RR
Richtech Robotics INC
NASDAQ
8-K: Richtech Robotics Secures $1 Million in Funding Through Promissory Note
Sentiment:
Debt Financing Agreement
22 April 2024 5:50 PM
Richtech Robotics has entered into a promissory note agreement for $1 million with YA II PN, Ltd., as part of their existing Standby Equity Purchase Agreement.
Capital raise
The promissory note represents a $1 million capital raise for Richtech Robotics.
The company may need to raise additional capital through share sales to meet its monthly payment obligations under the note.
The conversion feature of the note could result in a future capital raise through the issuance of new shares to the investor.
Summary
- Richtech Robotics issued a promissory note for $1 million to YA II PN, Ltd. on April 15, 2024.
- The note was issued under a Standby Equity Purchase Agreement previously disclosed.
- The note has a purchase price of $960,000, reflecting a 4% original issue discount.
- It carries an 8% annual interest rate and matures on February 15, 2025.
- The company must make monthly payments of one-ninth of the principal plus interest.
- Payments can be made in cash or by selling shares to the investor under the purchase agreement.
- The investor can convert the note into Class B common stock at a conversion price of $6.00 per share, which may be adjusted down to the average VWAP of the five trading days before May 28, 2024, but not below $1.50 per share.
- Richtech can redeem the note early with a 10% premium, after which the investor has 10 trading days to convert.
Sentiment
Score: 6
Explanation: The document indicates a necessary capital raise, which is positive for the company's operations but comes with the cost of interest and potential dilution. The terms are not overly favorable but are within the expected range for this type of financing.
Highlights
- Richtech Robotics secured a $1 million promissory note from YA II PN, Ltd.
- The note has a 4% original issue discount, resulting in a net of $960,000 for Richtech.
- The annual interest rate on the note is 8%.
- The maturity date for the note is February 15, 2025.
- Monthly payments of one-ninth of the principal plus interest are required.
- The conversion price for the note is initially $6.00 per share, but it can be adjusted down to the average VWAP of the five trading days before May 28, 2024, with a floor of $1.50 per share.
- A 10% cash redemption premium applies if Richtech chooses to redeem the note early.
Positives
- The company has secured $1 million in funding.
- The agreement provides flexibility in repayment options, allowing for cash payments or share sales.
- The conversion feature could potentially reduce the company's debt burden if the share price performs well.
- The company has the option to redeem the note early, providing further financial flexibility.
Negatives
- The company is paying a 4% original issue discount, reducing the net proceeds from the note.
- The 8% interest rate increases the cost of borrowing.
- Monthly payments are required, which could strain cash flow.
- The conversion price can be adjusted downwards, potentially diluting existing shareholders.
- Early redemption requires a 10% premium, increasing the cost of early repayment.
Risks
- The company may face challenges in making monthly payments if cash flow is insufficient.
- The potential for share dilution exists if the investor converts the note at a lower price.
- The company may incur additional costs if it chooses to redeem the note early.
- Failure to meet payment obligations could trigger an event of default, potentially leading to acceleration of the debt.
Future Outlook
The company will need to manage its cash flow to meet the monthly payment obligations and may need to issue shares to cover these payments. The conversion feature of the note could lead to future dilution of existing shareholders.
Management Comments
- The document does not contain any direct quotes from management.
Industry Context
This type of financing is common for growth-stage companies seeking capital. The use of a convertible note allows for flexibility and potential upside for both the company and the investor. The terms of the note, including the interest rate and conversion price, are typical for this type of agreement.
Comparison to Industry Standards
- The 8% interest rate is within the typical range for convertible notes issued to small-cap companies, but it is on the higher end.
- The 4% original issue discount is also a common feature, but it does reduce the net proceeds for the company.
- The conversion price reset mechanism is designed to protect the investor from a decline in the share price, which is a standard feature in these types of agreements.
- The 10% redemption premium is a typical penalty for early repayment, which is designed to compensate the investor for the loss of potential interest and conversion benefits.
- Comparable companies in the robotics and technology sector often use similar financing methods, including convertible notes and equity lines of credit, to fund their operations and growth.
Stakeholder Impact
- Shareholders may experience dilution if the investor converts the note into shares.
- Creditors are now owed $1 million plus interest.
- Employees may benefit from the company's increased financial stability.
- Customers and suppliers may see no immediate impact.
Next Steps
- Richtech Robotics will need to make monthly payments on the promissory note.
- The company will need to monitor its share price and consider the potential impact of the conversion feature.
- The company may need to issue shares to the investor to satisfy payment obligations.
- The company will need to manage its cash flow to ensure it can meet its financial obligations.
