What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-01-20 compared with 2025-01-14 · 411 added, 207 removed, 77 unchanged (89% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The following discussion should be read in

conjunction with our consolidated financial statements and the related notes contained elsewhere in this Report and in our other Securities

and Exchange Commission filings.

The following discussion may contain predictions, estimates, and other forward-looking statements that

involve a number of risks and uncertainties, including those discussed under “Risk Factors” and elsewhere in this Report.

Management’s Discussion and

Analysis of Financial Condition and Results of Operations

The following discussion

should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Report and

in our other Securities and Exchange Commission filings.

The following discussion may contain predictions, estimates, and other forward-looking

statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors” and elsewhere

in this Report.

These risks could cause our actual results to differ materially from any future performance suggested below.

Richtech Robotics, Inc.

a leading innovator and provider of advanced robotics solutions designed to address the growing need for automation in the service industry.

We develop, manufacture, and deploy cutting-edge robots that streamline operations, enhance efficiency, and alleviate labor shortages

across a diverse range of sectors, including restaurants, hotels, casinos, senior living facilities, and retail centers.

Our commitment

to technological advancement and customer-centric solutions has positioned us as a key player in the rapidly evolving robotics landscape.

We are a robotics

company focused on the development of embodied AI systems for manufacturing, retail, hospitality, and other sectors.

We develop proprietary

hardware and software that employ the latest robotics and AI innovations.

Our goal is to deploy robotics at scale in business operations

across our target markets.

Key Business Highlights for Fiscal Year 2025

Transition to Robotics-as-a-Service:

The Company has embarked on a strategic transition from

a traditional product sales model to a RaaS model.

This shift is aimed at generating a more

predictable and recurring revenue stream over the long term, enhancing customer accessibility

to our advanced technologies, and aligning with prevailing industry trends.

● Significant

RaaS Contracts Secured:

As of September 30, 2024, the Company has secured significant RaaS

contracts, including a notable agreement for the deployment of 25 ADAM units, representing

a total contract value of $5,250,000.00, to be recognized over a 60-month period.

These contracts,

totaling $5,862,765.00, will contribute to revenue generation incrementally over lease terms

ranging from 36 to 72 months.

Investment in Research and Development:

Richtech Robotics remains dedicated to innovation

and technological advancement, as evidenced by the increase in research and development expenses

during fiscal year 2024.

These investments are focused on expanding our product portfolio,

enhancing existing offerings, and maintaining our competitive edge in the dynamic robotics

of Sales and Marketing Efforts:

To support the RaaS model and drive customer acquisition,

the Company has significantly increased its investment in sales and marketing initiatives.

These efforts are crucial for educating potential customers about the benefits of leasing

robotics solutions, building brand awareness, and cultivating new customer relationships.

Factors and Trends Affecting Our Business and

Results of Operations

Fiscal year 2025 was a transformative period

for us, defined by the accelerated execution of our strategic shift toward a high-margin, recurring revenue business model.

Strategic and Operational Milestones

Contract Acceleration:

Successfully secured 55 RaaS contracts, demonstrating strong market

adoption of our RaaS model and validating the long-term strategy to build a high-quality,

predictable recurring revenue base.

of Hospitality Management Segment (AlphaMax):

Launched strategic initiatives under the AlphaMax

subsidiary, including deployment of robots in restaurants in partnered with Walmart stores.

Twofranchise agreements were secured during the period to kickstart this expansion.

Brand Launch (Clouffee & Tea):

Established our first self-owned robotic restaurant brand,

Clouffee & Tea, which serves as a scalable franchise blueprint, a live platform for technological

testing, and a new growth channel, with the inaugural location opening in Las Vegas in early

Restructuring and Infrastructure:

The Company purchased a new corporate headquarters in Las

Vegas, Nevada, optimizing its long-term operational footprint and accommodating organizational

● New Data Services:

launched a new suite of services focused on producing robotic training datasets and embodied AI development.

Financial and Capital Milestones

● Total Revenue Growth:

Achieved a 19% increase in total net revenue,

rising to $5,045 thousand for fiscal year 2025, despite the short-term revenue impact caused by the strategic shift to the RaaS model.

● Gross Margin Expansion:

Drove significant margin improvement with a

21.65% increase in Gross Profit, driven by our shift from one-time hardware sales to leasing and recurring revenue.

