Financial Performance - The company incurred a net loss of $157.1 million for the year ended December 31, 2022, compared to a net loss of $81.5 million for the year ended December 31, 2021, and expects to continue incurring losses until at least 2025[116]. - Negative cash flow from operating activities was $65.4 million for the year ended December 31, 2022, and $42.1 million for the year ended December 31, 2021, with expectations of continued negative cash flow until 2025[119]. - The company anticipates needing additional financing before achieving positive operating cash flows, expected no earlier than 2025[139]. - The company may not achieve profitability in the near future and has incurred losses historically[214]. - Significant capital is required for business development, including R&D, production, and marketing, leading to ongoing high expenses that may impact profitability[186]. Product Development and Commercialization - The company began production of the initial commercial version of the Guardian XM in September 2022 and the Guardian XT in December 2022, with expected customer deliveries starting in the first half of 2023[127]. - The company plans to begin production of the Guardian Sea Class in the second half of 2023, with anticipated delivery to customers also in the second half of 2023[127]. - The company is prioritizing the commercialization of the Guardian XM, Guardian XT, and Guardian Sea Class while continuing to develop the Guardian XO, which may face delays due to ongoing redesign efforts[131]. - The company has limited experience in large-scale commercialization of its products, which may lead to inefficiencies and delays in achieving anticipated revenue[138]. - The success of product offerings will depend on the company's ability to incorporate preferred features and effectively communicate product improvements to customers[157]. Supply Chain and Operational Challenges - Supply chain challenges, including increased costs and material shortages, have resulted in delays in product development and could further impact the commercialization of products[130]. - The company continues to experience inflationary pressures and geopolitical events that contribute to supply shortages and price increases, negatively impacting product development schedules[130]. - The company faces significant challenges in recruiting skilled employees, which has affected product development and commercialization timelines[129]. - The company relies on third-party suppliers for key components, with some being sole-source suppliers, which poses risks to production and profitability if supply issues arise[132]. - The company is experiencing significant challenges in attracting and retaining qualified personnel, which could adversely affect product development and operational efficiency[171]. Regulatory and Compliance Risks - The company faces increased legal and compliance costs as a publicly-traded entity, which could adversely impact financial performance[173]. - The company anticipates increased legal and compliance costs due to the requirements of the Sarbanes-Oxley Act and Nasdaq regulations[206]. - The company may face significant penalties under the GDPR for noncompliance, which could reach up to €20 million or 4% of worldwide turnover for serious violations[222]. - Compliance with export control and economic sanctions laws is critical, as non-compliance could result in severe penalties and affect revenue generation[237]. - The company is subject to various legal and regulatory proceedings that could adversely affect its financial condition and operating results[241]. Market and Competitive Landscape - The market demand for the company's new robotic systems is unproven, and assumptions about pricing and adoption rates may be inaccurate[143]. - The company faces challenges in attracting and retaining customers, which could adversely affect revenue growth and overall business prospects[147]. - The robotics industry is characterized by rapid technological change, and the company expects increased competition in the future[191]. - The competitive landscape includes various companies with existing products and those developing new technologies, posing a threat to the company's market position[195]. - A substantial portion of revenue is generated from government sales, which are subject to competitive bidding and budgetary uncertainties[232]. Intellectual Property and Legal Risks - The ability to protect intellectual property through patents and trademarks is critical for maintaining competitive advantage[251]. - Patent litigation can be lengthy and costly, potentially leading to invalidation or narrow interpretation of patents[254]. - The company may face challenges in enforcing intellectual property rights in foreign jurisdictions, limiting protection[259]. - Infringement claims could result in substantial costs and harm to the company's financial resources and reputation[263]. - Compliance with federal regulations regarding intellectual property developed with government funding may limit the company's exclusive rights and ability to contract with non-U.S. manufacturers[264]. Financial Instruments and Stockholder Considerations - Approximately 71.4% of the company's Common Stock outstanding as of December 31, 2022, was issued to former securityholders of Old Sarcos, with some shares still subject to lock-up obligations[267]. - The company issued 10.8 million shares of Common Stock, representing about 7.0% of the Common Stock outstanding as of December 31, 2022, in connection with the acquisition of RE2[271]. - The company received a notice from Nasdaq on January 23, 2023, indicating non-compliance with the Minimum Bid Price Requirement, as the closing bid price was below $1.00 per share for 30 consecutive business days[282]. - The company may consider options to resolve the noncompliance with the Minimum Bid Price Requirement, including a potential reverse stock split[284]. - The company has outstanding Public Warrants to purchase approximately 13,831,262 shares of Common Stock at an exercise price of $11.50 per share, and Private Placement Warrants to purchase 6,718,191 shares at the same price, which may lead to dilution for existing shareholders[289].
Sarcos Technology and Robotics (STRC) - 2022 Q4 - Annual Report