Key Dates
- 2024-02-15: Date of the original Standby Equity Purchase Agreement between Richtech Robotics and YA II PN, Ltd.
- 2024-03-14: Date of the letter agreement amending the Standby Equity Purchase Agreement.
- 2024-04-15: Date of the promissory note issuance.
- 2024-05-15: First payment due date under the promissory note.
- 2024-05-28: Reset date for the conversion price of the promissory note.
- 2025-02-15: Maturity date of the promissory note.
Keywords
promissory note, funding, convertible debt, equity purchase agreement, share dilution, interest rate, redemption premium, conversion price, financing, Richtech Robotics
RR
Richtech Robotics INC
NASDAQ
Sector: Industrials
Filings with Classifications
Worse than expected
3 March 2025 10:38 PM
Annual Report Amendment
- The company's total revenue decreased from $8,759 thousand in 2023 to $4,240 thousand in 2024.
- The company experienced a net loss of $8,140 thousand in 2024, compared to a net loss of $339 thousand in 2023.
Capital raise
3 March 2025 10:38 PM
Annual Report Amendment
- On September 3, 2024, the Company issued the following securities to certain institutional investors, pursuant to that certain Securities Purchase Agreement, dated as of August 29, 2024, and to certain retail purchasers (together with the institutional investors, the Investors), pursuant to the Companys prospectus, dated August 29, 2024, as filed with the SEC on August 30, 2024, in a public offering: (i) an aggregate of 13,242,963 shares of the Companys Class B common stock, (ii) pre-funded warrants to purchase up to 2,312,594 shares of Class B common stock (the Pre-Funded Warrants), and (iii) warrants to purchase up to 15,555,557 shares of Class B common stock (the Common Warrants), at a purchase price per share and accompanying Common Warrant of $1.35.
Worse than expected
14 February 2025 4:05 PM
Quarterly Report
- The company reported a net loss of $3.548 million, which is worse than the net loss of $2.750 million in the same period last year.
Capital raise
14 February 2025 4:05 PM
Quarterly Report
- The company issued an aggregate of 3,814,611 shares of Class B common stock and received aggregate proceeds of $5,149,724.85 in January 2025.
- The company entered into a warrant exercise inducement offer letter with a holder of Existing Warrants exercisable for an aggregate of 2,699,797 shares of its Class B common stock, to exercise its Existing Warrants at the existing exercise price of $1.35 per share, generating gross proceeds of approximately $3,644,726 before deducting financial advisory fees.
- In consideration for the immediate exercise of the Existing Warrants, the Company issued to such holder 2,699,797 new warrants (the Inducement Warrants) with an exercise price of $4.00 per share, which are immediately exercisable and valid for five years from issuance (the Armistice Warrant Inducement).
Capital raise
10 February 2025 8:01 PM
Current Report
- Richtech Robotics is set to receive approximately $3.64 million in gross proceeds from the exercise of existing warrants.
- The company is issuing new warrants with an exercise price of $4.00 per share as an inducement for the warrant holder to exercise their existing warrants.
Worse than expected
14 January 2025 4:53 PM
Annual Results
- The company's revenue decreased significantly due to the transition to a RaaS model.
- The company's net loss increased substantially compared to the previous year.
Worse than expected
31 October 2024 4:30 PM
Current Report
- The company's stock price falling below $1.00 for 30 consecutive days is worse than expected and triggers a delisting notice from Nasdaq.
Capital raise
5 September 2024 4:58 PM
Public Offering Announcement
- The company completed a public offering of 13,242,963 shares of Class B common stock, pre-funded warrants for 2,312,594 shares, and warrants for 15,555,557 shares.
- The offering generated approximately $19.4 million in net proceeds for the company.
- The company is restricted from issuing common stock or equivalents for 90 days and from variable rate transactions for one year, with some exceptions.
Capital raise
29 August 2024 9:50 PM
Registration Statement
- Richtech Robotics is seeking to raise up to $1,087,502.30 through the sale of Class B common stock, pre-funded warrants, warrants, and placement agent warrants.
- The offering is being conducted to raise additional capital for the company.
- The Placement Agent is acting as the placement agent on behalf of the Company on a best efforts basis.
Capital raise
27 August 2024 9:24 AM
Registration Statement
- Richtech Robotics is conducting a public offering to sell up to 14,492,753 shares of Class B common stock and warrants to purchase an equal number of shares.
- The company is also offering pre-funded warrants as an alternative to shares for investors who might exceed beneficial ownership limits.
- The assumed combined offering price is $1.38 per share and accompanying warrant, based on the stock's price on August 23, 2024.
- The company aims to raise up to $20 million through this offering.
