| Summary of Significant Accounting Policies | 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 Accounts
Receivable Accounts
receivables are primarily comprised of trade receivables presented net of rebates, price protection and an allowance for credit loss.
Accounts receivable also include unbilled receivables, which primarily represent work completed on development services recognized as
revenue but not yet invoiced to customers and semi-custom products under non-cancellable purchase orders that have no alternative use
to the Company at contract inception, for which revenue has been recognized but not yet invoiced to customers. All unbilled accounts
receivables are expected to be billed and collected within twelve months. We
manage our exposure to customer credit risk through credit limits, credit lines, ongoing monitoring procedures and credit approvals.
Furthermore, we perform in-depth credit evaluations of all new customers and, at intervals, for existing customers. From this, we may
require letters of credit, bank or corporate guarantees or advance payments if deemed necessary. We maintain an allowance for credit
loss, consisting of known specific troubled accounts as well as an amount based on overall estimated potential uncollectible accounts
receivable based on historical experience and review of their current credit quality. The amount of allowance for doubtful accounts were
$333 and $86 as of September 30, 2023 and 2022, respectively. We do not believe the receivable balance from its customers represents
a significant credit risk. 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 its products, we consider assumptions such
as changes in business and economic conditions, other-than-temporary decreases in demand for its 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, 2023 and 2022 are as follows:
September 30,
2023 2022
Raw materials $ 164 $ 286
Finished goods 658 1,087
Total
inventories $ 822 $ 1,373 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 six Property
and equipment, as of September 30, 2023 and 2022 are as follows:
September 30
2023 2022
Furniture, fixtures &
equipment $ 63 $ 63
Leasehold improvements 4 4
67 67
Accumulated depreciation (39 ) (26 )
Property
and equipment, net $ 28 $ 41 Depreciation
expense for 2022 and 2021 was $13 and $7, 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. 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. 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. Disaggregation
of Revenue The
following table sets forth revenue by product for the years ended September 30:
September 30
Notes 2023 2022
Robotics
Product revenue $ 5,665 $ 2,981
Service revenue 2,602 1,876
Leasing
revenue 197 441
Total Robotics revenue 8,464 5,298
Smart hardware 7 562
Interactive system 198 189
Cloutea* 90 —
Total
revenue, net $ 8,759 $ 6,049 Notes:
* Cloutea is the revenue generated from our boba tea store open in May 2023, in order to further develop our business model. This is our model store of interactive robot barista by utilizing our ADAM robot. 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 Leases In
December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes 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. COVID-19 In
March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues
to spread throughout the United States. The COVID-19 pandemic has adversely impacted global commercial activity, disrupted supply
chains and contributed to significant volatility in financial markets. Starting in 2020, and continuing through the date hereof, the
COVID-19 pandemic continued to adversely impact many different industries. The ongoing COVID-19 pandemic could have a continued material
impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this
situation precludes any prediction as to the extent and the duration of the impact of COVID-19. The COVID-19 pandemic therefore presents
material uncertainty and risk with respect to the Company and its performance and could affect its financial results in a materially
adverse way. The Company has considered information available to it as of the date of issuance of these consolidated financial statements
and is not aware of any specific events or circumstances that would require an update to its estimates or judgements, or an adjustment
to the carrying value of its assets or liabilities. The accounting estimates and other matters assessed include, but were not limited
to, long-lived assets and accrued expenses. These estimates may change as new events occur and additional information becomes available.
Actual results could differ materially from these estimates. In response to the changing dynamics of the COVID-19 pandemic and endemic,
the Company closely monitors the Centers for Disease Control and Prevention recommendations in order to react quickly with appropriate
safety protocols. Management is continuing to monitor the effect of COVID-19 and intends to adjust its operational protocols as may be
necessary. |