Under the model, robots

are recognized as long-lived assets and depreciated over the lease term, resulting in a structurally higher gross margin profile compared

to the traditional one-time sale model.

Sheet Strengthening (Subsequent Event):

Subsequent to September 30, 2025, the Company successfully

utilized its At-The-Market (“ATM”) offering program to raise $71.6 million in gross

proceeds, substantially strengthening our liquidity and providing capital to accelerate the

build-out of the RaaS asset fleet.

A portion of these proceeds was generated through a direct

sale of shares to a large institutional investor under the ATM program.

● Deleveraging

and Cost Optimization:

Executed decisive corporate finance activities, resulting in an 89.1%

reduction in net interest expenses, primarily through the pay-down and conversion of high-interest

debt, significantly improving the Company’s structural cost of capital.

● Continued Investment in Research

and Development:

Richtech Robotics remains dedicated to innovation and technological advancement, as evidenced by the increase in research

and development expenses during fiscal year 2025.

These investments are focused on expanding our product portfolio, enhancing existing

offerings, and maintaining our competitive edge in the dynamic robotics market.

● Expansion of Sales and Marketing

To support the RaaS model and drive customer acquisition, the Company has significantly increased its investment in sales and

marketing initiatives.

These efforts are crucial for educating potential customers about the benefits of leasing robotics solutions,

building brand awareness, and cultivating new customer relationships.

Recent Developments

New Product Launch - Dex Humanoid Robot

October 28, 2025, we announced

Dex, our next-generation humanoid robot.

Built on the NVIDIA Jetson Thor platform, Dex integrates a comprehensive suite of advanced AI

capabilities designed to transform the industrial workforce.

With sophisticated perception and manipulation abilities, Dex can interact

with and operate in real-world environments, enabling it to perform tasks once considered too complex to automate.

Dex is expected to be deployment-ready

for industrial applications by mid-2026, and we anticipate that it will become a significant driver of the company’s future growth.

R&D Collaboration

Subsequent to September 30,

2025, we entered into a non-commercial technology collaboration agreement with Microsoft Corporation through the Microsoft AI

Co-Innovation Lab to support the evaluation and development of certain artificial intelligence workflows.

Subsequent Capital Raise – At-The-Market

Subsequent to September

30, 2025, we utilized our at-the-market offering program (the “September ATM”) to issue and sell an aggregate of 15,156,685

shares of Class B common stock, receiving aggregate gross proceeds of $71,622,886.31.

A portion of such proceeds was generated through

a direct sale of shares to a large institutional investor under the September ATM.

We intend to use the proceeds to accelerate the build-out

of our RaaS asset fleet.

Charter Amendment

On November 10, 2025, we filed an Articles of Amendment to our Articles

of Incorporation, as amended, with the Nevada Secretary of State to effect an increase the number of shares of Class B common stock that

we are authorized to issue from 200,000,000 to 1,000,000,000, effective upon filing.

Factors and Trends Affecting Our Business

and Results of Operations

The following trends and

uncertainties either affected our financial performance historically or are likely to impact our results of operations in the future:

As our robotic products market potential is seen by others, more competitors enter the market, which will lead to price competition and a decline in profit margins;

A recession will lead to a decline in customer demand in our robotic products and services;

Some of the products are currently assembled by suppliers in China, which may delay the supply if they are affected by international shipping, epidemic, geopolitical conflicts and other factors;

We anticipate that our general and administrative expenses will continue to increase in the future as a result of increased costs associated with being a public company.

These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, attorneys, and accountants, and personnel-related stock-based compensation costs, among other expenses, and, in the case of public company-related expenses, services associated with strengthening our internal control over financial reporting, maintaining compliance with Nasdaq listing and SEC reporting requirements, director and officer liability insurance costs, and investor and public relations costs, among other expenses.

Inflationary pressures are also a concern as it is difficult to make reliable projections for the cost of components.

This means profit margins could be affected, and our pricing would need to re-evaluated on a regular basis.

The rising interest rate will lead to a higher borrowing cost.

It will increase our cost for any potential future borrowing and financing activities.

Higher interest rates reduce consumer spending and business investment, causing the economy to contract, which will impact our business and will reduce our customers’ purchasing power.

Results of Operations

● As our robotic products’

market potential is seen by others, more competitors could enter the market, which may lead to price competition and a decline in profit

A recession could lead to a decline in customer demand in our robotic

products and services;

Some of the products are currently assembled by suppliers in China,

which may delay the supply if they are affected by international shipping, epidemic, geopolitical conflicts and other factors;

We anticipate that our general and administrative expenses will continue

to increase in the future as a result of increased costs associated with being a public company.

