the use of spreadsheets in financial reporting. This includes enhanced controls over SaaS applications, improved IT governance, and increased data accuracy procedures. ● Testing of controls: We have performed testing of our controls to evaluate their design and operating effectiveness. While we believe that significant progress has been made in strengthening our internal control over financial reporting, these efforts are ongoing. We continue to evaluate and enhance our control environment to ensure its effectiveness and adaptability as the company grows and evolves. Inherent Limitations on Internal Controls Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. ITEM 9B. Other Information Not Applicable. ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections Not Applicable. 50 PART III ITEM 10. Directors, Executive Officers and Corporate Governance Listed below are the names of the directors and executive officers of the Company, their ages as of the date of this Annual Report, their positions held and the year they commenced service with the Company. Name Age Title Zhenwu (Wayne) Huang 48 Chief Executive Officer and Director Zhenqiang (Michael) Huang 46 Chief Financial Officer and Director Phil Zheng 31 Chief Operating Officer Matthew G. Casella 46 President John Shigley 68 Director Stephen Markscheid 70 Director Saul Factor 65 Director Biographies of Executive Officers and Directors Mr. Zhenwu (Wayne) Huang has served as our Founder, Chief Executive Officer and director since the founding of the Company in July 2016. Mr. Huang has 20 years of experience leading corporations across multiple technology industries. Mr. Huang directs the core focus of the company, formulates and implements business policies through the Company’s management team, and directly oversees R&D operations. He served as co-founder and Chief Executive Officer of Nanjing Rich Digital Technology Co. Ltd. from 2003 to 2007, a leading value-add service provider for telecommunications. There, he pioneered live interactive TV games based on smart computer vision. and had a peak audience of over 100 million subscribers. This success can be attributed to Mr. Huang’s understanding of customer centric design, utilizing technology to elevate the customer experience. Mr. Huang served was the co-founder and Chief Executive Officer of Richtech System Ltd. from 2007 to 2016, a global supplier of smart hardware and interactive multimedia systems to over 120 countries. Mr. Huang received a Bachelor in Computer Information Management from Huadong Finance and Economics College in July 2000. We believe that Mr. Huang’s extensive knowledge of our Company as co-founder and his experience in executive roles across multiple industries make him qualified to serve on our Board. Mr. Zhenqiang (Michael) Huang has served as our co-founder, Chief Financial Officer and director since the founding of the Company in July 2016. He oversees the functions relating to finance, accounting, reporting and procurement. Mr. Huang was co-founder of Nanjing Rich Digital Technology Co. Ltd. from 2003 to 2007 where he oversaw international cooperation and partnerships. He served as co-founder and Chief Financial Officer of Richtech System Ltd. from 2007 to 2016, leading the company on its international expansion and business development. Mr. Huang holds a management training certificate from the Federal Ministry of Economics and Technology of Germany since 2012. He received his Bachelor’s Degree in Economics from Nanjing University in June 2000. We believe that Mr. Huang’s extensive knowledge of our Company as co-founder and his experience in finance and international business development make him qualified to serve on our Board. Mr. Phil Zheng has served as our Chief Operating Officer since February 2020. He oversees the operations of the Company, including business development, marketing, product design, R&D process, market research, compliance, administration of standardized operating procedures, customer relations, and partnerships. Prior to that, he served as the Company’s Director of Operations from July 2017 to January 2019 and Chief Revenue Officer from February 2019 to January 2020, where he was tasked to build and scale company departments into effective business units and direct sales revenues strategies. He has a Bachelor of Arts from the University of California, Los Angeles, and a Juris Doctor from the University of California, Irvine, School of Law. We believe Mr. Zheng’s extensive knowledge of the Company’s internal operations qualifies him to be our Chief Operating Officer. Mr. Matthew G. Casella has served as our President since August 2023. He has over 20 years of diverse experience in finance, hospitality, and technology. He has a proven track record in project management, strategic planning, and financial analysis. As a Co-Founder of Caravive, Inc. (from 2019 to 2023), an early-stage food tech development company, he collaborated with a diverse team of industry experts to explore and develop innovation in the restaurant sector. From 2015 to 2021, he served as CFO at PRG, LLC, a restaurant automation startup. From 2012 to 2015, he served as the Director of Training and Deployment at LYFE Kitchen, a restaurant chain, where he played an important role in growing the restaurant chain from one to 16 locations in under three years opening restaurants in New York, Tennessee, Chicago, Colorado, Texas and California. Mr. Casella received his Bachelor of Science degree in Finance from the University of Illinois Urbana-Champaign in 2001. 51 Mr. John Shigley joined our board of directors as an independent director in November 2023. Mr. Shigley is a retired Nevada certified public accountant with over 30 years of executive experience in large casino-hotels. Mr. Shigley has held various positions in finance, marketing and operations, including Chief Financial Officer of Primadonna Resorts (1998 to 2000), President of Caesars Palace (2000 to 2001), Executive Vice President of New York, New York Hotel and Casino in Las Vegas (2002 to 2005), Executive Vice President (2005 to 2011) and Chief Financial Officer (2005 to 2008) of MGM Grand Hotel Las Vegas, President of MGM Vietnam (March 2011 to April 2013), Executive Vice President of MGM Macau (May 2013 to January 2014) and Chief Operating Officer of Gaming for MGM China (January 2014 to February, 2019). Mr. Shigley received his B.S. in Accountancy from Northern Illinois University and spent his early career with a large international certified public accounting firm. We believe that Mr. Shigley’s experience in financial and operational management and his established network in the hospitality industry make him a qualified candidate to serve on our Board. Mr. Stephen Markscheid joined our board of directors as an independent director in November 2023. Mr. Markscheid has been the Managing Partner of Aerion Capital, a family office, since July 2022. He currently serves as independent non-executive director of four other publicly listed companies: Jinko Solar Inc. (NYSE: JKS), a solar panel manufacturer (since 2010); ConnectM Technology Solutions, Inc. (Nasdaq: CNTM), a technology company (since July 2024); Four Leaf Acquisition Corporation (Nasdaq: FORL), a special purpose acquisition company (since 2023); Charlton Aria Acquisition Corporation (Nasdaq: CHARU), a special purpose acquisition company (since October 2024); and Shepherd Avenue Acquisition Corporation (Nasdaq: SPHAU), a special purpose acquisition company (since December 2024). Mr. Markscheid previously served as a director on numerous public boards including Cenntro Inc. (Nasdaq CENN), an electric vehicle manufacturer from 2023 to 2024, UGE International (XTSX:UGE), a solar installation company from August 2019 to July 2023, Fanhua, Inc. (Nasdaq: FANH), a financial services provider from 2007 to 2024, Kingwisoft Technology Services Ltd. (HKSE: 8295.HK), an information technology company from 2016 to 2024, and several special purpose acquisition companies. He is also a trustee emeritus of Princeton-in-Asia. From 1998 to 2006, he worked for GE Capital. During his time with GE Capital, Mr. Markscheid led GE Capital’s business development activities in China and Asia Pacific, primarily acquisitions and direct investments. Prior to GE Capital, Mr. Markscheid worked with the Boston Consulting Group throughout Asia. He was a banker for ten years in London, Chicago, New York, Hong Kong and Beijing with Chase Manhattan Bank and First National Bank of Chicago. Mr. Markscheid began his career with the US-China Business Council, in Washington D.C. and Beijing. He earned a BA in East Asian Studies from Princeton University in 1976, an MA in international affairs from Johns Hopkins University in 1980, and an MBA from Columbia University in 1991, where he was class valedictorian. We believe that Mr. Markscheid’s extensive experience serving on public boards and working with technology companies makes him a qualified candidate to serve on our Board. Mr. Markscheid was a consolidated defendant in his capacity as a director of ChinaCast Education Corporation (“ChinaCast”) in a securities lawsuit filed on May 2, 2012 in the U.S. District Court for the Central District of California, alleging misrepresentation of ChinaCast’s financial conditions and its failure to disclose cash transfers of $120 million to certain officers and directors of ChinaCast. On November 8, 2016, the district court ruled in favor of the class action plaintiffs, finding ChinaCast was liable for $65.8 million. On August 25, 2014, a securities complaint alleging similar violations was also filed in the Delaware Court of Chancery (the “Chancery Court”) by ChinaCast, where Mr. Markscheid was named a third-party defendant. On March 23, 2015, the Chancery Court entered a judgment in favor of the plaintiff, ordering a former director of ChinaCast with damages of $183.3 million caused by breach of fiduciary duty. The former director filed a third party complaint against the other directors, including Mr. Markscheid, which was settled in December 2022. Mr. Markscheid was a defendant in his capacity as a director of JinkoSolar Holding Co. Ltd. (“JinkoSolar”) in a class action securities lawsuit filed in October 2011. The plaintiff alleged the JinkoSolar directors of making materially false and misleading statements regarding its compliance with environmental regulations. The case was settled in March 2016. Mr. Markscheid was a defendant in his capacity as a director of China Integrated Energy, Inc. (“CBEH”) in a class action securities lawsuit filed on June 30, 2011, where the president, officers, directors of CBEH were alleged to have disseminated materially misleading statements and failed to disclose material information concerning the CBEH’s true financial condition and business prospects (“CBEH June 2011 Case”). Mr. Markscheid was also a defendant in his capacity as a director of CBEH in a class action securities lawsuit filed on July 8, 2011, where the officers of CBEH were alleged to have made improper statements regarding its financial results and business operations, caused it to enter into non-accretive acquisitions for entities that they knew were overvalued, failed to implement an effective system of internal and financial controls, and obstructed the CBEH’s audit committee’s independent investigation (“CBEH July 2011 Case”). CBEH June 2011 Case and CBEH July 2011 Case were later consolidated, which was settled in December 2015. 