Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our Unaudited condensed consolidated financial statements and the related notes contained elsewhere in this Report and in our other filings with the SEC. 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" in our 2025 Annual Report and elsewhere in this Report. These risks could cause our actual results to differ materially from any future performance suggested below.

Overview

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.

Recent Developments

On April 1, 2026, we entered into a purchase and sale agreement with PSIF EBS Rainbow LLC to acquire a building of approximately 79,325 square feet located at 9530 S. Rainbow Blvd., Las Vegas, Nevada for a purchase price of $21,180,000, including a $600,000 earnest money deposit. The agreement provides for a 45-day inspection period during which we may terminate the agreement and receive a refund of the earnest money. Closing is expected to occur within 15 days after the inspection period, subject to customary closing conditions. The purchase was closed on May 29, 2026.

In January 2026, we launched a strategic transformation initiative referred to internally as "AI Across All" ("AAA"), under which we are transitioning our operations, software platforms, and technology infrastructure to an AI-native architecture. As part of this initiative, we undertook a comprehensive redevelopment and modernization of our existing software assets. We evaluated the impact of this transformation on the expected future economic benefits associated with certain software-related intangible assets. Based on the accelerated deployment of our next-generation AI-native systems, we determined that the remaining useful lives of certain existing software platforms have been significantly shortened. We completed the transition, redevelopment, and deployment of substantially all affected software platforms by June 30, 2026. Accordingly, we concluded that the remaining carrying value of such software-related intangible assets will no longer provide future economic benefit beyond June 30, 2026. As a result, we intend to fully amortize, write off, or otherwise recognize the remaining carrying value of these assets as research and development expense during the period ending June 30, 2026. We believe this accounting treatment appropriately reflects the successful completion of our transition to an AI-native technology platform and the replacement of legacy software assets with newly developed AI-enabled systems.

Key Business Highlights for the Second Quarter of Fiscal Year 2026

Strategic and Operational Milestones

	●	RaaS Contract Acceleration: Successfully expanded our Robots-as-a-Service (RaaS) footprint, demonstrating continued market adoption of our recurring revenue model. This growth validates our long-term strategy to shift away from one-time hardware sales toward a high-quality, predictable revenue base.
	●	Continued Investment in Research and Development: During the second quarter of fiscal year 2026, we continued to invest in research and development focused on artificial intelligence, system autonomy, and intelligent human-machine interaction across our robotic platforms. As a member of the NVIDIA Connect program, we have continued to utilize NVIDIA-based AI computing platforms and robotics software frameworks to enhance real-time perception, decision-making, and on-device autonomy.
		These efforts are intended to enhance product functionality and support scalable commercial deployment across multiple industry verticals.

●

Expansion of Hospitality Management Operations (AlphaMax): Advanced the strategic rollout of our proprietary hospitality concepts by commencing development of a new Clouffee and Tea location in the San Francisco Financial District. Site preparation and operational workflows are currently in progress, with the location scheduled to officially commence operations in the third quarter of fiscal year 2026.

Financial and Capital Milestones

●

Despite higher operating expenses from strategic investments, we achieved year-over-year improvement in net loss across both reporting periods. For the six months ended March 31, 2026, consolidated net loss narrowed to $10.4 million, a 65.1% reduction from $29.9 million in the prior-year period. This improvement was primarily driven by $6.7 million in investment income, compared to $0.7 million in the prior-year period, as well as a non-cash gain of $0.4 million from the change in fair value of warrant liabilities, compared to a non-cash loss of $21.8 million in the prior-year period. For the three months ended March 31, 2026, net loss attributable to the Company was $0.3 million, reflecting a 55% improvement from $0.6 million in the prior-year quarter. This near-breakeven result was largely propelled by $3.3 million in investment income. During both periods, we also recorded non-cash gains from the change in fair value of warrant liabilities, which are driven by fluctuations in our stock price and do not affect our operating cash flows. These results underscore our strengthened financial position, disciplined expense management, and the meaningful contribution of our investment portfolio, all of which position us well for continued progress toward sustainable profitability.

●

In January 2026, we successfully closed a private placement with an institutional investor, raising approximately $35.89 million in net proceeds by issuing 8,500,000 shares of our Class B common stock at $4.55 per share, which generated gross proceeds of approximately $38.68 million before deducting placement agent fees and offering-related expenses of $2.79 million. This capital raise reflects strong investor confidence in our strategic direction, strengthens our working capital position, and provides us with the necessary resources to advance our product development capabilities and scale robotic hardware inventory to meet growing customer demand. With this financing, we are well-positioned to execute on our growth initiatives and drive long-term shareholder value.