Worse than expected
14 August 2024 6:16 PM
Quarterly Report
- The company reported a net loss of $5.181 million for the nine months ended June 30, 2024, which is worse than the loss of $2.543 million for the same period in 2023.
- Product revenue decreased by 55% due to the transition to a RaaS model, which is worse than the previous period.
Capital raise
14 August 2024 6:16 PM
Quarterly Report
- The company entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. for up to $50 million.
- The company received $3 million in pre-advances via convertible promissory notes, which were fully repaid in July 2024.
- The company issued 259,350 shares of Class B common stock as a commitment fee.
Worse than expected
14 May 2024 5:41 PM
Quarterly Report
- The company's net loss increased significantly compared to the same period last year, indicating worse than expected financial performance.
- Product revenue decreased by 59%, which is a significant drop and worse than expected.
Capital raise
14 May 2024 5:41 PM
Quarterly Report
- The company entered into a Standby Equity Purchase Agreement with YA II PN, Ltd., which could provide up to $50 million in funding over 24 months.
- The company issued three convertible promissory notes for $1 million each, with the first two in February and March 2024, and the third in April 2024.
- The company issued 259,350 shares of Class B common stock to the investor as a commitment fee.
Capital raise
22 April 2024 5:50 PM
Debt Financing Agreement
- The promissory note represents a $1 million capital raise for Richtech Robotics.
- The company may need to raise additional capital through share sales to meet its monthly payment obligations under the note.
- The conversion feature of the note could result in a future capital raise through the issuance of new shares to the investor.
Capital raise
29 March 2024 8:23 PM
S-1/A Filing
- Richtech Robotics has a standby equity purchase agreement with YA II PN, Ltd. for up to $50 million.
- The company may issue up to 12,983,208 shares of Class B common stock to the investor.
- The company can obtain pre-advances up to $3 million via convertible notes.
Better than expected
26 March 2024 8:43 PM
Annual Report Amendment
- The company's revenue increased by 45% year-over-year, indicating better than expected growth.
- The company's gross profit margin increased from 65% to 69%, indicating improved profitability.
- The company's net loss decreased from $507 thousand to $339 thousand, indicating improved financial performance.
Capital raise
22 March 2024 5:02 PM
Debt Financing Agreement
- The company has raised $1 million through a promissory note.
- The note can be converted into Class B common stock, potentially leading to further equity issuance.
- The company may need to issue shares to cover monthly payments if it does not have sufficient cash.
Capital raise
15 March 2024 6:13 PM
S-1 Filing
- The document details a potential capital raise of up to $50 million through a standby equity purchase agreement with YA II PN, Ltd.
- The agreement allows Richtech to sell shares of Class B common stock to the investor over a 24-month period.
- The company can also receive pre-advances of up to $3 million via convertible promissory notes.
Capital raise
15 March 2024 4:15 PM
Material Definitive Agreement Amendment
- The agreement involves a potential $50 million share purchase agreement with YA II PN, Ltd.
- The company has received a $1 million pre-advance and is expected to receive two additional $1 million pre-advances upon the satisfaction of certain conditions.
Capital raise
15 March 2024 4:05 PM
Financing Agreement Announcement
- Richtech Robotics has entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. for up to $50 million.
- The company has also secured a pre-advance facility of up to $3 million.
- The company will issue shares to the investor as part of the agreement.
Capital raise
21 February 2024 4:08 PM
Standby Equity Purchase Agreement
- The document details a Standby Equity Purchase Agreement for up to $50 million.
- The agreement includes a pre-advance of up to $3 million, with the first $1 million already advanced.
- The company can issue shares to the investor over a 24-month period, subject to certain conditions and limitations.
Worse than expected
14 February 2024 5:01 PM
Quarterly Report
- The company's net loss increased significantly compared to the same period last year, indicating worse than expected financial performance.
Capital raise
11 January 2024 5:28 PM
Annual Report
- The company anticipates that it will need additional funding in connection with its continuing operations after twelve months.
- The company expects to finance its future cash needs through public or private equity or debt financings, third-party funding, and other arrangements.
- The company will continue seeking additional capital to expand its operations, advance its products, and scale its sales and marketing capabilities.
- The company will continue seeking additional financing sources to meet its working capital requirements, make investment in research and development and make capital expenditures needed to maintain and expand its business.
- If the company raises additional funds through further issuances of equity or convertible debt securities, its existing stockholders could suffer significant dilution.
Worse than expected
11 January 2024 5:28 PM
Annual Report
- The company reported a net loss of $339 thousand in 2023, compared to a net loss of $507 thousand in 2022, indicating that while losses have decreased, the company is still not profitable.
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