These increases will likely include

increased costs related to the hiring of additional personnel and fees to outside consultants, attorneys, and accountants, and personnel-related

stock-based compensation costs, among other expenses, and, in the case of public company-related expenses, services associated with

strengthening our internal control over financial reporting, maintaining compliance with Nasdaq listing and SEC reporting requirements,

director and officer liability insurance costs, and investor and public relations costs, among other expenses.

Inflationary pressures are also a concern as it is difficult to make

reliable projections for the cost of components.

This means profit margins could be affected, and our pricing would need to re-evaluated

on a regular basis.

Comparison of the fiscal years ended September

30, 2025 and 2024

The following table summarizes our results of operations (in thousands)

for the fiscal years ended September 30, 2024 and 2023, together with the dollar change in those items from period to period:

The following table summarizes

our results of operations (in thousands) for the fiscal years ended September 30, 2025 and 2024, together with the dollar change in those

items from period to period:

Year ended September 30,

5 unchanged sentences

Total operating expenses

Gain/(loss) from operations

Loss from operations

Non-operating income(expense):

4 unchanged sentences

Income tax benefit/(expense)

The total revenue

for the fiscal year ended September 30, 2024 and 2023, was $4,240 thousand and $8,759 thousand, respectively.

The $4,519 thousand decrease,

or 51%, for fiscal year 2024 is primarily attributed to the strategic transition to the RaaS model, which impacts the timing of revenue

While this transition may initially reduce revenue, it is expected to generate a more predictable and recurring revenue stream

over the long term.

Net loss Attributable to Non-Controlling Interest

Revenue, net, increased by

$805 thousand, or approximately 19.0%, from $4,240 thousand for the year ended September 30, 2024, to $5,045 thousand for the year ended

September 30, 2025.

This significant

full-year growth demonstrates the effectiveness of our ongoing strategic initiatives and indicates a successful ramp-up in the latter

half of the fiscal year.

This performance is consistent with the anticipated long-term benefits of our strategic shift towards a leasing

and recurring revenue model, which is designed to build a more stable and predictable revenue foundation.

The overall increase, despite

transitional challenges, reflects strong underlying customer demand for our robotics solutions.

The breakdown of revenue is as follows:

Year ended September 30,

Product revenue

Service revenue

Leasing revenue

Total Robotics revenue

Smart hardware

Interactive system

Cloutea is the revenue generated from our boba tea store opened in May, 2023.

We opened this store as a model to further develop the concept of an interactive robot barista utilizing our ADAM robot.

Cloutea has been rebranded “Clouffee and Tea,” which will open in a new location in Las Vegas in January 2025.

In 2024, the Company generated

$4.2 million in total revenue, a decrease from $8.8 million in 2023.

This decrease was primarily driven by a decline in product revenue

within our Robotics category, partially offset by an increase in leasing revenue.

The shift towards service and leasing reflects the ongoing

transition to our Robot-as-a-Service model, which is expected to generate more predictable and recurring revenue streams in the long term.

The following table summarizes the RaaS sales numbers (in thousand):

Current Sales

(RaaS adjusted to sale model)

Leasing/Service/Rental

Business Model Transition and Revenue

Historically, we generated revenue

primarily through Product Revenue (outright hardware sales), resulting in immediate revenue and immediate Cost of Revenue recognition.

During fiscal 2025, the Company fundamentally

shifted its approach to emphasize long-term relationships and recurring revenue through leasing and service arrangements.

This strategic change significantly

impacts the financial statements:

Upfront product revenue is reduced.

The cost of leased robots is

capitalized as a long-term asset (Assets held for Lease), not immediately expensed.

Profitability:

This results in a materially

lower Cost of Revenue and an expanded Gross Margin, as the cost is recognized over the lease

term via depreciation instead of immediate Cost of Goods Sold.

The increase in Product Sale percentage

in fiscal 2025 was primarily attributable to occasional, non-recurring customer orders for earlier-generation delivery robotic systems,

which temporarily increased one-time product sales.

This activity does not reflect a shift in our long-term revenue strategy.

Our long-term focus remains on expanding

recurring revenue through service, rental, and leasing arrangements.