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 could enter the market, which may lead to price competition and a decline in profit margins;

●

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

	●	Some of our foundational hardware components continue to be manufactured and assembled by engineering partners in East Asia, which presents structural exposure to international freight disruptions, geopolitical dynamics, and regional logistical bottlenecks;
	●	We anticipate that our general and administrative expenses will trend upward as we continue to invest in organizational maturement. These expansionary costs will primarily represent enhanced compliance infrastructure, regulatory audit overhead, continuous internal control remediation (specifically surrounding accounting oversight under ASC 606 and ASC 842), and necessary adjustments to our director and officer (D&O) coverage;

●

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 be re-evaluated on a regular basis.

Results of Operations

Comparison of the six and three months ended March 31, 2026 and 2025

The following table summarizes our results of operations (in thousands) for the six and the three months ended March 31, 2026 and 2025, together with the dollar change in those items from period to period:

		Six months ended March 31,												Three months ended March 31,
		2026				2025				Change				2026				2025				Changes
Revenues		$	2,572			$	2,424			$	148			$	1,501			$	1,167			$	334
Cost of revenues			1,877				1,245				632				836				802				34
Gross profit			695				1,179				(484	)			665				365				300
Operating expenses:
Research and development			2,194				804				1,390				1,063				320				743
Sales and marketing			3,409				615				2,794				348				370				(22	)
General and administrative			12,497				8,771				3,726				4,288				4,757				(469	)
Total operating expenses			18,100				10,190				7,910				5,699				5,447				252
Loss from operations			(17,405	)			(9,011	)			(8,394	)			(5,034	)			(5,082	)			48
Non-operating income(expense):
Investment Income			6,737				720				6,017				3,336				387				2,949
Gain (loss) from change in fair value of warrant liability			375				(21,837	)			22,212				1,556				4,128				(2,572	)
Loss on disposition of subsidiary			(132	)			-				(132	)			(132	)			-				(132	)
Interest expenses, net			(4	)			(9	)			5				(2	)			(5	)			3
Total other expenses			6,976				(21,126	)			28,102				4,758				4,510				248
Loss before income tax expense			(10,429	)			(30,137	)			19,708				(276	)			(572	)			296
Income tax benefit/(expense)			-				-				-				-				-				-
Net loss			(10,429	)			(30,137	)			19,708				(276	)			(572	)			296
Less: Net loss Attributable to Non-Controlling Interest			(8	)			(38	)			30				-				(17	)			17
Net loss attributable to Richtech		$	(10,421	)		$	(30,099	)		$	19,678			$	(276	)		$	(555	)		$	279

Revenue

		Six months ended March 31,												Three months ended March 31,
		2026				2025				Change				2026				2025				Changes
Revenues
Product sales		$	597			$	1,413			$	(816	)		$	317			$	664			$	(347	)
Event services			889				424				465				507				292				215
RaaS			690				245				445				371				107				264
Others			396				342				54				306				104				202
Total revenues		$	2,572			$	2,424			$	148			$	1,501			$	1,167			$	334

For the six months ended March 31, 2026, net revenue increased by $0.1 million, or approximately 6.1%, to $2.6 million, compared to $2.4 million for the same period in 2025.

For the three months ended March 31, 2026, net revenue increased by $0.3 million, or approximately 28.6%, to $1.5 million, compared to $1.2 million for the same period in 2025.

The overall revenue growth reflects continued strong customer engagement, increased revenue from event rental services, the successful scaling of our Robots-as-a-Service (RaaS) model, and the ongoing expansion of Alphamax Management LLC, our wholly-owned subsidiary. Alphamax manages the complete operational workflow of our robot-operated restaurant locations, seamlessly blending our advanced AI robotics (such as the ADAM beverage system) into commercial foodservice environments. Rather than pursuing a broad multi-state rollout, Alphamax is currently focusing on an optimized, high-visibility geographic footprint; it currently operates one restaurant location in Georgia, maintains an operational storefront in Las Vegas, Nevada, and is in the process of opening an additional automated location in San Francisco, California. This targeted footprint establishes a steady, repeatable blueprint to scale our robotics solutions and capture predictable food and beverage revenue. These drivers collectively underscore the growing market acceptance of our offerings and our ability to capture increasing demand across our target markets. We remain confident in our revenue momentum as we continue to execute on our growth strategy.

Product Sales Revenue: Product revenue decreased for both periods, reflecting our strategic shift towards increased RaaS:

●

For the six months ended March 31, 2026, product revenue decreased by $0.8 million, or approximately 57.7%, to $0.6 million, compared to $1.4 million in 2025.

