| 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 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. $604,500 of our cash and cash
equivalents is earmarked for a future investment in a cafe. Once this investment is finalized, the corresponding funds will be reclassified
as long-term investments on our balance sheet. Accounts Receivable Accounts receivable primarily
consist of trade receivables presented in 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 receivable are expected to be billed and
collected within twelve months. We actively manage customer
credit risk through credit limits, ongoing monitoring, and a robust approval process. In-depth credit evaluations are conducted for all
new customers and periodically for existing customers. Based on these evaluations, we may require additional credit enhancements such
as letters of credit, bank guarantees, or advance payments. We maintain an allowance for credit losses, considering both specific identified
risks and broader historical trends. We do not believe our accounts receivable present a material credit risk at this time. Inventories We employ a standard cost
valuation approach for our inventory, with adjustments to align with the lower of cost or estimated net realizable value. This estimate
considers future demand and market conditions to ensure accurate representation. 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 The net realizable value adjustments are informed by recent historical sales
activity and selling prices, alongside future price estimations. We fully reserve for inventories and non-cancellable purchase orders
for inventory deemed obsolete. We actively manage inventory risk through regular reviews and comparisons of stock levels with anticipated
demand. This proactive approach allows for early identification of excess inventory, enabling us to implement corrective actions such
as promotional offers. Additionally, we maintain close collaboration with suppliers to ensure inventory acquisition aligns with our actual
needs and timing. Inventory as of June 30,
2024 and September 30, 2023 are as follows:
June 30, September 30,
Raw materials $ 80 $ 164
Finished goods 319 658
Total inventories $ 399 $ 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 six Property and equipment as
of June 30, 2024 and September 30, 2023 are as follows:
June 30, September 30,
Furniture, fixtures & equipment $ 65 $ 63
Leasehold improvements 4 4
69 67
Accumulated depreciation (48 ) (39 )
Property and equipment, net $ 21 $ 28 Depreciation expense for the
nine months ended June 30, 2024 and 2023 was $9 and $6, 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 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 noteworthy 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 Our revenue recognition policy
adheres to the principle of recognizing revenue when the promised goods or services are transferred to customers, at an amount reflecting
the consideration we expect to receive. This principle aligns with the five-step model outlined in the accounting standard ASC 606, 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 direct sale of our branded robotic products to customers. We consider customer purchase orders, which in some cases are governed by
master sales agreements, to be the contracts with our customers. Each contract establishes a single performance obligation: the delivery
of our product in accordance with the specified payment and shipping terms. The entire transaction price is allocated to this single performance
obligation. Product revenue is recognized upon the customer acquiring control of the product, which aligns with either the shipment or
delivery date as stipulated in 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 the cost of goods sold. Disaggregation of Revenue The following table sets forth
revenue by product for the nine months ended June 30, 2024 and 2023:
Nine months ended June 30,
2024 2023
Robotics
Product revenue $ 1,252 $ 2,767
Service revenue 1,510 258
Leasing revenue 604 146
Total Robotics revenue 3,366 3,171
Smart hardware 16 1
Interactive system 101 167
ClouTea* 232 25
Total revenue, net $ 3,715 $ 3,364 Notes: * ClouTea is the revenue generated from our boba tea store opened in May 2023, to further develop our business model. This is our model store of interactive robot barista by utilizing our ADAM robot. In July 2024, the Company received notice from the landlord of its
ClouTea location that the lease would be terminated July 31, 2024. Since July 31, 2024, ClouTea has ceased operations pending a new location.
The Company is currently evaluating its options and potential impacts of this lease termination, including relocation costs and potential
disruptions to operations. At this time, ClouTea is not in operation. The Company cannot determine the full financial impact of this event,
but it is not expected to be material to the Company’s financial condition or results of operations. 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 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. |