The relative decreases in Service/Rental Sale and Leasing percentages

in fiscal 2025 compared to fiscal 2024 were largely attributable to the impact of these non-recurring product sales and certain prior-year

revenue reclassifications.

Excluding these items, underlying adoption of recurring arrangements continues to increase.

Detailed Revenue Streams and Recognition

The Company’s revenue is classified

into four primary streams:

Product Revenue

Service revenue

Leasing revenue

* If the RaaS revenue is treated as product sales, the gross revenue

for fiscal year 2024 would be $10,210.

* This transition aligns with the Company’s long-term growth

strategy, aiming to create a more stable and recurring revenue stream while reducing the upfront financial burden for our customers.

We believe the RaaS model enhances customer retention and positions the Company competitively in an evolving market.

● Description:

Revenue from traditional, outright sales of hardware where the customer takes ownership.

● Recognition:

Recognized at a point in time (transfer of control, per ASC 606).

The 2025 increase was driven by increased demand for new robot models and strategic inventory

management, but the mix will shift away from this stream as the RaaS model matures.

Leasing/Service/Rental Revenue

● Description:

Revenue from short-term rentals, maintenance contracts, subscriptions, and installation services.

● Recognition:

Recognized over time or at a point in time, based on contract specifics.

This category reflects the reclassified rental income from 2024.

Organic growth is expected

to continue as the total installed unit base expands, increasing the high-margin service

revenue stream.

● Description:

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

● Recognition:

Recognized over the term of the lease agreement.

While showing a reported decrease due to a prior-period reclassification adjustment, this

stream represents the primary long-term growth engine.

Its accelerated adoption will drive

predictable, recurring revenue growth, which is central to our long-term value creation strategy.

AlphaMax (Cloutea)

● Description:

Revenue generated from the AlphaMax subsidiary, which operates as a hospitality management

company overseeing various cafes and restaurants.

● Recognition:

Recognized according to the performance obligations outlined in the specific management or

operating contracts.

This segment contributed $602 thousand in total revenue in 2025.

This revenue is non-robotics

related, and the performance of this segment is subject to factors impacting the broader

hospitality and restaurant industry.

Strategic Initiatives and Growth Channels

The following initiatives demonstrate

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

Expansion of Robotic Restaurant Locations

in Walmart Stores

The Company is actively executing

a strategic plan to integrate its robotics technology into high-traffic retail environments through franchise agreements.

On October 17, 2024, the Company announced

plans to launch a total of 20 robotic restaurant locations within Walmart stores across the country.

This initiative is designed to demonstrate

the scalability and reliability of our technology in a demanding, quick-service retail setting, thereby generating both recurring revenue

and acting as a high-visibility marketing platform.

As of the date of this report, two locations within Walmart stores are currently

in operation.

We intend to prudently evaluate the performance of these existing locations and, based on operating results, selectively

pursue potential collaboration opportunities at additional locations.

Clouffee & Tea Restaurant Brand

Clouffee & Tea is our first self-owned

restaurant brand, designed to showcase our robotics-as-a-service model directly to consumers.

The concept seamlessly blends innovative

robotic technology with a vibrant coffee and tea culture to create an engaging customer experience.

Strategic Purpose:

Franchise Blueprint:

The robotic operation presents a uniquely scalable franchise model.

Clouffee & Tea will serve as a successful blueprint for integrating robotics into coffee

and tea shop operations, which the Company intends to replicate through future franchising

● Technological

Application and Iteration:

Beyond redefining the beverage experience, Clouffee & Tea

functions as a dynamic platform for technological application.

It allows us to utilize real-world,

high-volume scenarios for testing new robotic technologies and iterating on system performance.

Growth Channel:

The brand opens an additional revenue channel for the Company.

Tea opened its inaugural franchise store in Las Vegas, Nevada, in January 2025, adding another

dimension to our growth strategy and enhancing the recurring revenue profile of the AlphaMax

Cost of Revenue

Our gross profit decreased

significantly in 2024, declining by 55% from $6.0 million in 2023 to $2.7 million in 2024, our gross margin remained relatively stable.

Our gross margin was 64% in 2024, compared to 69% in the prior year.

This slight decrease in gross margin is primarily attributed to adjustments

and write-offs related to our inventory.

During the year, we conducted a thorough review of our inventory and identified certain obsolete

and slow-moving items that required adjustments and write-offs.

These adjustments impacted on our cost of goods sold and, consequently,

our gross margin.