●

For the three months ended March 31, 2026, product revenue decreased by $0.347 million, or approximately 52.3%, to $0.317 million, compared to $0.664 million in 2025.

Event Services Revenue: Event Services revenue increased significantly, reflecting increased customer activity:

●

For the six months ended March 31, 2026, event services revenue increased by $0.5 million, or approximately 109.7%, to $0.9 million, compared to $0.4 million in 2025.

●

For the three months ended March 31, 2026, event services revenue increased by $0.2 million, or approximately 73.6%, to $0.5 million, compared to $0.3 million in 2025.

RaaS Revenue: RaaS revenue showed a notable increase over the six-month period, demonstrating the growing adoption of our RaaS model:

●

For the six months ended March 31, 2026, RaaS revenue increased by $0.445 million, or approximately 181.6%, to $0.690 million, compared to $0.245 million in 2025.

●

For the three months ended March 31, 2026, RaaS revenue increased by $0.3 million, or approximately 246.7%, to $0.4 million, compared to $0.1 million in 2025.

Cost of Revenue, net

Cost of revenue, net, increased for both the six and three months ended March 31, 2026:

For the six months ended March 31, 2026, cost of revenue, net, increased by $0.6 million, or approximately 50.8%, to $1.9 million, compared to $1.2 million for the same period in 2025.

For the three months ended March 31, 2026, cost of revenue, net, increased by less than $0.1 million, or approximately 4.2%, to $0.8 million, compared to $0.8 million for the same period in 2025.

This overall variance is driven by shifting dynamics across our core revenue channels:

	●	Product Sales Cost: For the six months ended March 31, 2026, product cost of revenue decreased by $0.2 million, or 23.0%, to $0.6 million, matching our intentional scale-back of upfront hardware transactions.

●

Service and RaaS Cost Scaling: Conversely, expansion in our high-growth segments led to elevated fulfillment costs. Event services cost of revenue increased by $0.3 million for the six-month period, while RaaS cost of revenue scaled by $0.4 million. This reflects initial logistics, deployment footprint extensions, and asset depreciation associated with our expanding fleet under active lease.

Gross Profit

Gross profit experienced mixed trends for the six and three months ended March 31, 2026:

For the six months ended March 31, 2026, gross profit decreased by $0.5 million, or approximately 41.1%, to $0.7 million, compared to $1.2 million for the same period in 2025. Gross margin decreased to approximately 27.0% for the six months ended March 31, 2026, compared to approximately 48.6% for the same period in 2025.

For the three months ended March 31, 2026, gross profit increased by $0.3 million, or approximately 82.2%, to $0.7 million, compared to $0.4 million for the same period in 2025. Gross margin improved to approximately 44.3% for the three months ended March 31, 2026, compared to approximately 31.3% for the same period in 2025.

The decrease in gross profit for the six-month period primarily reflects our strategic investments in scaling operations and expanding our service capabilities, which resulted in higher cost of revenue as we continue to build the infrastructure necessary to support future growth.

The improvement for the three-month period was primarily driven by higher revenue volumes across our three business lines, including Event Services, RaaS, and Others. Meanwhile, the improvement in gross margin was mainly attributable to the growing revenue contribution from our Others category, which carries a higher margin profile.

Research and development expenses

Research and development expenses increased for both the six months and three months ended March 31, 2026:

For the six months ended March 31, 2026, research and development expenses increased by $1.4 million, or approximately 172.9%, to $2.2 million, compared to $0.8 million for the same period in 2025.

For the three months ended March 31, 2026, research and development expenses increased by $0.7 million, or approximately 232.2%, to $1.1 million, compared to $0.3 million for the same period in 2025.

These increases reflect our continued commitment to advancing our product roadmap and strengthening our competitive position through strategic investments in product development, engineering capabilities, and technology initiatives. We believe these investments are critical to driving long-term growth and delivering innovative solutions to our customers, and we remain focused on scaling our R&D efforts to capitalize on market opportunities.

Sales and Marketing Expenses

Sales and marketing expenses showed mixed trends for the six and three months ended March 31, 2026:

For the six months ended March 31, 2026, sales and marketing expenses increased by $2.8 million, or approximately 454.3%, to $3.4 million, compared to $0.6 million for the same period in 2025. The increase was primarily attributable to two factors: (i) higher non-cash stock-based compensation expense, which included a significant one-time equity incentive award granted to employees and management within our sales and marketing organization during the first quarter of fiscal 2026, and (ii) increased spending on industry trade shows and events to promote our sales and enhance brand visibility. The equity award was designed to recognize performance achievements and support key talent retention within the commercial team. As stock-based compensation is a non-cash item, this component of the increase did not impact our operating cash flows for the six-month period. Excluding the impact of the one-time equity award and the incremental trade show and event-related investments, the remaining increase in sales and marketing expenses for the six-month period was largely in line with our normal operating cost structure, reflecting disciplined spending across other expense categories. The one-time equity award was recorded entirely in the first quarter and did not recur in the second quarter; accordingly, it affected the year-to-date comparison but not the three-month comparative period discussed below.