52 Mr. Saul Factor joined our board of directors as an independent director in November 2023. Mr. Factor has over 20 years of experience as a healthcare and pharmaceuticals executive, with experience driving business operations across various countries around the world. Mr. Factor currently serves as president of Factor Healthcare Consulting, a pharmaceuticals consulting company, which he founded in 2020. Prior to that, he served in various roles at different pharmaceuticals and healthcare companies, including serving as president of Smith Drug Company (2017 to 2020), where he directed marketing, sales, operations, and financial functions; executive vice president of strategy at Accord Healthcare (2016 to 2017); president of global sourcing & procurement and senior vice president of Global Generics at McKesson Corporation (2006 to 2016); chief operating officer at RX America, LLC (2003 to 2006); and B2B Brand Manager and Leader at Eli Lily & Company (2000 to 2003). Mr. Factor received a Bachelor of Science in Pharmacy from Northeastern University and a Master of Business Administration (MBA) from the University of New Haven. We believe that Mr. Factor’s executive leadership experience and specialty in fostering corporate growth make him a qualified candidate to serve on our Board. Our Advisory Board We have an Advisory Board comprised of the following individuals: Name Age Title Yman Vien 64 Advisory Board Nominee Dr. Lingyun Gu 47 Advisory Board Nominee Dr. Darryl T. Jenkins 62 Advisory Board Nominee Michael Roberts 73 Advisory Board Nominee The following sets forth certain biographical information with respect to the members of our Advisory Board: Ms. Yman Vien , an advisor of the Company, is a business consultant and financial advisor with 30 years of banking industry experience. Recognized by the American Bankers Association, she has served as Vice President Business Banker at Lakeside Bank where she was responsible for developing new business for deposits and lending activities, managing customer portfolios, and expanding other banking products and services relationships. For 30 years, Ms. Vien worked in the banking industry in various positions including auditor, accountant, president and chief executive officer at local Chicago community banks. Most recently, from 2015 to current, Ms. Vien serves as President at Lotus Financial Partners, which provides financial consulting services to local developers and business owners for raising private funding and obtaining bank financing for real estate development projects. Same time from 2021, Ms. Vien has helped to start an Adult Day Care Service center and In-Home Service programs to seniors. Ms. Vien also served as trustee and treasurer for Ravenswood Health Care Foundation from 2007 to 2018. Ms. Vien received her Bachelor’s Degree in Business Administration Managerial Accounting from Loyola University in 1985. She also received a diploma from the Graduate School of Banking, University of Wisconsin in 2000. She holds real estate and insurance licenses. She is the co-founder and current board member of Chinese Mutual Aid Association, a not for profit organization serving refugees and immigrants in Chicago since 1981. Dr. Lingyun Gu , an advisor of the Company, focuses on the fields of AI, machine learning, and big data, he has published dozens of papers in international journals and has at least 15 invention patents in the United States and China. At the same time, he also has senior leadership experience in building AI companies, as well as TMT investment experience in VC companies, which enables him to combine academic research with business practice. He holds a PhD in School of Computer Science from Carnegie Mellon University. 53 Dr. Darryl T. Jenkins , an advisor of the Company, is a business executive with 30+ years of professional experience building multiple products and companies. He is an experienced senior leader with a history of working in project management, diversity, equity and inclusion, marketing, sales, organizational leadership and information technology. Dr. Jenkins has extensive experience working with non-profit organizations, health care systems, and providers to promote greater health equity through education and research, with a focus in areas of chronic conditions. Dr. Jenkins currently serves as the President of the Judson University Board of Trustees of Elgin, Illinois and CEO of DLJ Consulting Group, a professional consulting firm working in corporate and non-profit sectors in Polarity Thinking™. He has held key leadership positions with Fortune 500 Companies and has led diverse information technology teams and network engineers in national and international project deployments, advanced systems and software integrations. Dr. Jenkins is also a published author. Dr. Jenkins has served on various public and private boards of directors. Dr. Jenkins holds a Bachelor’s Degree from the University of Illinois Chicago, a Masters and Doctorate degrees from Northern Seminary, Lisle, Illinois. Michael Roberts , an advisor of the Company, is currently the President of Westside Holdings LLC, a marketing and brand development company since 2006, and the former Global President and Chief Operations Officer for McDonald’s Corporation (NYSE: MCD) (2004 to 2006), where he also served on the Board of Directors. As Global President for McDonald’s, Mr. Roberts was responsible for more than 31,000 restaurants in 118 countries. Before assuming this position in 2004, his previous positions at McDonald’s Corporation included Chief Executive Officer, McDonald’s USA (2001 to 2004); and President, West Division, McDonald’s USA (1997 to 2001). Mr. Roberts was the Co-Founder of LYFE Kitchen restaurants, where he created a transformational, socially responsible “lyfestyle” brand whose acronym stands for Love Your Food Everyday. In 2009, Mr. Roberts was the Vice Chairman and a Board Member of the Chicago 2016 Olympic Committee. He was responsible for overseeing marketing and communications activities for the bid from the board level. In addition, he was also active in areas of sponsorship, advertising, grassroots marketing and building the bid’s national and international presence in support of Chicago’s candidacy. Mr. Roberts is also on the Board of Directors of Lumen Technologies (NYSE: LUMN) (since 2011), a telecommunications company, and a former board member of W.W. Grainger, Inc. (NYSE: GWW), where he also served as Chair of the Compensation Committee and as a member of the Board Affairs and Nominating Committee. and of Lumen Technologies (f/k/a CenturyLink), where he also served as a member of the Nominating and Corporate Governance Committee. Mr. Roberts received his undergraduate degree from Loyola University of Chicago. Family Relationships There are no family relationships between or among any of the current directors, executive officers or persons nominated or charged to become directors or executive officers, except that Mr. Zhenqiang (Michael) Huang and Mr. Zhenwu Huang are brothers. Board Composition Our business and affairs are organized under the direction of our board of directors, which consists of five (5) members. Our directors hold office until the earlier of their death, resignation, removal, or disqualification, or until their successors have been elected and qualified. Our board of directors does not have a formal policy on whether the roles of Chief Executive Officer and chairman of our board of directors should be separate. The primary responsibilities of our board of directors are to provide oversight, strategic guidance, counseling, and direction to our management. Our board of directors meets on a regular basis. In addition, in accordance with the terms of our second amended and restated articles of incorporation and amended and restated bylaws, our board of directors is divided into three (3) classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. The term of office of the first class of directors, which consists of Stephen Markscheid, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, which consists of Saul Factor and John Shigley, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, which consists of Zhenwu Huang and Zhenqiang Huang, will expire at the third annual meeting of stockholders. We expect that any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control. 54 Our second amended and restated articles of incorporation and second amended and restated bylaws provide that the authorized number of directors may be changed only by resolution of our board of directors. Our second amended and restated articles of incorporation and second amended and restated bylaws also provide that our directors may be removed only for cause, and only by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the total voting power of the outstanding shares of capital stock of the Company entitled to vote in the election of directors, voting together as a single class, and that any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office. Director Independence The Nasdaq Marketplace Rules require a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, the Nasdaq Marketplace Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. Under Rule 5605(a)(2) of the Nasdaq Marketplace Rules, a director will only qualify as an “independent director” if, in the opinion of our board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 of the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. 55 Our board of directors has reviewed the composition of our board of directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that each of John Shigley, Stephen Markscheid and Saul Factor is an “independent director” as defined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules and that John Shigley, Stephen Markscheid and Saul Factor are “independent directors.” Our board of directors also determined that John Shigley, Stephen Markscheid and Saul Factor, who are members of our audit committee, Stephen Markscheid and Saul Factor, who are members of our compensation committee, and Stephen Markscheid and Saul Factor, who are members of our nominating and corporate governance committee, satisfy the independence standards for such committees established by the SEC and the Nasdaq Marketplace Rules, as applicable. In making such determinations, our board of directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director. Board Committees Our board of directors has established three standing committees — audit, compensation and nominating and corporate governance — each of which operates under a charter that has been approved by our board of directors. Copies of each committee’s charter are posted on the Investor Relations section of our website, which is located at www.richtechrobotics.com . Each committee has the composition and responsibilities described below. Our board of directors may from time to time establish other committees. Audit Committee Our audit committee consists of John Shigley, who is the chair of the audit committee, Stephen Markscheid and Saul Factor. Our board of directors has determined that each of the members of our audit committee satisfies the Nasdaq Marketplace Rules and SEC independence requirements. The functions of this committee include, among other things: ● evaluating the performance, independence and qualifications of our independent auditors and determining whether to retain our existing independent auditors or engage new independent auditors; ● reviewing and approving the engagement of our independent auditors to perform audit services and any permissible non-audit services; ● reviewing our annual and quarterly financial statements and reports, including the disclosures contained under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and discussing the statements and reports with our independent auditors and management; ● reviewing with our independent auditors and management significant issues that arise regarding accounting principles and financial statement presentation and matters concerning the scope, adequacy and effectiveness of our financial controls; ● reviewing our major financial risk exposures, including the guidelines and policies to govern the process by which risk assessment and risk management is implemented; and ● reviewing and evaluating on an annual basis the performance of the audit committee, including compliance of the audit committee with its charter. Our board of directors has determined that John Shigley qualifies as an “audit committee financial expert” within the meaning of applicable SEC regulations and meets the financial sophistication requirements of the Nasdaq Marketplace Rules. In making this determination, our board has considered extensive financial experience and business background. Both our independent registered public accounting firm and management periodically meet privately with our audit committee. 