We have implemented measures to improve our inventory management practices and minimize the risk of future inventory

obsolescence.

Despite this slight margin compression, we are pleased with the overall stability of our

gross margin, which reflects the inherent profitability of our business model.

We believe that our strategic shift towards an RaaS model,

with its higher-margin recurring revenue streams, will further enhance our profitability in the long term.

Despite the decrease in revenue, our gross profit remained relatively

stable, decreasing from $6.0 million in 2023 to $2.7 million in 2024.

This resulted in a gross margin of 64% in 2024, compared to 69%

in the prior year.

This slight decrease in gross margin is primarily attributed to a shift in our revenue mix.

As we transition towards

a Robot-as-a-Service (RaaS) model, a higher proportion of our revenue is now generated from service and leasing arrangements.

These arrangements

generally have lower gross margins compared to product sales, as they involve ongoing service costs and the amortization of the robot’s

cost over the contract term.

However, we believe this strategic shift towards RaaS will benefit us in the long run by creating more predictable

recurring revenue streams and fostering stronger customer relationships.

Cost of revenue, net, increased

by $236 thousand, or approximately 15.5%, from $1,520 thousand in 2024 to $1,756 thousand in 2025.

This increase was driven by an overall

increase in net revenue of $805 thousand and significant growth in Product Revenue.

Depreciation of Rental Assets:

For the fiscal year ended September 30, 2025, depreciation expense attributable to our RaaS fleet was $79 thousand.

We expect this non-cash

expense to increase in future periods as our installed base of leased robots expands, creating a predictable cost structure that scales

with recurring revenue.We continue to focus on optimizing our manufacturing and supply chain processes to maintain a competitive cost

Gross profit increased by

$569 thousand, or approximately 20.9%, from $2,720 thousand in 2024 to $3,289 thousand in 2025.

The resulting expansion of our gross margin

is a direct reflection of the full-year impact of the strategic shift to a RaaS model.

By capitalizing the cost of leased assets rather

than recognizing them as immediate cost of goods sold, our gross margin profile has significantly improved, leading to a higher gross

profit despite the ongoing business model transition.

We anticipate that this

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

Research and Development Expenses

We remain committed to investing

in research and development to drive innovation and maintain our competitive edge.

R&D expenses increased from $1.9 million in 2023

to $2.0 million in 2024 was due primarily to our increased expenditure in developing new products.

Research and development

(R&D) expenses increased by $411 thousand, or approximately 20.3%, from $2,021 thousand in 2024 to $2,432 thousand in 2025.

increased investment demonstrates our commitment to maintaining technological leadership and fueling future growth.

The increase is primarily

attributable to:

Increased Headcount and

Compensation:

Higher personnel costs, including the hiring of specialized engineers, data scientists, and AI developers necessary to

support complex platform upgrades and new product development like ADAM and TITAN.

We also undertook compensation adjustments to ensure

retention of key talent in a competitive market.

New Product Development

and Platform Upgrades:

Significant expenses related to the development and successful launch of the DEX product line and substantial

core robotics platform enhancements.

This includes costs for prototyping, testing environments, and integration of cutting-edge components.

Technology Licensing and

Infrastructure:

Increased investment in new R&D equipment, advanced simulation software licenses, and expanded cloud computing services

necessary for concurrent and rapid product development cycles.

This infrastructure spending is designed to shorten time-to-market for

future iterations.

Our sustained R&D investment

is critical to maintaining a long-term competitive advantage, driving product innovation, and expanding the functional capabilities of

our robotics fleet.

Sales and Marketing Expenses

Our sales and marketing expenses

increased significantly, from $238,000 in 2023 to $1.3 million in 2024.

This increase is directly related to our strategic initiatives

to expand our market reach and promote our RaaS (Robot-as-a-Service) offerings.

Sales and marketing (S&M)

expenses decreased by $53 thousand, or approximately 4.0%, from $1,315 thousand in 2024 to $1,262 thousand in 2025.

This slight decrease,

despite an overall increase in net revenue, is primarily the result of:

Strategic Shift Efficiency:

A reduced need for high-cost, upfront sales campaigns typically associated with achieving single large product sales.

Resources were

strategically reallocated to focus on the lower-cost, recurring customer acquisition model required for leasing.

The marketing focus

shifted from volume-based lead generation to quality, relationship-based lead nurturing.

