Palladyne AI Corp., formerly known as Sarcos Technology & Robotics Corporation, reported significant financial developments in its latest 10-Q filing for the period ending September 30, 2024. The company, which has shifted its focus to the development and commercialization of an AI/ML Software Platform, continues to face challenges, including a history of losses and negative cash flows.

As of September 30, 2024, Palladyne AI Corp. reported total current assets of $24.7 million, down from $45.1 million at the end of 2023. Total assets decreased to $38.7 million from $60.4 million, while total stockholders’ equity fell to $23.4 million from $40.9 million. The company’s accumulated deficit reached approximately $437.9 million.

For the three months ended September 30, 2024, Palladyne AI Corp. generated net revenue of $871,000, a 52% decrease from $1.8 million in the same period of 2023. Product revenue saw a dramatic decline of 86%, dropping to $107,000 from $783,000, attributed to fluctuations in legacy hardware product sales. In contrast, for the nine months ended September 30, 2024, total revenue increased by 30% to $7.0 million, driven primarily by product development contract revenue.

Operating expenses for the third quarter of 2024 totaled $8.2 million, a significant reduction of 75% compared to $32.6 million in Q3 2023. This decrease was largely due to cost-cutting measures, including workforce reductions that affected approximately 70% of the staff in November 2023. Research and development expenses also fell sharply, down 74% to $2.6 million from $10.0 million in the prior year.

The company has not yet achieved positive operating cash flow, with net cash used in operating activities for the nine months ending September 30, 2024, reported at $17.5 million, a decrease from $60.1 million in the same period of 2023. Palladyne AI Corp. anticipates substantial ongoing research and development costs as it seeks to commercialize its AI/ML Software Platform, with no guarantee of achieving profitability.

Strategically, the company has suspended hardware product development to focus resources on its software platform, a decision made in late 2023. This pivot aims to align with acute customer needs while reducing capital requirements. However, the company acknowledges the risks associated with this strategy, including potential delays in product commercialization and challenges in customer acquisition.

Palladyne AI Corp. has raised approximately $7 million in gross proceeds from the sale of Common Stock and warrants through recent offerings, which it plans to use for software platform enhancement and product development. The company believes it has sufficient liquidity to operate for at least the next 12 months but may seek additional financing to bolster cash reserves.