56 Compensation Committee Our compensation committee consists of Stephen Markscheid, who is the chair of the compensation committee, and Saul Factor. Our board of directors has determined that each of the members of our compensation committee is an outside director, as defined pursuant to Section 162(m) of the Code, and satisfies the Nasdaq Marketplace Rules independence requirements. The functions of this committee include, among other things: ● reviewing, modifying and approving (or if it deems appropriate, making recommendations to the full board of directors regarding) our overall compensation strategy and policies; ● reviewing and approving the compensation, the performance goals and objectives relevant to the compensation, and other terms of employment of our executive officers; ● reviewing and approving (or if it deems appropriate, making recommendations to the full board of directors regarding) the equity incentive plans, compensation plans and similar programs advisable for us, as well as modifying, amending or terminating existing plans and programs; ● reviewing and approving the terms of any employment agreements, severance arrangements, change in control protections and any other compensatory arrangements for our executive officers; ● reviewing with management and approving our disclosures under the caption “Compensation Discussion and Analysis” in our periodic reports or proxy statements to be filed with the SEC; and ● preparing the report that the SEC requires in our annual proxy statement. Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Saul Factor, who is the chair of the compensation committee, and Stephen Markscheid. Our board of directors has determined that each of the members of this committee satisfies the Nasdaq Marketplace Rules independence requirements. The functions of this committee include, among other things: ● identifying, reviewing and evaluating candidates to serve on our board of directors consistent with criteria approved by our board of directors; ● evaluating director performance on the board and applicable committees of the board and determining whether continued service on our board is appropriate; ● evaluating, nominating and recommending individuals for membership on our board of directors; and ● evaluating nominations by stockholders of candidates for election to our board of directors. The compensation committee will take into account may factors in determining recommendations for persons to serve on the board of directors, including the following: ● personal and professional integrity, ethics and values; ● experience in corporate management, such as serving as an officer or former officer of a publicly-held company; ● experience as a board member or executive officer of another publicly-held company; ● strong finance experience; ● diversity of expertise and experience in substantive matters pertaining to our business relative to other board members; ● diversity of background and perspective including, without limitation, with respect to age, gender, race, place of residence and specialized experience; ● experience relevant to our business industry and with relevant social policy concerns; and ● relevant academic expertise or other proficiency in an area of our business operations. 57 Attendance There were eight (8) meetings, exclusive of action by unanimous written consent, of the board of directors held during fiscal year 2024. Each of our directors attended all of the meetings of the board of directors held during fiscal year 2024, while such director was a member of the board of directors. There were four (4) meetings, exclusive of action by unanimous written consent, of the Audit Committee held during fiscal year 2024. Each of the committee members attended all of the meetings of the Audit Committee held during fiscal year 2024 while such committee member served on the Audit Committee. There was one (1) meeting, exclusive of action by unanimous written consent, of the Compensation Committee held during fiscal year 2024. Each of the committee members attended such meeting of the Compensation Committee held during fiscal year 2024. There were zero (0) meetings, exclusive of action by unanimous written consent, of the Nominating and Corporate Governance Committee held during fiscal year 2024. Director Attendance at Annual Meeting of Stockholders We do not have a formal policy regarding the attendance of our board members at our annual meetings of stockholders, but we expect all directors to make every effort to attend any meeting of stockholders. Role of Board in Risk Oversight Process Our co-founder and Chief Executive Officer, Zhenwu (Wayne) Huang, beneficially owns approximately 64.28% of the voting power of our common stock as of December 31, 2024. Periodically, our board of directors assesses these roles and the board of directors leadership structure to ensure the interests of the Company and our stockholders are best served. Our board of directors has determined that its current leadership structure is appropriate. Zhenwu (Wayne) Huang, as one of our founders and as our Chief Executive Officer, has extensive knowledge of all aspects of the Company, our business and risks. While management is responsible for assessing and managing risks to the Company, our board of directors is responsible for overseeing management’s efforts to assess and manage risk. This oversight is conducted primarily by our full board of directors, which has responsibility for general oversight of risks, and standing committees of our board of directors. Our board of directors satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within our company. Our board of directors believes that full and open communication between management and the board of directors is essential for effective risk management and oversight. Compensation Committee Interlocks and Insider Participation None of our executive officers serves, or in the past has served, as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of our board of directors or our compensation committee. None of the members of our compensation committee is, or has ever been, an officer or employee of our company. 58 Code of Business Conduct and Ethics We have adopted a written code of business conduct and ethics that applies to our employees, officers and directors. A current copy of the code is posted on the Corporate Governance section of our website, which is located at www.richtechrobotics.com . We intend to disclose future amendments to certain provisions of our code of business conduct and ethics, or waivers of such provisions applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and our directors, on our website identified above or in filings with the SEC. Insider Trading Policy We have adopted a formal policy against insider trading which provides guidelines to all of our directors, officers, employees, and consultants with respect to trading in our securities, as well as the securities of publicly traded companies with whom we have a business relationship. This policy has been designed to prevent insider trading or even allegations of insider trading. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors, executive officers and ten percent stockholders to file initial reports of ownership and reports of changes in ownership of our common stock with the Commission. Directors, executive officers and ten percent stockholders are also required to furnish us with copies of all Section 16(a) forms that they file. Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that during the year ended September 30, 2024, all reports applicable to our executive officers, directors and greater than 10% beneficial owners were filed in a timely manner in accordance with Section 16(a) of the Exchange Act, except as set forth below: ● King Bliss Limited, a ten percent stockholder, failed to timely file its Form 4 once. ● John Shigley, a director, failed to timely file its Form 4 once. ● Stephen Markscheid, a director, failed to timely file its Form 4 once. ● Saul Factor, a director, failed to timely file its Form 4 once. ITEM 11. Executive Compensation This section discusses the material components of the executive compensation program for our named executive officers for the years ended September 30, 2024 and 2023. Individuals we refer to as our “named executive officers” include our Chief Executive Officer and our two other most highly compensated executive officers whose salary and bonus for services rendered in all capacities exceeded $100,000 during the fiscal year ended September 30, 2024. Our named executive officers are: ● Zhenwu (Wayne) Huang Chief Executive Officer ● Matthew Casella President ● Phil Zheng Chief Operating Officer 59 Summary Compensation Table The following table presents the compensation awarded to or earned by or paid to our named executive officers during the fiscal years ended September 30, 2024 and 2023. Name and Principal Position Year (FY) Salary ($) Bonus ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Zhenwu (Wayne) Huang 2024 120,000 — — — — 120,000 CEO 2023 120,016 800 — — — — 120,816 Phil Zheng 2024 133,717 — — — — — 133,717 COO 2023 60,000 — — — — — 60,000 Matthew Casella 2024 168,654 — — — — 180,000 President 2023 --- — — — — --- Narrative to Summary Compensation Table Employment Agreements For the fiscal year ended September 30, 2023, the Company maintained employment agreements with its Chief Executive Officer, Chief Operating Officer and President. Each of the agreements provide for paid holidays, health insurance eligibility, and severance as required by applicable law. Following termination of employment, the executives agreed to refrain from (i) hiring or attempting to hire any current employees of the Company; and (ii) solicit business from current clients or clients who have retained the Company in the 6-month period immediately preceding the employment termination. Agreement with Chief Executive Officer The CEO employment agreement was entered as of July 1, 2016. Initially, the CEO annual base salary was $120,000, and for the fiscal year ended September 30, 2024, the annual base salary for Mr. Zhenwu (Wayne) Huang was $120,000. Upon termination of employment without cause, the Company is required to pay to Mr. Zhenwu (Wayne) Huang an amount as required by the Employment Standards Act 2000 or other such legislation as may be in effect at the time of termination. This payment shall constitute the employee’s entire entitlement arising from said termination. The agreement provides for a non-solicitation period of six (6) months following the termination of employment. Agreement with Chief Operating Officer The COO employment agreement was entered as of July 2, 2020. Initially, Mr. Zheng was paid an hourly rate of $50 per hour, and for the fiscal year ended September 30, 2024, the annual base salary for Mr. Zheng was $133,717. On November 20, 2024, Mr. Zheng was granted 200,000 shares of Class B common stock. Upon termination of employment without cause, the Company is required to pay to Mr. Zheng an amount as required by the Employment Standards Act 2000 or other such legislation as may be in effect at the time of termination. This payment shall constitute the employee’s entire entitlement arising from said termination. The agreement provides for a non-solicitation period of six (6) months following the termination of employment. On November 20, 2024, Mr. Zheng was granted 200,000 shares of Class B common stock Agreement with President The employment agreement with Matt Casella August 15, 2023. For the fiscal year ended September 30, 2023, the annual base salary for Mr. Casella was $168,654. Under the terms of the agreement, the annual stock option grant will follow a “50+70” plan, where 50,000 shares will be granted as vested stock options after one year of service, and an additional 70,000 shares will be granted based on the completion of annual performance targets. On November 20, 2024, Mr. Casella was granted 60,000 shares of Class B common stock. Upon termination of employment without cause, the Company is required to pay to Mr. Casella an amount as required by the Employment Standards Act 2000 or other such legislation as may be in effect at the time of termination. This payment shall constitute the employee’s entire entitlement arising from said termination. The agreement provides for a non-competition and non-solicitation period of twelve (12) months following the termination of employment. 60 Outstanding Equity Awards at Fiscal Year-End Table The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each named executive officer as of September 30, 2024. Name Number of Securities Underlying Unexercised Options (# exercisable) Number of Securities Underlying Unexercised Options (# unexercisable) Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options Option Exercise Price Option Expiration Date Number of shares or units of stock that have not yet vested Zhenwu (Wayne) Huang CEO — — — — — — Phil Zheng COO — — — — — — Matthew Casella President — — — — — — Incentive Plan On September 26, 2024, our Board and the holders of a majority of the voting power of the outstanding Class B common stock of the Company adopted resolutions by written consent to approve and adopted the Amended and Restated Richtech Robotics Inc. 2023 Stock Option Plan (the “Incentive Plan”), pursuant to the Company’s second amended and restated bylaws and Nevada law. The principal purposes of the Incentive Plan are to: (a) attract and retain the best available personnel for positions of substantial responsibility; (b) provide additional incentive to employees, directors, and consultants; and (c) promote the success of the business of the Company. The following description of the principal terms of the Incentive Plan is a summary of the terms of the Incentive Plan and is qualified in its entirety by the full text of the Incentive Plan. Administration of the Incentive Plan Our Board or a committee appointed by the Board will administer the Incentive Plan. The plan administrator has broad authority to: ● select participants and determine the types of awards that they are to receive; ● determine the number of shares that are to be subject to awards and the terms and conditions of awards, including the price (if any) to be paid for the shares or the award and establish the vesting conditions (if applicable) of such shares or awards; ● cancel, modify, or waive our rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consents; ● reduce the exercise price of an option if the fair market value of shares covered by such option has declined since the date the option was granted; ● determine whether an option will be settled in cash instead of shares; and ● construe and interpret the terms of the Incentive Plan and any agreements relating to the Incentive Plan. Shares Subject to the Incentive Plan An aggregate of 6,000,000 shares was initially reserved under the original Incentive Plan. An aggregate of 14,311,215 shares of Class B common stock was reserved for issuance under the amended and restated Incentive Plan (including the 6,000,000 shares originally reserved). As of September 30, 2024, 525,274 shares remain available for issuance under the Incentive Plan. If an option should expire or become unexercisable for any reason without having been exercised in full or no shares are issued with respect to an award, the shares underlying that award will again become available for issuance under the Incentive Plan. All of the shares available under the Incentive Plan may be issued upon the exercise of incentive stock options. 61 Participation Employees, directors, and consultants that provide services to us or one of our subsidiaries may be selected to receive awards under the Incentive Plan. Incentive stock options may only be granted under the Incentive Plan to persons who, at the time of the grant, are employees of our Company or our subsidiaries. Types of Awards The Incentive Plan permits the granting of awards in the form of stock options and stock purchase rights, which include restricted stock awards and restricted stock units. Stock Options. A stock option entitles the recipient to purchase shares of Class B common stock at a fixed exercise price. The exercise price per share will be determined by the plan administrator in the applicable award agreement in its sole discretion at the time of the grant. The exercise price can be paid in cash, check, net exercise, any consideration permissible under applicable law, or any combination of the foregoing. The maximum term of each stock option shall be fixed by the plan administrator, but in no event shall an option be exercisable more than ten (10) years after the date such option is granted. The plan administrator may grant share options that qualify as “incentive stock options,” as described in Section 422 of the Code. The exercise price per share for an incentive stock option may not be less than 100% of the fair market value of a share of Class B common stock on the date of the grant. However, for an incentive stock option granted to a person possessing more than 10% of the total combined voting power of all classes of our shares, the exercise price may not be less than 110% of the fair market value of a share of Class B common stock on the date of grant and the option term may not exceed five (5) years. The aggregate fair market value of all shares with respect to which incentive stock options are exercisable by any one individual participant for the first time during any calendar year (under all of the plans of the Company, including the Incentive Plan), measured at the date of the grant, may not exceed $100,000. Restricted Stock. A restricted stock award is an award of Class B common stock that vests in accordance with the terms and conditions established by the plan administrator. The plan administrator will determine the persons to whom grants of restricted stock are made, the number of shares to be awarded, the price (if any) to be paid for the restricted stock, the time or times within which awards of restricted stock may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of restricted stock awards. Restricted Stock Units. Restricted stock units are the right to receive shares of Class B common stock at a future date in accordance with the terms of such grant upon the attainment of certain conditions specified by the plan administrator. Restrictions or conditions could include, but are not limited to, the attainment of performance goals, continuous service with our Company, the passage of time, or other restrictions or conditions. The plan administrator determines the persons to whom grants of restricted stock units are made, the number of restricted stock units to be awarded, the time or times within which awards of restricted stock units may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the restricted stock unit awards. The holders of restricted stock units will have no voting rights. Prior to settlement or forfeiture, restricted stock units awarded under the Incentive Plan may, at the plan administrator’s discretion, provide for a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all dividends paid on one share of Class B common stock while each restricted stock unit is outstanding. Dividend equivalents may be converted into additional restricted stock units. Settlement of dividend equivalents may be made in the form of cash, shares, other securities, other property, or a combination of the foregoing. Prior to distribution, any dividend equivalents shall be subject to the same conditions and restrictions as the restricted stock units to which they are payable. Equitable Adjustments In the event of a stock split, reverse stock split, stock dividend, combination, recapitalization or reclassification of shares of Class B common stock, the maximum number and kind of shares reserved for issuance or with respect to which awards may be granted under the Incentive Plan will be adjusted to reflect such event, and the plan administrator will make such adjustments as it deems appropriate and equitable in the number, kind, and exercise price of shares covered by outstanding awards made under the Incentive Plan. 62 Change in Control In the event of any proposed change in control (as described in the Incentive Plan), the plan administrator will take any action as it deems appropriate, which action may include, without limitation, the following: (i) the continuation of any award, if the Company is the surviving corporation; (ii) the assumption of any award by the surviving corporation or its parent or subsidiary; (iii) the substitution by the surviving corporation or its parent or subsidiary of equivalent awards; or (iv) accelerated vesting of the award and a limited period during which to exercise the award prior to closing of the change in control. Transferability An award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, and may be exercised or purchased during the lifetime of the participant, only by the participant. Term The Incentive Plan became effective upon adoption by the Board on November 16, 2023 and, unless terminated, the Incentive Plan will continue in effect for a term of ten (10) years. Amendment and Termination Our Board may amend, alter, suspend, or discontinue the Incentive Plan at any time. Any such termination will not affect outstanding awards. No amendment, alteration, suspension, or discontinuation of the Incentive Plan will impair the rights of any participant without the participant’s consent. Director Compensation Following our initial public offering, our non-employee directors and members of our Advisory Board will each receive an initial award of 6,427 restricted shares of Class B common stock. Such shares would vest ratably on an annual basis over four years beginning on the first anniversary of the initial public offering. Non-employee directors will also receive additional annual awards of restricted shares of Class B common stock equal to the number of shares granted in the initial award. Such subsequent awards may be adjusted by the compensation committee of the board of directors based on then-current market conditions considering the size of the Company. We will also reimburse our non-employee directors for certain expenses incurred in connection with their duties as directors of the Company. The following table shows the compensation paid to our non-employee directors during the year ended September 30, 3024. On July 1, 2024, the Company issued 12,000 shares of its Class B common stock to each of its non-employee directors as compensation for their services on the Board of Directors. The shares were issued at the closing market price of the Company’s common stock on the date of grant. The total value of the stock issued to each director was $14,640. Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Nonequity incentive plan compensation ($) Nonqualified deferred compensation earnings ($) All other compensation ($) Total ($) John Shigley $ - 14,640 - - - - $ 14,640 Stephen Markscheid - 14,640 - - - - 14,640 Saul Factor - 14,640 - - - - 14,640 63 Limitation of Liability and Indemnification Matters The Company’s second amended and restated articles of incorporation and second amended and restated bylaws limit the directors’ liability and may indemnify directors and officers to the fullest extent permitted under the NRS 78.7502-NRS 78.751. Nevada law, NRS 78.138, provides that the Company’s directors and officers will not be personally liable to us, our stockholders or our creditors for damages for any act or omission in his or her capacity as a director or officer other than in circumstances where the director or officer breaches his or her fiduciary duty to us or our stockholders and such breach involves intentional misconduct, fraud or a knowing violation of law and the trier of fact determines that the presumption that he or she acted in good faith, on an informed basis and with a view to the interests of the corporation has been rebutted, or with respect to payment of dividends in violation of the NRS. While Nevada law allows the articles of incorporation of a corporation to provide for greater liability of the corporation’s directors and officers, our second amended and restated articles of incorporation does not provide for greater liability of our officers and directors than is provided under Nevada law. Nevada law allows a corporation to indemnify officers and directors for actions pursuant to which a director or officer either would not be liable pursuant to the limitation of liability provisions of Nevada law or where he or she acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to our best interests, and, in the case of an action not by or in the right of the corporation and with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. As permitted by Nevada law or our second amended and restated articles of incorporation, our second amended and restated bylaws (a) include provisions that eliminate the personal liability of our directors or officers for damages resulting from certain breaches of fiduciary duties as a director or officer; (b) require the Company to indemnify and hold harmless any officer or director against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, taxes, penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by the indemnitee in connection with any threatened, pending, or completed action, suit or proceeding (including, without limitation, an action, suit or proceeding by or in the right of the company), whether civil, criminal, administrative, or investigative; and (c) require us to advance expenses of the indemnitee as such expenses are incurred upon receipt of an undertaking by or on behalf of the indemnitee to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the Company. The effect of these provisions is to restrict our rights and the rights of our stockholders in derivative suits to recover damages against a director or officer for breach of fiduciary duties as a director or officer. In addition, the Company pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. These limitations of liability do not apply to liabilities arising under federal securities laws and do not affect the availability of equitable remedies such as injunctive relief or recession. We have obtained a directors’ and officers’ insurance policy pursuant to which our directors and officers are insured against liability for actions taken in their capacities as directors and officers. 64 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth certain information concerning the ownership of our Class A common stock and Class B common stock as of the date of this Report, with respect to: (i) each person, or group of affiliated persons, known to us to be the beneficial owner of more than five percent of our Class A common stock and Class B common stock; (ii) each of our directors; (iii) each of our named executive officers; and (iv) all of our current directors and executive officers as a group. Applicable percentage ownership is based on an aggregate of 112,052,244 shares of our common stock, consisting of (i) 39,934,846 shares of our Class A common stock and (ii) 72,117,398 shares of our Class B common stock outstanding as of January 10, 2025. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting or investment power with respect to such securities. In addition, pursuant to such rules, we deemed outstanding shares of Class B common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of the date of this Report. We did not deem such shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the beneficial owners named in the table below have sole voting and investment power with respect to all shares of our Class A common stock and Class B common stock that they beneficially own, subject to applicable community property laws. Name of Beneficial Owner (1) Shares of Class A Common Stock Shares of Class B Common Stock % of Total Voting Power Executive Officers and Directors Zhenwu Huang 30,308,000 — 64.28 % Zhenqiang Huang 7,892,000 — 16.74 % Phil Zheng — 1,400,000 * Matthew G. Casella — 60,000 * John Shigley — 22,000 * Stephen Markscheid — 22,000 * Saul Factor — 22,000 * All officers and directors as a group (7 individuals) 38,200,000 1,526,000 81.35 % 5% Stockholders N/A * Less than 1% (1) Unless noted otherwise, the address of all listed stockholder is 4175 Cameron St Ste 1, Las Vegas, NV 89103. Each of the stockholder listed has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise. Changes in Control None. 65 ITEM 13. Certain Relationships and Related Transactions, and Director Independence During the year ended September 30, 2024, the Company repaid all outstanding loans from related parties. These loans, which were previously disclosed in our Form 10-K for the year ended September 30, 2023, were obtained to support the Company’s operations and growth. The repayment of these loans demonstrates the Company’s commitment to sound financial management and reducing its reliance on related party financing. In addition, we had the following related party balances: As of As of September 30, September 30, Notes 2024 2023 Amounts due from related parties: Uplus Academy LLC (i) - 118 Uplus Academy NLV LLC (i) - 16 - 108 As of As of September 30, September 30, Notes 2024 2023 Amounts due to related parties: Bison Systems LLC (ii) - 85 Zhenwu Huang (iii) - 113 Phil Zheng (iv) - 40 - 238 (i) Uplus Academy LLC and Uplus Academy NLV LLC were both former subsidiaries of the Company that were disposed of on December 31, 2021. As of September 30, 2024, loans to Uplus Academy LLC and Uplus Academy NLV LLC were fully repaid. (ii) Bison Systems LLC was 100% owned by Zhenwu Huang, CEO and controlling stockholder of the Company and Zhenqiang Huang, CFO and major stockholder of the Company. As of September 30, 2024, the loans from Bison Systems LLC were fully repaid. (iii) Zhenwu Huang, CEO and controlling stockholder of the Company, made multiple interest-free and non-maturity loans to the Company since the inception of the business to support the Company’s operations. As of September 30, 2024, the loans from Zhenwu Huang were fully repaid. (iv) Phil Zheng has served as the Company’s COO since February 2020. Phil Zheng made an interest-free and non-maturity loan to the Company in May 2023. As of September 30, 2024, the loan from Phil Zheng was fully repaid. 66 ITEM 14. Principal Accounting Fees and Services The following table sets forth the fees billed by our independent accountants, Bush & Associates CPA LLC (“Bush & Associates”) for the years ended September 30, 2024 and 2023. Year Ended September 30, 2024 2023 Audit fees $ 36,400 $ 42,500 Audit-related fees $ 15,600 $ 18,000 Tax fees $ - $ - All other fees $ - $ - Audit Fees Audit fees consist of fees for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Bush & Associates in connection with regulatory filings. The aggregate fees of Bush & Associates for professional services rendered for the audit of our annual financial statements, review of the financial information include in our filings with the SEC for the years ended September 30, 2024 and 2023 totaled approximately $36,400 and $42,500, respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings. Audit-Related Fees Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. We paid Bush & Associates $15,600 and $18,000 for consultations concerning financial accounting and reporting standards for the years ended September 30, 2024 and 2023, respectively. Tax Fees We did not pay Bush & Associates for tax services, planning or advice for the years ended September 30, 2024 and 2023. All Other Fees We did not pay Bush & Associates for any other services for the years ended September 30, 2024 and 2023. Procedures For Board of Directors Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditor Our audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit). 