Palladyne AI Corp.(PDYN) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Sarcos' Q1 2023 unaudited financials report a $21.5 million net loss, with assets at $147.9 million and equity at $125.7 million Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets to $147.9 million at March 31, 2023, primarily from reduced cash and marketable securities Balance Sheet Summary | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :----------------------------- | :------------------------------ | | Total Assets | $147,860 | $167,625 | | Cash and cash equivalents | $25,368 | $35,159 | | Marketable securities | $69,352 | $79,337 | | Inventories, net | $6,058 | $3,562 | | Intangible assets, net | $18,297 | $19,116 | | Total Liabilities | $22,128 | $23,175 | | Total Stockholders' Equity | $125,732 | $144,450 | | Accumulated deficit | $(324,097) | $(302,621) | | Common Stock Shares Issued and Outstanding | 154,282,881 | 154,252,704 | Condensed Consolidated Statements of Operations The company reported a net loss of $21.5 million for Q1 2023, with revenue increasing 209% to $2.3 million from product development contracts Statements of Operations Summary | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :----------------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Revenue, net | $2,296 | $743 | | Cost of revenue | $1,786 | $488 | | Research and development | $9,403 | $5,881 | | General and administrative | $9,735 | $17,792 | | Sales and marketing | $3,741 | $2,211 | | Intangible amortization expense | $819 | $— | | Total operating expenses | $25,484 | $26,372 | | Loss from operations | $(23,188) | $(25,629) | | Interest income, net | $1,099 | $11 | | (Loss) gain on warrant liability | $(436) | $6,414 | | Other income, net | $1,049 | $2 | | Net loss | $(21,476) | $(19,202) | | Net loss per share (Basic and diluted) | $(0.14) | $(0.14) | | Weighted-average shares used in computing net loss per share | 152,827,729 | 137,908,690 | Condensed Consolidated Statements of Comprehensive Loss The comprehensive loss for Q1 2023 was $21.4 million, slightly lower than the net loss due to unrealized gains on investments Statements of Comprehensive Loss Summary | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Net loss | $(21,476) | $(19,202) | | Change in unrealized gain on available-for-sale investments | $59 | $— | | Total other comprehensive income | $59 | $— | | Comprehensive loss | $(21,417) | $(19,202) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased to $125.7 million by March 31, 2023, primarily due to the net loss incurred during the period Stockholders' Equity Summary | Metric | December 31, 2022 (in thousands) | March 31, 2023 (in thousands) | | :---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $144,450 | $125,732 | | Stock-based compensation | $2,664 | $10,850 | | Net loss | $(21,476) | $(19,202) | | Other comprehensive gain | $59 | $— | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $20.1 million in Q1 2023, while investing activities provided $10.3 million Cash Flows Summary | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | :------- | | Net cash used in operating activities | $(20,122) | $(12,452) | $(7,670) | 62% | | Net cash provided by (used in) investing activities | $10,338 | $(514) | $10,852 | (2,111)% | | Net cash used in financing activities | $(7) | $(5,190) | $5,183 | (100)% | | Net decrease in cash, cash equivalents | $(9,791) | $(18,156) | $8,365 | (46)% | | Cash, cash equivalents at end of period | $25,368 | $198,958 | | | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations of Sarcos' business, accounting policies, acquisitions, and financial instruments Note 1. Basis of Presentation and Summary of Significant Accounting Policies Sarcos designs mobile robotic systems, acquired RE2, Inc. in April 2022, and believes it has sufficient liquidity for the next 12 months - Sarcos designs and produces highly-dexterous mobile robotic systems and solutions for use in dynamic and unstructured environments[15] - Acquired RE2, Inc. on April 25, 2022, a developer of autonomous and teleoperated mobile robotic systems, with RE2's activity included from the acquisition date[24] Liquidity and Accumulated Deficit | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Cash, cash equivalents and marketable securities | $94,700 | $114,500 | | Accumulated deficit | $(324,100) | $(302,621) | | Working capital | $101,100 | | - The Company believes it has sufficient financial resources for at least the next 12 months from the date of this Report[27] - Revenue is recognized from the sale of products and from the delivery of goods and services arising out of contractual arrangements to provide product development contract services, following a five-step process[28][33] Revenue Breakdown | (In thousands) | For the three months ended March 31, 2023 | For the three months ended March 31, 2022 | | :----------------------------- | :---------------------------------------- | :---------------------------------------- | | Product Development Contract Revenue | $2,296 | $733 | | Product Revenue | $— | $10 | | Revenue, net | $2,296 | $743 | - As of March 31, 2023, the Company had backlog, or revenue related to remaining performance obligations, of $3.8 million, with most expected to be recognized over the next 12 months[41] - Adopted ASU 2016-13 (Financial Instruments—Credit Losses) on January 1, 2023, with no material impact on the condensed consolidated financial statements[43] Note 2. Fair Value Measurements The company measures marketable securities (Level 1) and warrant liability (Level 2) at fair value on a recurring basis Fair Value Measurements | (In thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------- | :------ | :------ | :------ | :---- | | Assets (March 31, 2023): | | | | | | U.S. treasury securities | $69,352 | $— | $— | $69,352 | | **Li