Revenue Growth and Financial Performance - Revenue increased by $2.71 million (45%) from $6.05 million in 2022 to $8.76 million in 2023[232] - Robotics revenue grew by $3.17 million (60%) from $5.30 million in 2022 to $8.46 million in 2023, driven by the launch of the ADAM robot and increased adoption among small to medium businesses[234] - Net loss improved by $168 thousand from $507 thousand in 2022 to $339 thousand in 2023[232] - Product sales accounted for 91.0% of revenue in FY2023, up from 61.7% in FY2022, while service sales decreased to 5.7% from 31.0%[63] - Percentage of sales attributable to enterprise customers increased from 2.06% in fiscal year 2022 to 3.82% in fiscal year 2023[19] - Percentage of sales attributable to MSA customers increased from 0.77% in fiscal year 2022 to 3.40% in fiscal year 2023[19] Cost and Expense Management - Cost of revenue increased by $646 thousand (31%) from $2.10 million in 2022 to $2.74 million in 2023, primarily due to higher robotics revenue[235] - Research and development expenses rose by $207 thousand (12%) from $1.77 million in 2022 to $1.98 million in 2023, reflecting increased investment in new product development[237] - Sales and marketing expenses decreased by $59 thousand (20%) from $297 thousand in 2022 to $238 thousand in 2023, due to improved targeting efficiency and reduced need for marketing after reaching manufacturing capacity[238] - The company spent $1.98 million on R&D in FY 2023, compared to $1.772 million in FY 2022, focusing on the Universal Smart Mobile Platform (USMP) to accelerate robot development[80] Cash Flow and Financing Activities - Net cash used in operating activities for 2022 was $2.65 million, primarily due to a net loss of $507 thousand and a $2.20 million decrease in net operating assets and liabilities[247] - Net cash provided by financing activities in 2023 totaled $3.03 million, including $2.23 million from the issuance of ordinary shares and $845 thousand from short-term loans[249] - Cash and cash equivalents increased to $433,000 in 2023 from $327,000 in 2022[385] - The company completed an IPO of 2,100,000 shares of Class B common stock at $5.00 per share, generating $10.5 million in gross proceeds[442] - Underwriters purchased an additional 42,563 shares of Class B common stock at $5.00 per share, adding $212,815 in gross proceeds[442] Internal Controls and Financial Reporting - The company identified a material weakness in internal control over financial reporting, which did not result in material misstatements but led to the conclusion that internal controls were not effective as of September 30, 2023[266] - The company identified material weaknesses in IT general controls and report reviews, particularly in SaaS vendor audit responses and IPE controls[268] - Remediation measures are being implemented to address IT control deficiencies, including enhanced user access management and governance over IT systems[269][274] - The company is developing and implementing internal controls over financial reporting as it transitions to a public reporting company[270] Executive Compensation and Stock Plans - CEO Zhenwu (Wayne) Huang's total compensation for FY 2023 was $120,816, including a salary of $120,016 and a bonus of $800[320] - CFO Zhenqiang (Michael) Huang's total compensation for FY 2023 was $50,000, with no bonus or equity awards[320] - COO Phil Zheng's total compensation for FY 2023 was $120,679, including a salary of $104,800 and a bonus of $15,879[320] - The company has adopted the Richtech Robotics Inc. 2023 Stock Option Plan, with 6,000,000 shares of Class B common stock available for issuance[330] - Non-employee directors will receive an initial award of 6,427 restricted shares of Class B common stock, vesting ratably over four years[344] - The Incentive Plan allows for the granting of stock options, restricted stock awards, and restricted stock units[332] - The exercise price for incentive stock options cannot be less than 100% of the fair market value of Class B common stock on the grant date[334] - The maximum term for stock options is 10 years, with a $100,000 limit on the aggregate fair market value of shares exercisable by any one individual in a calendar year[334] - The Incentive Plan became effective on November 16, 2023, and will continue for a term of 10 years unless terminated[342] Assets and Liabilities - Accounts receivable (net) rose significantly to $5,576,000 in 2023 from $1,656,000 in 2022[385] - Total current assets grew to $6,982,000 in 2023 compared to $3,505,000 in 2022[385] - Total liabilities increased to $3,044,000 in 2023 from $1,020,000 in 2022[385] - Additional paid-in capital expanded to $4,608,000 in 2023 from $2,378,000 in 2022[385] - Allowance for doubtful accounts increased to $333,000 in 2023 from $86,000 in 2022[406] - Amounts due from related parties increased to $134,000 as of September 30, 2023, compared to $108,000 in the previous year[435] - Amounts due to related parties decreased to $238,000 as of September 30, 2023, from $284,000 in the previous year[435] - Phil Zheng provided an interest-free and non-maturity loan to the company in May 2023[438] Product Development and Deployment - The company's ADAM food and beverage automation system was successfully launched in 2022 and deployed at multiple events, including for a "Big Four" accounting firm and a global alcoholic beverage company[20] - As of September 30, 2023, the company recognized $306,914 in revenue under a Master Service Agreement (MSA) with a top U.S. casino company[19] - The company received a lease order of $9,000 under an MSA with one of the nation's largest restaurant chains with over 2,000 U.S. locations as of September 30, 2023[19] - The company deployed ADAM in Los Angeles, Las Vegas, and New York in late 2022 and the first half of 2023, with additional deployments ongoing in New Jersey, San Francisco, and Oakland[21][23] - The company is on track to reveal new versions and models of robots by the end of 2023[21] - The company's ADAM system is being used for coffee in a Los Angeles hotel lobby, boba tea in Las Vegas, and an upcoming smoothie stall in New Jersey[23] - The company's robots perform over 1,000 deliveries monthly in busy environments, targeting hospitality sectors like restaurants, hotels, and casinos[17] - The company's AI Cloud Platform (ACP) aims to optimize workflows, lower management complexity, and minimize labor dependency through robotic fleet management[18] - The Matradee robot performs over 1,000 deliveries per month in busy restaurants, with a carrying capacity equivalent to 3-4 waiters per trip[30][31] - Richie and Robbie robots can traverse over 850,000 sq. ft. and are elevator-enabled, making them suitable for large buildings and hospitals[34][38] - The CX cleaning robot is designed for spaces under 10,000 sq. ft., while the SX handles areas up to 100,000 sq. ft., and the MX can clean spaces up to 500,000 sq. ft.