67 PART IV ITEM 15. Exhibits and Financial Statements Schedules (a) The following documents are filed as part of this Report: (1) Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 6797 ) F-2 Balance Sheets F-4 Statements of Operations F-5 Statements of Stockholders’ Equity F-6 Statements of Cash Flows F-7 Notes to Financial Statements F-8 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Richtech Robotics, Inc. Las Vegas, Nevada OPINION ON THE FINANCIAL STATEMENTS We have audited the accompanying consolidated balance sheets of Richtech Robotics, Inc. and Subsidiaries (the “Company”) as of September 30, 2024, and the related consolidated statements of operations and comprehensive income, changes in stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. BASIS FOR OPINION These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. CRITICAL AUDIT MATTERS The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F- 2 CRITICAL AUDIT MATTER: REVENUE RECOGNITION. Description of the Matter: We identified revenue recognition as a critical audit matter. Richtech Robotics Inc. generates revenue primarily through direct sales of branded robotic products to customers. The Company also generates revenue from Robots-as-a-Service (RaaS). which provide customers with ongoing access to our robotic solutions under long-term contracts. For RaaS agreements, revenue is recognized over time on a monthly basis as the services are provided and the customer benefits from the use of the robotic solutions. The transaction price is typically fixed and allocated evenly across the contract term unless specific usage-based considerations are included. Revenue recognition begins once the robots are installed and operational at the customer’s site. For the fiscal year ended September 30, 2024, the Company reported revenue of approximately $4,240 thousand, representing a 52% decrease from the previous year. The Company’s revenue recognition process involves significant judgment in several areas: 1. Identifying performance obligations in customer contracts 2. Determining the timing of control transfer to customers 3. Measuring and allocating the transaction price 4. Assessing the probability of collecting consideration from customers Given the complexity of the Company’s revenue recognition policy, which adheres to ASC 606, and the significant decrease in revenue, auditing revenue recognition required extensive audit effort and a high degree of auditor judgment How the Critical Audit Matter Was Addressed in the Audit Auditor’s Evaluation: 1. Evaluating the Company’s revenue recognition policy for compliance with ASC 606 2. Analyzing a sample of customer contracts to assess proper identification of performance obligations 3. Testing the timing of revenue recognition by examining shipping documents and delivery terms 4. Performing substantive analytical procedures to identify unusual revenue trends 5. Assessing the Company’s disclosures related to revenue recognition in the financial statements /s/ Bush & Associates CPA LLC We have served as the Company’s auditor since 2024. Henderson, Nevada January 14, 2024 PCAOB ID Number 6797 F- 3 RICHTECH ROBOTICS INC. Balance Sheets September 30, 2024 and 2023 (In thousands, except share and per share data) 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 14,566 $ 433 Short term investment 15,940 - Accounts receivable, (net of allowance for doubtful accounts) 1,359 5,576 Amount due from related parties, current - 134 Inventory 1,148 822 Prepaid expenses and other current assets 33 17 Total current assets 33,046 6,982 Property and equipment, net 738 28 Deferred tax assets, net - 518 Operating lease right-of-use-assets 506 315 Intangible assets, Net 7,621 - Other assets, non-current 740 10 Total assets $ 42,651 $ 7,853 LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 150 $ 1,126 Amount due to related parties, current - 238 Accrued expenses 97 59 Short-term loan 53 845 Tax payables 5 461 Operating lease liabilities, current 150 161 Total current liabilities 455 2,890 Long-term payables 102 - Operating lease liabilities, non-current 356 154 Total liabilities 913 3,044 Commitments and contigencies Stockholders’ equity: Class A Common stock, $ 0.0001 par, 100,000,000 shares authorized as of September 30, 2024 and September 30, 2023, 39,934,846 and 44,353,846 shares issued and outstanding as of September 30, 2024 and September 30, 2023, respectively $ 4 $ 4 Class B Common stock, $ 0.0001 par, 200,000,000 shares authorized as of September 30, 2024 and September 30, 2023, 53,795,254 and 17,813,000 shares issued and outstanding as of September 30, 2024 and September 30, 2023,respectively. 6 2 Additional Paid-in Capital 49,667 4,602 Retained earnings ( 7,939 ) 201 Total stockholders’ equity 41,738 4,809 Total liabilities, preferred stock and stockholder's equity $ 42,651 $ 7,853 See accompanying Notes to Financial Statements F- 4 RICHTECH ROBOTICS INC. Statements of Operations For the years ended September 30, 2024 and 2023 (In thousands, except share and per share data) 2024 2023 Revenue, net $ 4,240 $ 8,759 Cost of revenue, net 1,520 2,744 Gross profit 2,720 6,015 Operating expenses: Research and development 2,021 1,979 Sales and marketing 1,315 238 General and administrative 6,457 3,509 Total operating expenses 9,793 5,726 Loss from operations ( 7,073 ) 289 Non-operating income(expense): Investment Income 13 - Interest expenses, net ( 762 ) ( 734 ) Total other expenses ( 749 ) ( 734 ) Loss before income tax expense ( 7,822 ) ( 445 ) Income tax benefit/(expense) ( 318 ) 106 Net loss ( 8,140 ) ( 339 ) Net loss attributable to common stockholders $ ( 8,140 ) $ ( 339 ) Basic and diluted net loss per share of common stock $ ( 0.12 ) $ ( 0.01 ) Weighted average shares used to compute basic and diluted net loss per share 69,953,723 62,166,846 See accompanying Notes to Financial Statements. F- 5 RICHTECH ROBOTICS INC Statements of Equity For the years ended September 30, 2023 and 2024 (in thousands, except per share data) Common stock* Additional Retained earnings Total Class A Class B Paid-in (Accumulated Shareholders’ Shares Amount Shares Amount Capital deficit) equity Balance at September 30, 2022 39,400,000 $ 4 600,000 $ - $ 2,374 $ 540 $ 2,918 Common stock issued for cash - - 9,397,000 1 2,229 - 2,230 Common stock issued for future services 6,153,846 - 6,616,000 1 38,317 - 38,318 Provision of Common stock issued for future services - - - - ( 38,318 ) - ( 38,318 ) Conversion from class A to Class B common stock ( 1,200,000 ) - 1,200,000 - - - - Net loss - - - - - ( 339 ) ( 339 ) Balance at September 30, 2023 44,353,846 $ 4 17,813,000 $ 2 $ 4,602 $ 201 $ 4,809 Initial Public offering related expenses - - - - ( 1,435 ) - ( 1,435 ) Common stock Issuance for initial public offering* - - 2,142,563 - 10,713 - 10,713 Issuance of Common shares for Loan Settlement - - 2,294,114 - 3,383 - - Issuance of Common Shares for Intangible Asset Acquisition - - 4,730,726 1 2,216 - - Shares Issued to Employees and Directors - - 51,890 - 74 - - Issuance of new shares for cash - - 22,343,961 2 30,124 - 30,126 Conversion from class A to Class B Common stock ( 4,419,000 ) - 4,419,000 1 - - - Net loss - - - - - ( 8,140 ) ( 8,140 ) Balance at September 30, 2024 39,934,846 $ 4 53,795,254 $ 6 $ 49,667 $ ( 7,939 ) $ 41,738 * Par value per share and the number of shares has been retrospectively restated for the related period in connection with our 4-for-1 forward stock split and concurrent re-designation of our common stock into Class A and Class B common stock in October 2022. See accompanying Notes to Financial Statements. F- 6 RICHTECH ROBOTICS, INC. STATEMENTS OF CASH FLOWS For the year ended September 30, 2024 and 2023 (In thousands) 2024 2023 Cash flows from operating Activities: Net loss $ ( 8,140 ) $ ( 339 ) Adjustments to reconcile net income to net cash provided by operating activities: Accounts receivable 4,218 ( 3,919 ) Inventory ( 326 ) 551 Prepaid expenses and other current assets ( 16 ) 23 Right-of-use asset ( 191 ) 67 Accounts payable ( 976 ) 951 Tax payable ( 456 ) 344 Accrued expenses 38 3 Deferred tax assets 518 ( 518 ) Depreciation and amortization 81 13 Operating lease liabilities, current ( 12 ) ( 108 ) Operating lease liabilities, non- current 202 36 Net cash provided by operating activities ( 5,060 ) ( 2,896 ) Cash flows from investing activities: Purchase of equipment ( 725 ) - Purchase of intangible assets ( 5,470 ) - Purchase of short-term investments ( 15,940 ) - Purchase of long-term investments ( 730 ) - Cash used for lending to related parties 134 ( 30 ) Payment received from lending to related parties - 4 Net cash used in investing activities ( 22,731 ) ( 26 ) Cash flows from financing activities: Proceeds from the issuance of related party debt - 200 Payment of loans received from third parties ( 3,792 ) - Loans received from third parties 3,102 845 Loan Settlement 3,383 - Payment of related party debt ( 238 ) ( 247 ) Proceeds from issuance of ordinary shares 30,182 - Proceeds from stockholder capital injection 9,286 2,230 Net Cash used in financing activities 41,924 3,028 Net change in cash and cash equivalents 14,133 106 Cash, cash equivalents and restricted cash at beginning of the period $ 433 $ 327 Cash, cash equivalents and restricted cash at end of the period $ 14,566 $ 433 See accompanying Notes to Financial Statements. F- 7 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 (Dollars in thousands, unless otherwise stated) NOTE 1: Nature of Business Description of Business Richtech Robotics Inc. (“we”, “us”, “our” or “Richtech”), is a Nevada C-Corporation registered in Nevada. Richtech was converted from Richtech Creative Displays, LLC on June 22, 2022, and is the predecessor of Richtech. Richtech Creative Displays, LLC was established on July 19, 2016 in Nevada. We are a leading provider of service robotic solutions. We develop, manufacture, and deploy novel products that address the growing need for automation in the service industry and provide service automation solutions that directly address the labor shortage problem affecting the US service industry. Our solutions include delivery, commercial cleaning, food & beverage service, and customization and development service, which have been implemented in more than 80 cities across the United States in restaurants, hotels, casinos, senior living homes, factories and retail centers. Our solutions automate repetitive and time-consuming tasks which allows clients to reallocate labor hours to more value-creating roles. Many of our clients see our robotic solutions as crucial to expanding and scaling their businesses. Our goal is to be a long-term partner to our clients, providing them with a range of robotic solutions to remedy their problems. Risk and Uncertainties The Company’s business and operations are sensitive to general business and economic conditions worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the world economy. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse developments in these general business and economic conditions could have a material adverse effect on the Company’s financial condition and the results of its operations. In addition, the Company will compete with many companies that currently have extensive and well-funded projects, marketing and sales operations. The Company may be unable to compete successfully against these companies. The Company’s industry is characterized by rapid changes in technology and market demands. As a result, the Company’s products, services, or expertise may become obsolete or unmarketable. The Company’s future success will depend on its ability to adapt to technological advances, anticipate customer and market demands, and enhance its current technology under development. Emerging Growth Company Status We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we are (1) no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We will remain an emerging growth company until the earliest of (1) the last day of the first fiscal year (A) following the fifth anniversary of the completion of November 17, 2023, (B) in which our total annual gross revenue is at least $ 1.235 billion or (C) when we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $ 700.0 million as of our most recently completed second fiscal quarter and (2) the date on which we have issued more than $ 1.0 billion in non-convertible debt securities during the prior three-year period. F- 8 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 (Dollars in thousands, unless otherwise stated) NOTE 2: Summary of Significant Accounting Policies Basis of Presentation These financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Segment Reporting Operating segments are identified as components of an enterprise about which separate financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. We view our operations and manage our business as one operating segment. Cash and Cash Equivalents We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. We