For the three months ended March 31, 2026, sales and marketing expenses decreased by $22 thousand, or approximately 5.9%, to $348 thousand, compared to $370 thousand for the same period in 2025. The slight decrease reflects our ongoing cost discipline and expense management efforts, which largely offset routine inflationary pressures. Recurring stock-based compensation expense remained relatively flat compared to the prior-year period, as the one-time equity incentive award recognized in the first quarter of fiscal 2026 was not present in the current quarter. Overall, sales and marketing expenses for the three-month period were broadly in line with the prior-year comparable period, reflecting our continued focus on optimizing go-to-market spend while maintaining investment in strategic growth initiatives.

We are continuously evaluating the effectiveness of our sales and marketing investments to ensure they align with our strategic objectives and drive sustainable revenue growth.

General and Administrative Expenses

General and administrative expenses increased for the six months ended March 31, 2026, but decreased for the three months ended March 31, 2026.

For the six months ended March 31, 2026, general and administrative expenses increased by $3.7 million, or approximately 42.5%, to $12.5 million, compared to $8.8 million for the same period in 2025. The increase was primarily attributable to higher non-cash stock-based compensation expense, which included a significant one-time equity incentive award granted to employees and management during the first quarter of fiscal year 2026. This award was designed to recognize performance achievements and support key talent retention. General and administrative expenses for the six months ended March 31, 2026 also included an approximately $0.9 million provision for expected credit losses, primarily associated with a limited number of past-due customer receivables. As both stock-based compensation and provision for expected credit losses are non-cash items, these increases did not impact our operating cash flows for the six-month period. Excluding these impacts, the remaining increase in G&A for the six-month period was largely in line with our normal operating cost structure, reflecting disciplined spending across other expense categories. This one-time award was recorded entirely in the first quarter and did not recur in the second quarter; accordingly, it affected the year-to-date comparison but not the three-month comparative period discussed below.

For the three months ended March 31, 2026, general and administrative expenses decreased by $0.5 million, or approximately 9.9%, to $4.3 million, compared to $4.8 million for the same period in 2025. The decrease was primarily attributable to our continued cost discipline and effective expense management across the organization. We achieved meaningful reductions in personnel-related costs as part of our ongoing efficiency initiatives. Recurring stock-based compensation expense remained relatively flat compared to the prior-year period, as the one-time equity incentive award recognized in the first quarter of fiscal 2026 was not present in the current quarter. The decrease in SG&A reflects our commitment to aligning operating expenses with current business priorities while maintaining investment in key growth areas.

We are committed to carefully managing our general and administrative expenses while ensuring we have the necessary resources to support the company's growth and meet our obligations. While the increase in G&A expenses is a natural consequence of our growth and transition to becoming a public company, we are committed to managing these expenses effectively. We are actively implementing cost optimization measures, streamlining processes, and leveraging technology to improve efficiency and control costs. We believe that our strategic investments in human capital, infrastructure, and compliance are essential to support our long-term growth objectives. As we continue to scale our operations and expand our market presence, we anticipate that G&A expenses will continue to increase, but we are committed to managing these costs prudently and ensuring that they align with our overall financial performance.

Investment Income

Investment income increased substantially for both the six and three months ended March 31, 2026.

For the six months ended March 31, 2026, investment income increased by $6.0 million to $6.7 million, compared to $0.7 million for the same period in 2025.

For the three months ended March 31, 2026, investment income increased by $2.9 million to $3.3 million, compared to $0.4 million for the same period in 2025.

These increases are primarily attributable to higher average invested cash balances and higher interest rates on our cash balances.

Gain (Loss) from Change in Fair Value of Warrant Liabilities

For the six months ended March 31, 2026, we recognized a gain of $0.4 million from the change in fair value of warrant liabilities, compared to a loss of $21.8 million in the same period of the prior year. The favorable variance of $22.2 million was primarily driven by a decrease in the fair value of the underlying warrants during the current period. The change in fair value is a non-cash item and does not impact our operating cash flows.