Marketing Optimization and

Digital Focus:

Successful optimization of digital marketing channels, yielding better results at a lower cost-per-acquisition.

expenditures on less effective traditional advertising formats while increasing investment in targeted digital platforms and content

marketing efforts, resulting in a more efficient spend.

We anticipate S&M expenses

to remain relatively stable as a percentage of revenue in the near term as we balance recurring revenue growth with the need for efficient

new customer acquisition.

General and Administrative Expenses

As a newly public company,

we incurred higher general and administrative expenses, which increased from $3.5 million in 2023 to $6.4 million in 2024.

This increase

is primarily due to an increase in professional service fees associated with operating as a public company.

General and administrative

(G&A) expenses increased dramatically by $11,082 thousand, or approximately 171.6%, from $6,457 thousand in 2024 to $17,539 thousand

This significant surge is primarily attributed to non-recurring and foundational investments required to transition the Company

into a scalable public enterprise:

Company Readiness and Compliance Costs:

The increase primarily reflects incremental legal,

audit, and consulting costs associated with ongoing SEC reporting, SOX compliance, and expanded

internal control requirements as a public company.

D&O Insurance Premiums:

We incurred a material increase in premiums for our Directors

and Officers (D&O) liability insurance.

This increase reflects broader market pricing

trends for newly public companies and the necessity of securing higher coverage limits to

attract and retain qualified independent directors.

We expect these premium costs to remain

a recurring component of our operating expenses.

Infrastructure and Staffing:

A large portion of the expenditure supported essential corporate

infrastructure expansion and personnel scaling.

This includes costs related to the purchase

of the new corporate headquarters and the subsequent move, which incurred significant one-time

expenses for facility build-out, IT integration, and relocation services.

Crucially, the

increase reflects the necessary expansion of the back-office staff—specifically Finance,

Legal, and Human Resources—to support the increased complexity of public reporting

and the accelerated growth rate of the business, particularly the compliance demands of the

leasing portfolio.

Investment Income

Investment income increased

from $13 thousand in fiscal 2024 to $2,177 thousand in fiscal 2025, primarily due to higher average cash and investment balances resulting

from funds received through various financing transactions, as discussed in Liquidity and Capital Resources.

Other Income (Expense)

Our total other expenses

increased in 2024, rising from $734,000 in 2023 to $749,000 in 2024.

This increase is mainly attributed to higher interest expenses incurred

on outstanding debt.

As we scaled our operations and invested in working capital to support our growth, our interest expense increased.

However, we made a strategic decision to prioritize debt reduction and paid off a significant portion of our outstanding loans in the

middle of 2024.

This proactive approach to debt management will reduce our interest burden going forward, improve our overall financial

position, and provide us with greater financial flexibility to pursue future growth opportunities

Interest expense, net, decreased

from $762 thousand in fiscal 2024 to $83 thousand in fiscal 2025, primarily due to the repayment of outstanding interest-bearing debt

during the fiscal year.

Income Tax Benefit/(Expense)

We recorded an income tax

expense of $318 thousand in 2024.

This is primarily driven by the removal of deferred tax benefits.

Management determined that it is more

likely than not that the Company will be unable to realize the benefits of these deductible temporary differences in the future.

tax expense for the year was $12 thousand, compared to an income tax expense of $318 thousand in 2024, t his

is primarily driven by the removal of deferred tax benefits in 2024, management determined that it is more likely than not that the Company

will be unable to realize the benefits of these deductible temporary differences in the future.

Liquidity and Capital Resources

Our primary sources of liquidity

are cash and cash equivalents, which consist of cash on hand and short-term investments that are readily convertible to cash.

As of September

30, 2024, our cash and cash equivalents totaled $14.6 million.

This represents a significant increase from $433,000 at the end of the

prior fiscal year.

The substantial increase in our cash position is primarily attributable to the net proceeds of $40.2 million received

from our initial public offering completed in November 2023 and subsequent financing as described in “ITEM 1.

Business – Recent

Developments – Registered Offering.” These proceeds significantly strengthened our balance sheet and provided us with the

financial flexibility to invest in our growth initiatives, including the expanding our R&D team, purchase of property and equipment

to support our expanding operations.

This increase was partially offset by cash used in operating activities, primarily due to our net

loss and investments in working capital.

Our primary sources of liquidity are cash and cash equivalents, which

consist of cash on hand and short-term investments that are readily convertible to cash.