place our cash and cash equivalents in highly liquid instruments with, and in the custody of, financial institutions with high credit ratings. Accounts Receivable Our accounts receivable primarily consist of trade receivables, which represent amounts owed to us by customers for products and services provided. These receivables are presented net of any rebates, price protection adjustments, and an allowance for credit losses. In addition to trade receivables, our accounts receivable also include unbilled receivables. These primarily relate to work completed on development services and semi-custom products for which revenue has been recognized but not yet invoiced to customers. We expect these unbilled receivables to be billed and collected within twelve months. We actively manage our exposure to customer credit risk through various measures, including credit limits, credit lines, ongoing monitoring procedures, and credit approvals. We perform in-depth credit evaluations of all new customers and periodically reassess the creditworthiness of existing customers. If deemed necessary, we may require letters of credit, bank or corporate guarantees, or advance payments to mitigate credit risk. To account for potential losses from uncollectible accounts, we maintain an allowance for credit losses. This allowance considers both specific troubled accounts and an overall estimate of potential uncollectible receivables based on historical experience and current credit quality assessments. As of September 30, 2024, the allowance for credit losses was $ 197 thousand, compared to $ 333 thousand as of September 30, 2023. We believe that our rigorous credit risk management practices and the allowance for credit losses adequately address the potential for uncollectible accounts. F- 9 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 (Dollars in thousands, unless otherwise stated) NOTE 2: Summary of Significant Accounting Policies (cont.) Inventories We value inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about future demand and market conditions. In determining excess or obsolescence reserves for our products, we consider assumptions such as changes in business and economic conditions, other-than-temporary decreases in demand for our products, and changes in technology or customer requirements. In determining the lower of cost or net realizable value reserves, we consider assumptions such as recent historical sales activity and selling prices, as well as estimates of future selling prices. We fully reserve for inventories and non-cancellable purchase orders for inventory deemed obsolete. We perform periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by us, additional inventory carrying value adjustments may be required. Inventory as of September 30, 2024 and 2023 are as follows: Year ended September 30, 2024 2023 Raw materials $ 619 $ 164 Finished goods 529 658 Total inventories $ 1,148 $ 822 Property, and Equipment, net Property and equipment, net is stated at cost less accumulated depreciation and amortization and is depreciated using the straight-line method over the estimated useful lives of the assets. Estimated useful lives of equipment is two to six years , and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated useful economic lives of the improvements. Property and equipment, as of September 30, 2024 and 2023 are as follows: Year ended September 30, 2024 2023 Furniture, fixtures & equipment $ 788 $ 63 Leasehold improvements 4 4 792 67 Accumulated depreciation ( 54 ) ( 39 ) Property and equipment, net $ 738 $ 28 Depreciation expenses for 2024 and 2023 were $ 15 and $ 13 , respectively. Intangible Asset, net The Company’s intangible assets consist of multiple systems purchased for our robotic product. These assets are amortized using the straight-line method over their estimated useful life of 10 years. F- 10 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 (Dollars in thousands, unless otherwise stated) NOTE 2: Summary of Significant Accounting Policies (cont.) Intangible Asset, as of September 30, 2024 and 2023 are as follows: Year ended September 30, 2024 2023 Intangible Asset $ 7,687 $ - Accumulated Amortization ( 67 ) - Intangible Asset, net $ 7,620 $ - Amortization expenses for 2024 and 2023 were $ 67 and 0 , respectively. Stockholders’ Equity According to ASC 505-10-S99-4, changes in the capital structure of a reporting entity due to a stock dividend, stock split or reverse split occurring after the date of the latest reported balance sheet but before the release of the financial statements (or the effective date of the registration statement, whichever is later) should be given retroactive effect in the balance sheet. In such cases, appropriate disclosure should be made of the retrospective treatment and the date the change became effective. For our Statements of Stockholders’ Equity, par value per share and the number of shares has been retrospectively restated for the related period in connection with our 4-for-1 forward stock split and concurrent re-designation of our common stock into Class A and Class B common stock in October 2022. In accounting for the conversion of member units into common stock, we followed the relevant accounting guidance provided by the Financial Accounting Standards Board (“FASB”) in accordance with GAAP. According to ASC 805-50-15-6, an entity charters a newly formed entity and then transfers some or all of its net assets to that newly chartered entity is an example of common-control transactions. ASC 805-50-15-6 provides guidance on common control transactions, stating that such transactions involve transfers between entities under common control, where the control is not transitory. In the case of the conversion of member units into common stock, the entities involved are under common control by the same parent entity. This relationship satisfies the criteria for a common control transaction, as control is not transitory and the parent entity exercises significant influence over the entities involved. Financial statements reflect the members’ equity and that the reclassification of members’ equity during fiscal 2022 to paid-in-capital is properly accounted for, in accordance with ASC 805-50-45-4 and SAB Topic 4.B by analogy. Listing on the Nasdaq Stock Market On November 17, 2023, the Company completed its initial public offering, issuing 2,100,000 shares of Class B common stock at a price of $ 5.00 per share under the ticker symbol “RR. ” Purchase of intangible assets In the fourth quarter of 2024, the Company acquired intangible assets through a combination of cash and common stock. The total consideration included $ 5.47 million in cash and approximately $ 2.2 million in Class B common stock. F- 11 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 (Dollars in thousands, unless otherwise stated) NOTE 2: Summary of Significant Accounting Policies (cont.) Revenue Recognition Revenue is recognized when we transfer promised goods or services to our customers, in amounts that reflect the consideration that we expect to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under each agreement, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. Product Revenue We generate revenue through the sale of our branded robotic products directly to customers. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with our customers. There is a single performance obligation in all our contracts, which is our promise to transfer our product to customers based on specific payment and shipping terms in the arrangement. The entire transaction price is allocated to this single performance obligation. Product revenue is recognized when a customer obtains control of our product, which occurs at a point in time and may be upon shipment or delivery, based on the terms of the contract. Revenue from Robots-as-a-Service (RaaS) As part of our evolving business model, we generate revenue through our Robots-as-a-Service (RaaS) offerings, which provide customers with ongoing access to our robotic solutions under long-term contracts. For RaaS agreements, revenue is recognized over time on a monthly basis as the services are provided and the customer benefits from the use of the robotic solutions. The transaction price is typically fixed and allocated evenly across the contract term unless specific usage-based considerations are included. Revenue recognition begins once the robots are installed and operational at the customer’s site. Other Revenue Policies Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue. We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised products to the customer will be one year or less, which is the case with substantially all customers. We recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. These costs are included in selling expenses. We account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. We record the related costs within cost of goods sold. F- 12 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 (Dollars in thousands, unless otherwise stated) NOTE 2: Summary of Significant Accounting Policies (cont.) Research and Development Costs Research and development costs primarily consist of employee-related expenses, including salaries and benefits, facilities costs, depreciation, and other allocated expenses. Research and development costs are expensed as incurred. Income Taxes The Company accounts for income taxes in accordance with income tax accounting guidance (Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not some portion or all of a deferred tax asset will not be realized. Tax positions are recognized if it is more likely than not, based on the technical merits, the tax position will be realized or sustained upon examination. The term “more likely than not” means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment. The Company recognizes interest and penalties on income taxes as a component of income tax expense. Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (“Topic 842”). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The standard is effective for public business entities for fiscal years beginning after December 15, 2018. As an emerging growth company, we adopted the new standard on January 1, 2022 for our year ending September 30, 2023 and 2024. We had operating leases for which we were required to recognize a right-of-use asset and lease liability. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes , which amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard allows certain exceptions, including an exception to the use of the incremental approach for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially based on income to be reported as income tax and to reflect the effects of enacted changes in tax laws or rates in the annual effective tax rate computation from the date of enactment. Lastly, in any future acquisition, we would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction. The standard will be effective for us beginning January 1, 2022, with early adoption of the amendments permitted. The adoption of ASU 2019-12 did not have a material impact on our financial statements and disclosures. In May 2020, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another topic. ASU 2021-04 is effective for fiscal years beginning after December 15, 2021. The Company has determined the adoption of ASU 2021-04 did not have a material impact on our financial statements and disclosures. F- 13 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 (Dollars in thousands, unless otherwise stated) NOTE 3: Earnings per Share Because we reported a net loss for all periods presented, no potentially dilutive securities have been included in the computation of diluted net loss per share. In addition, we have no outstanding stock options, warrants, convertible notes, and any other forms of convertible deferred compensation that could dilute basic earnings per share in the future as of September 30, 2024 and 2023. Year ended September 30, 2024 2023 Numerators: Net loss attributable to common stockholders $ ( 8,140 ) $ ( 339 ) Denominator: Weighted Average ordinary shares used in computing 69,953,723 62,166,846 Basis and diluted net loss per share (in each dollar) $ ( 0.12 ) $ ( 0.01 ) F- 14 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 (Dollars in thousands, unless otherwise stated) NOTE 4: Income Taxes The Company’s financial statements include a total state tax expense of $ 763 on a loss before income taxes of approximately $ 8,139 thousand for the year ended September 30, 2024. A reconciliation of the difference between the (expense)/benefit for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows (in thousands, except amounts pertaining to rate which are shown as a percentage): Year ended September 30, 2024 Federal Statutory Rate 21.00 % Effect of: Change in Valuation Allowance ( 23.22 )% RTP & Deferred True-up 1.77 % Change in Rate ( 0.23 )% State Tax Benefit (Net of Fed) 0.76 % M&E ( 0.08 )% TX Franchise tax ( 0.01 )% Others 0.00 % Total provision effective rate ( 0.01 )% The components of deferred tax assets and liabilities are as follows (in thousands): September 30, 2024 Deferred tax assets relating to: Net Operating loss carryforwards $ 1,474 Research & development tax credit carryforward 7 174 Expenses 498 Right of Use Liability 157 Other deferred tax assets 43 Total gross deferred tax assets 2,179 Deferred tax liabilities relating to: Right of Use Asset 157 Fixed Asset 8 Other deferred tax liabilities 4 Total Gross deferred tax liabilities 169 Deferred assets less liabilities 2,010 Less: valuation allowance ( 2,010 ) Net deferred tax asset (liability) $ - F- 15 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023 (Dollars in thousands, unless otherwise stated) NOTE 4: Income Taxes (cont.) In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income (losses) and projections for future taxable income (losses) over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences in the future. The Company had the following federal net operating loss carryforward and research activities credits as of September 30, 2024 (in thousands): Year incurred Net Operating Loss Research Activities Credit 2023 219 7.33 2024 6,561 – Note 5: Commitments and Contingencies Lease We lease office facilities under noncancelable operating lease agreements. We lease space for its corporate headquarters in Las Vegas, Nevada through August 2027, and we have closed our office space in Austin in April 2024. The components of leases and lease costs are as follows (in thousands): Operating leases September 30, 2024 September 30, 2023 Operating lease right-of use assets $ 506 $ 315 Operating lease liabilities, current portion $ 150 $ 161 Operating lease liabilities, non-current portion 356 154 Total operating lease liabilities $ 506 $ 315 Operating leases Year Ended September 30, 2024 Year Ended September 30, 2024 Operating lease cost $ 224 $ 227 Future minimum lease payments under these leases as of September 30, 2024, are approximately as follow: Year ending September 30, Amount 2025 $ 209 2026 247 2027 255 Total future minimum lease payments $ 711 F- 16 Note 6: Subsequent Events On October 16, 2024, we entered into a binding LOI with Ghost Kitchens America (DBA as One Kitchen). Under the terms of the LOI, the parties agreed to enter into a franchise agreement, pursuant to which the Company will acquire exclusive rights to operate 20 Walmart-located “One Kitchen” restaurants. These restaurants will be directly managed by the Company’s subsidiary, AlphaMax Management LLC. As of the date of this Report, two locations have been secured via franchise agreements: (1) on September 10, 2024, the Company signed a franchise agreement for a new location in Peachtree City, Georgia. This location, slated to commence operations in January 2025, will be operated by Alphamax Management LLC, a wholly-owned subsidiary of the Company; and (2) on August 20, 2024, the Company amended an existing franchise agreement originally intended for Clovis, California, relocating the franchise to Oceanside, California. On October 25, 2024, the Company received a notice from Nasdaq notifying the Company that, because the closing bid price for the Company’s Class B common stock had fallen below $ 1.00 per share for 30 consecutive business days, the Company no longer complies with the minimum bid price requirement for continued listing on the Nasdaq Capital Market under Rule 5550(a)(2) of Nasdaq Listing Rules. Nasdaq’s notice had no immediate effect on the listing of the Company’s Class B common stock on the Nasdaq Capital Market. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial compliance period of 180 calendar days, or until April 23, 2025, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the Company’s Class B common stock must meet or exceed $ 1.00 per share for a minimum of 10 consecutive business days prior to April 23, 2025. On January 6, 2025, the Company received a notice from Nasdaq that the Company has regained compliance with the minimum bid price requirement and the matter is closed. (2) Financial Statement Schedules All financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial statements and notes thereto beginning on page F-1 of this Report. (3) Exhibits We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits that are incorporated herein by reference can be inspected on the SEC website at www.sec.gov. ITEM 16. Form 10-K Summary. Not applicable. 68 EXHIBIT INDEX Exhibit No. Description 3.1 Second Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 in the Company’s Current Report on Form 8-K, filed with the SEC on November 22, 2023). 3.2 Second Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.3 in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the SEC on January 11, 2024). 4.1 Specimen Class B Common Stock Certificate (Incorporated by reference to Exhibit 4.1 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 4.2 Form of Underwriter Warrant (Incorporated by reference to Exhibit 4.1 in the Company’s Current Report on Form 8-K, filed with the SEC on November 22, 2023). 4.3 Form of Pre-Funded Warrant (Incorporated by reference to Exhibit 4.1 in the Company’s Current Report on Form 8-K, filed with the SEC on September 5, 2024). 4.4 Form of Common Warrant (Incorporated by reference to Exhibit 4.2 in the Company’s Current Report on Form 8-K, filed with the SEC on September 5, 2024). 4.5 Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.3 in the Company’s Current Report on Form 8-K, filed with the SEC on September 5, 2024). 4.6 Description of Registered Securities* 10.1# Letter of Intent, dated as of October 16, 2024, by and between Richtech Robotics Inc. and Ghost Kitchens America (Incorporated by reference to Exhibit 10.1 in the Company’s Current Report on Form 8-K, filed with the SEC on October 22, 2024). 10.2# Master Professional Services Agreement, dated September 26, 2022 (Gaming MSA) (Incorporated by reference to Exhibit 10.2 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.3# Master IT Services and Products Agreement, dated January 12, 2023 (Hotel MSA) (Incorporated by reference to Exhibit 10.3 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.4 Form of Invention Assignment Agreement (Incorporated by reference to Exhibit 10.4 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.5 Form of Stock Purchase Agreement (Pre-IPO Private Placement) (Incorporated by reference to Exhibit 10.5 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.6 2023 Equity Stock Option Plan (Incorporated by reference to Exhibit 10.6 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.7 Form of Stock Option Agreement (Incorporated by reference to Exhibit 10.7 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.8 Form of Stock Purchase Agreement (Incorporated by reference to Exhibit 10.8 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.9 Employment Agreement between the Company and Zhenwu Huang (Incorporated by reference to Exhibit 10.9 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 69 10.10 Employment Agreement between the Company and Zhenqiang Huang (Incorporated by reference to Exhibit 10.10 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.11 Employment Agreement between the Company and Phil Zheng (Incorporated by reference to Exhibit 10.11 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.12 Employment Agreement between the Company and Matthew Casella (Incorporated by reference to Exhibit 10.12 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 10.13 Standby Equity Purchase Agreement, dated February 15, 2024, by and between the Company and YA II PN, Ltd. (Incorporated by reference to Exhibit 10.1 in the Company’s Current Report on Form 8-K, filed with the SEC on February 21, 2024). 10.14 Letter Agreement, dated March 14, 2024, by and between the Company and YA II PN, Ltd. (Incorporated by reference to Exhibit 10.1 in the Company’s Current Report on Form 8-K, filed with the SEC on March 15, 2024). 10.15 Promissory Note issued to YA II PN, Ltd. dated March 18, 2024 (Incorporated by reference to Exhibit 10.1 in the Company’s Current Report on Form 8-K, filed with the SEC on March 22, 2024). 10.16 Promissory Note issued to YA II PN, Ltd. dated April 15, 2024 (Incorporated by reference to Exhibit 10.1 in the Company’s Current Report on Form 8-K, filed with the SEC on April 23, 2024). 10.17 Form of Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 in the Company’s Current Report on Form 8-K, filed with the SEC on September 5, 2024). 14 Code of Ethics* 19 Insider Trading Policy* 21 Subsidiaries of the Registrant (Incorporated by reference to Exhibit 21.1 in the Company’s Registration Statement on Form S-1/A (File No. 333-273628), filed with the SEC on November 1, 2023). 31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* 31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* 32.1 Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** 32.2 Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** 101.INS Inline XBRL Instance Document.* 101.SCH Inline XBRL Taxonomy Extension Schema Document.* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.* 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.* 104 Cover Page Interactive Data File (Embedded as Inline XBRL document and contained in Exhibit 101).* * Filed herewith. ** Furnished herewith # Certain portions of this exhibit have been omitted because the omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. 70 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. January 14, 2025 RICHTECH ROBOTICS INC. By: /s/ Zhenwu Huang Zhenwu Huang Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Zhenwu Huang Chief Executive Officer and Director January 14, 2025 Zhenwu Huang (Principal Executive Officer) /s/ Zhenqiang Huang Chief Financial Officer and Director January 14, 2025 Zhenqiang Huang (Principal Financial and Accounting Officer) /s/ John Shigley Director January 14, 2025 John Shigley /s/ Stephen Markscheid Director January 14, 2025 Stephen Markscheid /s/ Saul Factor Director January 14, 2025 Saul Factor 71