For the three months ended March 31, 2026, we recognized a gain of $1.6 million from the change in fair value of warrant liabilities, compared to a gain of $4.1 million in the same period of the prior year. The unfavorable variance of $2.5 million was primarily attributable to changes in the Company's stock price. This non-cash gain did not affect our operating cash flows for the period.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents and short-term investments, which consist of cash on hand and highly liquid short-term investments. As of March 31, 2026, our cash and cash equivalents and short-term investments totaled $362.6 million, representing an increase of $110.6 million from $251.9 million at September 30, 2025. This increase was primarily driven by net proceeds of $105.0 million received from the issuance of new shares. These proceeds significantly strengthened our balance sheet and enhanced our financial flexibility to invest in growth initiatives, including expanding our research and development team and purchasing property and equipment to support our growing operations. The increase was partially offset by cash used in operating activities, primarily attributable to our net loss and investments in working capital.

		Six months ended
		March 31,
		2026				2025				Change
Net Cash provided by (used in):
Operating activities		$	(2,027	)		$	(4,937	)		$	2,910
Investing activities			(45,928	)			(15,335	)			(30,593	)
Financing Activities			113,030				16,832				96,198
Net increase (decrease) in cash		$	65,075			$	(3,440	)		$	68,515

Operating Activities

Net cash used in operating activities was $2.0 million for the six months ended March 31, 2026, compared to $4.9 million for the same period in 2025. The $2.9 million improvement in operating cash flow was primarily attributable to a significantly reduced net loss of $10.4 million in the current period, compared to a net loss of $30.1 million in the prior-year period, partially offset by changes in working capital.

Non-cash adjustments to reconcile net loss to net cash used in operating activities for the current period mainly included stock-based compensation of $8.6 million, allowance for credit loss of $0.9 million, depreciation and amortization of $0.8 million, a $0.1 million loss on disposition of a subsidiary, and a $0.4 million gain from the change in fair value of warrant liabilities, compared to a $21.8 million loss in the prior-year period. These adjustments positively contributed to the year-over-year improvement in operating cash flow.

Changes in net operating assets and liabilities resulted in a net outflow of approximately $1.7 million for the current period, primarily driven by an increase in inventory of $0.9 million and a decrease in accrued expenses and other payables of $1.1 million, partially offset by a decrease in gross accounts receivable of $0.1 million and other changes in operating assets and liabilities. In the prior-year period, changes in net operating assets and liabilities resulted in a net outflow of approximately $0.3 million, primarily due to increases in accounts receivable and increase in operating lease right-of-use asset, partially offset by an increase in accounts payable and lease liabilities.

Investing Activities

Net cash used in investing activities was $45.9 million for the six months ended March 31, 2026, compared to $15.3 million for the same period in 2025. The $30.6 million unfavorable variance was primarily driven by $67.0 million in purchases of short-term investments, partially offset by $21.3 million in proceeds from maturities and sales of short-term investment. In the prior-year period, cash used in investing activities was primarily attributable to $14.8 million in purchases of short-term investments and $0.4 million in purchase of equipment.

Financing Activities

Net cash provided by financing activities totaled $113.0 million for the six months ended March 31, 2026, compared to $16.8 million for the same period in 2025. The increase was primarily due to $110.3 million in proceeds from the issuance of ordinary shares and $9.8 million in proceeds from warrant exercises, partially offset by $1.7 million of payments of settlement of employee tax liabilities in connection with treasury stock transaction. Overall, these activities reflect our successful capital raising activities during the period. In the prior-year period, cash provided by financing activities primarily consisted of $18.0 million in proceeds from the issuance of ordinary shares.

Contractual Obligations

We are a smaller reporting 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 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.

Seasonality

Seasonality does not materially affect our business or the results of our operations.

Off-Balance Sheet Arrangements

We do not have off-balance sheet arrangements.

Recent Accounting Pronouncements Not Yet Adopted

See Note 2 to our unaudited financial statements included elsewhere in this report for more information.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows may be affected.

In particular, the fair value of warrant liabilities is determined using the Black-Scholes option pricing model, which requires significant assumptions, including expected volatility, expected term, risk-free interest rate, and dividend yield. The expected volatility is based on the historical volatility of our common stock, and the expected term is estimated based on the remaining contractual term of the warrants. Changes in these assumptions could result in significant fluctuations in the fair value of warrant liabilities, which could have a material impact on our financial statements.

We have assessed the impact of these estimates and are not aware of any specific events or circumstances that required an update to our estimates and assumptions, or materially affected the carrying value of our assets or liabilities, as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

JOBS Act

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.

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;

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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; and

●

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.

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. 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 difficult for investors and securities analysts to evaluate our company. As a result, investor confidence in our company and the market price of our common stock may be materially and adversely affected.