As of September 30, 2025, our cash and cash equivalents

totaled $193.6 million.

This represents a significant increase from $14.6 million at the end of the prior fiscal year.

The substantial

increase in our cash position is primarily attributable to the net proceeds of $219.8 million received from issuance of shares of Class

B common stock, and the net proceeds of $16.3 million received from the exercise and issuance of warrants.

These proceeds significantly

strengthened our balance sheet and provided us with financial flexibility to invest in our growth initiatives, including expanding our

R&D team, purchase of property and equipment to support our expanding operations.

This increase was partially offset by cash used

in operating activities, primarily due to our net loss and investments in working capital.

During the fiscal year ended

September 30, 2025, the Company raised capital through three at-the-market offering agreements.

2025, the Company entered into the May ATM Agreement with Rodman & Renshaw LLC, H.C.

Wainwright & Co., LLC, and BTIG, LLC.

agreement, the Company issued and sold 45,636,983 shares of Class B common stock, generating gross proceeds of $99,998,023.72.

28, 2025, the Company entered into the August ATM Agreement with Rodman & Renshaw LLC and H.C.

Wainwright & Co., LLC, which effectively

replaced the May ATM Agreement.

The Company issued and sold 27,322,000 shares of Class B common stock under this agreement, generating

gross proceeds of $99,995,480.96.

On September 23, 2025, the Company entered into the September ATM Agreement with Rodman & Renshaw

Wainwright & Co., LLC for an aggregate offering price of up to $1.0 billion.

During the fiscal year ended September

30, 2025, the Company issued and sold 6,282,472 shares under this agreement, generating gross proceeds of $26,773,037.95.

For more information on the at-the-market offering agreements, please see “ ITEM 1.

Material Contracts – ATM Agreements .”

Comparison of the years ended September 30,

2025 and 2024

The following table

summarizes our cash flow information (in thousands) for the years ended September 30, 2024 and 2023, together with the dollar change

in those items from period to period:

The following table summarizes

our cash flow information (in thousands) for the years ended September 30, 2025 and 2024, together with the dollar change in those items

from period to period:

Year ended September 30,

5 unchanged sentences

Operating Activities

cash used in operating activities for the year ended September 30, 2024 was $5,061 thousand, primarily due to a net loss of $8,140 thousand

an increase of $3,079 thousand in net operating assets and liabilities.

The cash flow impact from changes in net operating assets and

liabilities was primarily driven by decrease in accounts receivable of $4,217 thousand, deferred tax asset of $518 thousand and operating

lease liabilities of $404 thousand, partially offset by decreases in accounts payable of $976 thousand, tax payable of $456 thousand,

right-of-use asset of $405 thousand and increase in inventory of $326 thousand respectively.

Net cash used in operating

activities for the year ended September 30, 2023 was $2,896 thousand, primarily due to a net loss of $339 thousand and a decrease of $2,557

thousand in net operating assets and liabilities.

The cash flow impact from changes in net operating assets and liabilities was primarily

driven by increases in accounts receivable of $3,919 thousand, deferred tax asset of $518 thousand and current operating lease liabilities

of $108 thousand, partially offset by decreases in inventory of $551 thousand, right-of-use asset of $67 thousand and increase in accounts

payable and tax payable of $951thousand and $344 thousand, respectively.

For the increase in accounts receivable of $3,919 thousand, we

have collected majority of this amount as of the report date.

activities for the year ended September 30, 2025 was $9,043 thousand, primarily driven by a net loss of $15,754 thousand, partially offset

by non-cash charges of $6,043 thousand and a net change in operating assets and liabilities of $668 thousand.

Non-cash charges primarily

included $2,319 thousand of depreciation and amortization, $2,635 thousand of professional service expenses, and $1,089 thousand of incentive

compensation settled in shares of common stock.

The cash flow impact from changes in net operating assets and liabilities was mainly driven

by an increase in accrued expenses and other payable of $1,280 thousand, which was significantly offset by increases in accounts receivable

of $421 thousand, inventory of $232 thousand, and prepaid expenses and other current assets of $396 thousand.

Net cash used in

operating activities for the year ended September 30, 2024 was $5,060 thousand, primarily due to a net loss of $8,140 thousand

partially offset by increase of $3,080 thousand in net operating assets and liabilities.

