Revenue Performance - Revenue for the three months ended September 30, 2025, was $860,000, a slight decrease of 1% compared to $871,000 in the same period of 2024[115]. - Product revenue was minimal, with no sales recorded in Q3 2025 compared to $107,000 in Q3 2024, indicating a 100% decrease[115]. - Revenue decreased by $3.4 million, or 49%, from $7.0 million for the nine months ended September 30, 2024, to $3.6 million for the same period in 2025[127]. Product Development and Contracts - Product development contract revenue increased by $0.1 million, or 13%, from $764,000 in Q3 2024 to $860,000 in Q3 2025, primarily due to the timing of milestone completions[116]. - The company has U.S. government revenue-generating contracts and has met all development milestones associated with these contracts[107]. - Product development contract revenue fell by $0.8 million, or 18%, from $4.4 million in the nine months ended September 30, 2024, to $3.6 million in 2025[128]. Future Revenue Expectations - The company expects to begin generating revenues from commercial customers in the first half of 2026, with a sales cycle for Palladyne IQ estimated at 12 to 18 months[106]. - The company aims to enhance its software products and pursue marketing and sales opportunities to achieve revenue from its products[110]. Operating Expenses - Total operating expenses increased by $0.8 million, or 9%, from $8.2 million for the three months ended September 30, 2024, to $8.9 million for the same period in 2025[118]. - Research and development expenses rose by 22%, from $2.6 million in Q3 2024 to $3.1 million in Q3 2025, primarily due to increased labor costs related to software product enhancements[120]. - General and administrative expenses increased by 4%, from $4.0 million in Q3 2024 to $4.1 million in Q3 2025, mainly due to higher stock-based compensation[121]. Other Income and Financial Performance - Other income surged by $4.1 million, or 2,000%, from $0.2 million in Q3 2024 to $4.3 million in Q3 2025, driven by increased mark-to-market gains on outstanding warrants[125]. - Total other income for the nine months ended September 30, 2025, was $34.6 million, a significant increase of $33.8 million, or 4,260%, compared to $0.8 million in 2024[136]. Cash and Financing Activities - Cash, cash equivalents, and marketable securities were $57.1 million as of September 30, 2025, up from $40.1 million as of December 31, 2024[140]. - Net cash used in operating activities increased by $1.6 million to $19.1 million for the nine months ended September 30, 2025, compared to $17.5 million in the same period of 2024, primarily due to changes in operating assets and liabilities[151]. - Net cash provided by financing activities increased by $35.7 million, reaching $35.6 million for the nine months ended September 30, 2025, primarily from $35.5 million in net proceeds from the sale of Common Stock and exercise of warrants[153]. Financial Position and Risks - The company has an accumulated deficit of approximately $479.3 million as of September 30, 2025[140]. - The backlog as of September 30, 2025, was $0.8 million, with $0.2 million funded and $0.6 million unfunded, while the total estimated remaining contract value was $6.9 million[139]. - The company is dependent on customer demand for its AI/ML software products, which remains unproven, and faces risks related to government contracts due to the current government shutdown[112]. - If additional financing is required, it may not be available on favorable terms, which could impair operational flexibility and increase interest expenses[149]. Accounting and Compliance - The company’s financial statements are prepared in accordance with GAAP, requiring estimates and judgments that may differ from actual results[157]. - There have been no material changes to critical accounting policies or estimates since the last annual report[158]. - The company is classified as an "emerging growth company" and has elected to take advantage of the extended transition period for new or revised financial accounting standards[155].
Sarcos Technology and Robotics (STRC) - 2025 Q3 - Quarterly Report