[41][42][44] - ADAM, the food and beverage automation robot, is capable of making beverages autonomously and is planned to add noodle-making functionality in Q2 2024[47][48] - The ACP service collects and analyzes robot utilization metrics, providing clients with detailed operational data and advanced features like delivery playback and preemptive maintenance scheduling[28][36][45] - The Matradee robot can operate for 8-14 hours on a single charge and is designed for easy deployment, typically completed within 3-4 hours[31][32] - Richie and Robbie robots are equipped with advanced safety features, including 360-degree sensors, anti-trip mechanisms, and delivery security with pin-based and biometric access[37] - The SX cleaning robot features a high-power vacuum and multi-roller system, achieving one-pass cleaning efficiency and precise localization with a wall gap of just 3 centimeters[42] - ADAM has been deployed at corporate and celebrity events, including a "Big Four" accounting firm and a major U.S. celebrity, showcasing its versatility in food and beverage automation[48] - The company has deployed close to 200 robots across 34 states in the U.S., serving diverse environments including restaurants, hotels, casinos, schools, and senior living facilities[64] - The company is developing a new line of medical delivery robots for healthcare facilities, addressing the lack of skilled nurses in senior care[84] - The ADAM system, the company's first non-AMR robot, is a key focus of R&D efforts in 2023, aimed at accelerating robotic adoption in the service sector[83] Market Opportunities and Sales Strategy - The U.S. has over 660,000 restaurants and 130,000 hotels, with 97% of hotel members reporting a worker shortage, creating significant market opportunities for robotic solutions[51] - 20-30% of total revenue in 2022 was generated through distribution channels with over 30 regional and national distributors[54] - The company has executed MSAs with enterprise customers representing over 9,000 restaurants and hotels, and ongoing pilot programs with ten enterprises covering over 40,000 locations[54] - The company plans to expand its sales teams and has already connected with external regional sales teams in the food and beverage space[54] - The company expects to deploy thousands of robots across the United States after formal agreements with hotel enterprise customers[54] - The company has secured a space in The Forum Shops at Caesars Palace, Las Vegas, as the first location for its robotics-based restaurant franchise[54] - The company provides discounts ranging from 5% to 30% for bulk orders and offers 10% commission for referrals[67] - The company plans to expand into the consumer sector with the launch of the ADAM robotic franchise[68] - The company currently has 12 certified distributors in the U.S., 35 certified independent sales agents, and an internal enterprise sales team of 5[76] - Each robot saves clients an average of $36,856 per year in labor costs, as highlighted in client testimonials[78] Supply Chain and Manufacturing - The company has over 20 major suppliers, primarily located in the United States and China, and outsources manufacturing for most products[73] - SUNWING INDUSTRIES LIMITED was the largest supplier in 2023, providing $486,284 in materials, followed by NANJING YUDINGXIN ELECTRONIC with $80,900, UFACTORY TECHNOLOGY with $71,500, MINGSHILI INTELLIGENT SYSTEM with $70,700, and ARO ROBOTICS with $69,613[74] - The company's logistics team uses freight carriers like FedEx, TrumpCard, and Pegasus Logistics Group to ship robots, which typically weigh between 200 to 700 pounds[79] - The company's manufacturing process involves selecting suppliers and OEM/ODM partners, with most production and R&D operations based in China[86][89] Intellectual Property and Patents - The company holds several pending patents, including for tray stabilizer systems, service robots, and cleaning robots, as well as registered trademarks like RICHTECH and RICHTECH ROBOTICS[91][92] Legal and Regulatory Matters - No material litigation or regulatory matters impacting financial results were reported as of September 30, 2023[441] Employment and Workforce - The company employs 51 full-time employees, with 16 (31.4%) being dispatched workers managed through a third-party[93] Real Estate and Leasing - The company leases office facilities in Las Vegas through August 2027 and in Austin through April 2024[439] - The ClouTea store lease in Las Vegas will transition to a month-to-month agreement after January 2024[439] Leadership and Experience - Zhenwu Huang, CEO, has 20 years of experience in technology industries and previously led a company with over 100 million subscribers[278] - Zhenqiang Huang, CFO, oversees finance, accounting, and procurement, with a background in international business development[279] - Phil Zheng, COO, manages operations, business development, and R&D processes, with a focus on scaling business units[280] Future Plans and Capital Raising - The company plans to seek additional capital to expand operations, advance products, and scale sales and marketing capabilities, potentially through equity or convertible debt issuances[243] - The company expects to enter into new employment arrangements with its named executive officers following the offering[322]
Richtech Robotics (RR) - 2023 Q4 - Annual Report