The cash flow impact from changes in net

operating assets and liabilities was primarily driven by decrease in accounts receivable of $4,218 thousand, deferred tax asset of

$518 thousand and operating lease liabilities of $202 thousand, partially offset by decreases in accounts payable of $976 thousand,

tax payable of $456 thousand, right-of-use asset of $191 thousand and increase in inventory of $326 thousand respectively.

Investing Activities

Net cash used for investing

activities was $47,996 thousand for the year ended September 30, 2025, primarily driven by $41,975 thousand on purchase of short-term

investments, $5,009 thousand on purchase of property and equipment, and $591 thousand on purchase of intangible assets.

Net cash used for investing

activities was $22,731 thousand net cash used for investing activities for year ended September 30, 2024, primarily driven by $15,940

1 unchanged sentence

investments and $725 thousand on purchase of equipment.

Net cash used for investing

activities was $26 thousand net cash used for investing activities for year ended September 30, 2023, primarily consisted of cash used

for lending to related parties, and cash collected from loan to related parties

Financing Activities

Net cash provided by financing

activities totaled $41,925 thousand for the year ended September 30, 2024.

We received $33,566 thousand from issuance of common stock,

raised approximately $9,286 thousand from issuance of ordinary shares, received loans with a net balance of $3,102 from third parties,

offset by $238 thousand payment of related party debt.

Net cash provided by financing

activities totaled $3,028 thousand for the year ended September 30, 2023.

We raised $2,230 thousand from issuance of ordinary shares,

received proceeds of $200 thousand from related party debt, and obtained loans with a net balance of $845 from third parties as of September

30, 2023, offset by $247 thousand payment of related party debt.

Net cash provided by financing activities totaled $236,102 thousand

for the year ended September 30, 2025, mainly due to $219,808 thousand from issuance of ordinary shares and $16,266 thousand from proceeds

from warrants exercise.

Net cash provided by financing activities totaled $41,924 thousand

for the year ended September 30, 2024.

We received $39,468 thousand from issuance of common stock, which included $9,286 thousand from

our initial public offering, received loans with a net balance of $3,102 from third parties, offset by $3,792 payment of loans received

from third parties and $238 thousand payment of related party debt.

Contractual Obligations

We are a smaller reporting

company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Trend Information

Other than as disclosed elsewhere

in this registration statement, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely

to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that

Other than as disclosed

elsewhere in this report, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to

have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that

would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

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The preparation of the financial

statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to

make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and

the reported amounts of revenues and expenses during the reporting periods.

statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements

and the reported amounts of revenues and expenses during the reporting periods.

Actual results could differ from those estimates.

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Section 107 of the JOBS

Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of

the Securities Act for complying with new or revised accounting standards.

In other words, an “emerging growth company” can

delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies.

We have elected

to avail ourselves of this extended transition period.

Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section

7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

In other words, an “emerging growth company”

can delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies.

elected to avail ourselves of this extended transition period.

For as long as we remain

an “emerging growth company” under the recently enacted JOBS Act, we will, among other things:

be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act, which requires that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal controls over financial reporting;

be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure concerning executive compensation;

be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.

be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley

Act, which requires that our independent registered public accounting firm provide an attestation report on the effectiveness of

our internal controls over financial reporting;

be permitted to omit the detailed compensation discussion and analysis

from proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure concerning executive

compensation;

be exempt from any rules that may be adopted by the Public Company

Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial

Although we are still evaluating

the JOBS Act, we currently intend to take advantage of some or all of the reduced regulatory and reporting requirements that will be available

to us so long as we qualify as an “emerging growth company,” including the extension of time to comply with new or revised

financial accounting standards available under Section 102(b) of the JOBS Act.

the JOBS Act, we currently intend to take advantage of some or all of the reduced regulatory and reporting requirements that will be

available to us so long as we qualify as an “emerging growth company,” including the extension of time to comply with new

or revised financial accounting standards available under Section 102(b) of the JOBS Act.

Among other things, this means that our independent

registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over

financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies in

our internal control over financial reporting go undetected.

Likewise, so long as we qualify as an emerging growth company, we may elect

not to provide you with certain information, including certain financial information and certain information regarding compensation of

our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more

registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control

over financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies

in our internal control over financial reporting go undetected.

Likewise, so long as we qualify as an emerging growth company, we may

elect not to provide you with certain information, including certain financial information and certain information regarding compensation

of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more

difficult for investors and securities analysts to evaluate our company.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis