1 unchanged sentence
Some of the information contained in this section or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.
−Removed: You should read Part I Item 1A Risk Factors and the section titled “Special Note Regarding Forward-Looking Statements”
−Removed: for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and throughout this Report.
−Removed: We are a technology leader in the design, development and manufacture of advanced robotic systems and solutions that redefine human possibilities.
−Removed: Our mission is to increase worker productivity and longevity and prevent injuries through robotics.
−Removed: Our robotic systems are designed to augment and increase human productivity by combining human intelligence, instinct and judgment with the strength, endurance and precision of machines.
−Removed: We aim to bring the benefits of robotics to dynamic and unstructured environments (i.e., environments that change or that require our robotic systems to perform different tasks at different times in different places, especially outdoor environments).
−Removed: To do this, we design our robotic systems to be mobile, dexterous and adaptable through the use of flexible hardware designs and intelligent software.
−Removed: Our core systems consist of the Guardian XM (formerly known as the Sapien 6M), Guardian XT and Guardian Sea Class teleoperated/semi-autonomous systems and the Guardian XO exoskeleton.
−Removed: Our teleoperated/semi-autonomous systems are comprised of mobile robotic arms, sensing, wireless communications, control stations with intuitive human-robot interfaces and application-specific end-of-arm attachments (end-effectors), such as grippers, drills or spray nozzles.
−Removed: We create our solutions by combining our systems with use-case specific features and components, which may include third-party hardware, such as lifts, bucket trucks and underwater remotely operated vehicles, or ROVs, as well as use-case specific hardware designs, software and end-effectors.
−Removed: In general, the use-cases we are targeting are currently being done by humans, at times with the aid of generic industrial equipment like a crane or forklift, and involve dangerous or injury-prone activities in areas experiencing, and expected to continue to experience, labor shortages.
−Removed: As a result, we believe our systems and solutions will increase safety and reduce injuries, prolong careers, broaden the pool of available workers by equalizing physical capabilities and increase productivity.
−Removed: While taking advantage of our proprietary intelligent software, humans continue to be an essential part of our systems’
−Removed: operation, whether through teleoperation, supervised autonomy or directly operating the robot (e.g., by wearing an exoskeleton).
−Removed: In this way, human jobs and health are preserved while increasing productivity and helping to address labor shortages in our target markets.
−Removed: While we ultimately expect our systems and solutions to benefit a wide variety of markets, we are currently focusing our systems and solutions on use-cases in the aviation, construction, defense, maritime, power and utility and solar energy industries.
−Removed: We adapt our teleoperated/semi-autonomous core systems for specific use-cases based on the capabilities and characteristics of each system to create solutions.
−Removed: We may also combine aspects of multiple systems or create a specific system for a particular solution.
−Removed: For example, we currently expect that the next version of our solar field construction solution will be a hybrid of our Guardian XM and Guardian XT systems, and the baggage-handling solution we are developing uses a specific system designed for that solution.
−Removed: Our product development efforts are led by a highly experienced robotics team, with some members of our engineering team having worked together for over 20 years.
−Removed: We also benefit from more than $375 million in research and development investment in our proprietary technologies and an extensive patent portfolio.
−Removed: Much of our technology we leverage across our systems and solutions.
−Removed: For example, various technologies and inventions developed for the Guardian XO have been incorporated into the Guardian XT.
−Removed: Combined with our advanced, success-based learning artificial intelligence, or AI approach, our supervised autonomy software framework uses multi-modal sensor data to optimally perceive, interact, and conceptualize dynamic, unstructured environments to harness the power of real-time and learned-behavior data inputs that allow our robotic systems and solutions to successfully execute task-specific autonomy in unstructured environments.
−Removed: Our advanced, success-based AI enables human workers’
−Removed: flexibility, creativity and improvisation skills to deliver improved workflow performance and safer interactions between humans and machines in unstructured environments.
−Removed: Based on interest shown by our development customers and potential commercial customers in purchasing our systems and solutions, we have decided to offer our products primarily through a sales business model where the customer purchases a system or solution for a one-time, upfront amount.
−Removed: As a result, we do not expect the Robot-as-a-Service (RaaS) model that we had previously planned to apply to our Guardian XO and Guardian XT systems to be a focus of our business model going
−Removed: We also plan to offer software upgrades and additional capabilities and to offer for sale add-on hardware components (such as additional interchangeable end-effectors).
−Removed: History and Corporate Information
−Removed: Sarcos is the result of a decades-long effort in research and development of robotic systems and solutions.
−Removed: Our original predecessor was spun-out of the University of Utah in 1983.
−Removed: In 2007, our predecessor was acquired by Raytheon and was operated until 2014 as a division of Raytheon known as Raytheon Sarcos.
−Removed: During this period, Raytheon Sarcos was focused primarily on developing cutting-edge technologies for use by U.S.
−Removed: governmental agencies.
−Removed: In December 2014, the assets of Raytheon Sarcos were acquired by a consortium led by the former Raytheon Sarcos President and our current Chief Innovation Officer Dr.
−Removed: Fraser Smith and technology and telecom entrepreneur Benjamin Wolff, our former Chief Executive Officer and current member of the Board of Directors.
−Removed: This acquisition was the basis for the establishment of Old Sarcos, which was incorporated in Utah in February 2015 as Sarcos Corp.
−Removed: On September 24, 2021, we completed the Business Combination whereby Old Sarcos became a wholly-owned subsidiary of Rotor Acquisition Corp.
−Removed: and Rotor Acquisition Corp.
−Removed: changed its name to Sarcos Technology and Robotics Corporation.
−Removed: In April 2022, we acquired RE2, Inc., a Pittsburgh, Pennsylvania based robotics company.
−Removed: The acquisition added engineering talent, technology, products and customers and expanded the potential use-cases and target markets we can address.
−Removed: Our principal executive offices are located at 650 South 500 West, Suite 150, Salt Lake City, Utah, 84101.
−Removed: Our telephone number is 888-927-7296.
−Removed: Company Website
−Removed: We maintain a company website with the address www.sarcos.com.
−Removed: We are not including the information contained on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.
−Removed: We make available free of charge through the www.sarcos.com website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
−Removed: These reports and other information are also available, free of charge, at www.sec.gov.
−Removed: In addition, our Code of Business Conduct and Ethics is available through the www.sarcos.com website and any amendments to or waivers of the Code of Conduct will be disclosed on that website.
+Added: You should read Part I Item 1A Risk Factors and the section titled “Special Note Regarding Forward-Looking Statements” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and throughout this Report.
+Added: We use the terms “Sarcos,” “the Company,” “we,” “us,” and “our” to refer to Sarcos Technology and Robotics Corporation.
+Added: Our mission is to deliver software to our customers that enhances the utility and functionality of third-party stationary and mobile robotic systems by enabling these systems to quickly observe, learn, reason and act in structured and unstructured environments.
+Added: Our AI/ML Software Platform is being designed with artificial intelligence (AI) and machine learning (ML) techniques to enable robotic systems to perceive their environment and quickly adapt to changing circumstances by generalizing (i.e., learning) from their past experience using dynamic real-time operations “on the edge” (i.e., on the robotic system) without extensive programming and with minimal robot training.
+Added: We believe this “human-like” ability to learn and adapt will be a key differentiator in helping our customers maintain optimal productivity in dynamic or unstructured environments, where new situations and unexpected challenges are more likely to cause delays and costly downtime.
+Added: Our value proposition is further enhanced relative to other competitive solutions because robotic systems using our AI/ML Software Platform are not required to be continuously connected to the cloud for our software to function, thereby reducing the performance issues associated with poor connectivity and latency typically associated with processing in the cloud.
+Added: Our approach also reduces the expense typically associated with transmitting large amounts of data to and from the cloud.
+Added: As a pioneer in the robotic systems industry, we benefit from both experiences and lessons gained from our 30-plus years, as well as significant investment in our internal research and development efforts.
+Added: Software has been an integral part of our development efforts over the years.
+Added: Our vision for our AI/ML Software Platform began in 2017 as a foundational technology to enhance training for the autonomous operation of our own internally developed hardware solutions and progressed to our first CYTAR (Cybernetic Training for Autonomous Robots) government project in 2019.
+Added: Significant design and development work began in 2020 when our Chief Technology Officer, Dr.
+Added: Denis Garagic, joined our team.
+Added: We have since continued to develop our AI/ML software both for the U.S.
+Added: Department of Defense and in connection with our development of commercial robotic systems.
+Added: As previously disclosed, in November 2023, we decided to suspend our hardware product development efforts to focus on commercializing our AI/ML Software Platform, although some de minimis hardware-related research and development efforts continue.
+Added: By de-coupling our AI/ML Software Platform from our own hardware systems and applying it to a wide range of third-party robotics systems, from industrial robots and cobots to mobile systems potentially including drones, autonomous mobile robots (AMR), autonomous underwater vehicles (AUV) and remotely operated vehicles (ROV), we believe we can reach a much broader market more quickly and better utilize our remaining cash resources.
+Added: We are designing our AI/ML Software Platform to be hardware agnostic in order to be compatible with most industrial robots being sold today and to support other specific types of commercially available robots with additional development and the necessary application programming interface (API).
+Added: The AI/ML Software Platform is expected to enable robotic systems to perform tasks that involve variations in the environment and the objects being manipulated by the robot.
+Added: Specifically, we expect our AI/ML Software Platform to incorporate internal and external environmental inputs that allow robots to comprehend their environment, determine reasonable behavior given these inputs and to act in real time to achieve the expected task.
+Added: Each newly learned task will then be incorporated and used to perform future tasks.
+Added: We believe this closed-loop autonomy approach is the key to how our software can expedite robot training, expand the tasks that a robot can perform, reduce costly workflow stoppages, mitigate downtimes and reduce human labor requirements.
+Added: A variety of industries ranging from manufacturing to warehousing encounter lengthy and costly efforts to program, manage, and modify their robotic systems.
+Added: These industries also experience significant limitations with the tasks that existing robotic platforms can perform, resulting in more human labor required and a lower return on investment from robotic system deployments than what we believe will be possible when our software is deployed on these machines.
+Added: We are designing our AI/ML Software Platform to enable industrial robotic systems to function with human-like reasoning through flexible and adaptable learning capabilities such that an industrial robot can perform a variety of tasks without the need for costly
+Added: reprogramming efforts.
+Added: We believe that the AI/ML Software Platform will enable autonomous functionality to address challenging and dynamic environments for industries that can benefit from a high degree of adaptability and efficiency.
Industry Background
−Removed: Evolution of Robotics
−Removed: Industrial robots have been commercially available and used in industrial and manufacturing environments for many decades.
−Removed: They are typically large, stationary machines designed to automate repetitive tasks in a controlled environment (e.g., a factory assembly line) that require speed and strength greater than what a human can accomplish.
−Removed: For manufacturing tasks, industrial robots generally execute plans by rote programming (functions that are programmed in advance by a human engineer).
−Removed: Over time, industrial robots have become more sophisticated.
−Removed: Industrial robots have seen widespread adoption in a host of applications and have gained acceptance across many industries.
−Removed: However, these heavy industrial robots generally require workspaces to be configured around them and large safety cages to protect workers on the factory floor, consume significant amounts of power and space, are substantially less agile and versatile than humans and are difficult and costly to move from one location to another.
−Removed: These characteristics typically limit the number of use-cases to highly routinized tasks.
−Removed: As a result, two new categories of products, called collaborative robots, or cobots, and automated mobile robots, or AMRs, are gaining market traction.
−Removed: Advances in tangential technologies such as grippers, vision systems, cloud computing, augmented reality, or AR, and artificial intelligence, or AI, have led to the broader adoption and commercial viability of cobots and AMRs.
−Removed: These advances have offered increased safety and operational flexibility, allowing robots to be deployed safely alongside humans, disrupting the historical industrial robotics industry and labor markets while offering more advanced capabilities than earlier models.
−Removed: However, neither cobots nor AMRs are designed to perform tasks in dynamic or unstructured environments, especially outdoors.
−Removed: As with their predecessors, they are tools of automation, designed and programmed to perform routinized tasks.
−Removed: They also generally lack human-like dexterity and the ability to lift and manipulate heavy objects.
−Removed: Robotic exoskeletons are also not a new concept.
−Removed: They have been a staple of science fiction for decades.
−Removed: General Electric was the first to try to move the concept from fiction to reality with its experimental Hardiman exoskeleton debuting in the 1960s.
−Removed: Early versions of full-body, powered exoskeletons were reliant on hydraulic power supplies connected via a cord or hydraulic lines, which greatly restricted the mobility and the number of use-cases.
−Removed: They also consumed large amounts of power, making it impractical to use these early versions on an untethered basis.
−Removed: More recently, partial-body, powered exoskeletons have primarily been deployed for healthcare and rehabilitative uses.
−Removed: Partial-body, non-powered devices (called passive exoskeletons) have been adopted for passive support functions such as assisting parts-assembly workers when performing repetitive, overhead manual labor.
−Removed: Unlike these commercial predecessors, powered, full-body industrial robotic exoskeletons seek to combine human intelligence and mobility with the strength, endurance and precision of traditional industrial robots by allowing humans and robots to operate as a single unit, substantially augmenting a typical worker's capabilities while reducing the risk of occupational injuries.
−Removed: Manual Labor Market
−Removed: Historically, many industries have been dependent on manual human labor and heavy equipment (such as forklifts or cranes) for physically demanding tasks.
−Removed: Human limitations, such as strength, potential for injury and limited reach, and equipment inflexibility, such as size constraints, power needs and limited or narrow functionality, create costly inefficiencies.
−Removed: Relying on human labor sources also has considerable financial and safety costs, which impact both businesses and workers.
−Removed: Workplace accidents and fatigue caused by heavy lifting and working at-height have significant detrimental effects on a workforce’s productivity and can cause extensive bodily harm to human workers.
−Removed: Challenges to the labor market include:
−Removed: Rising average age of the labor force in developed nations.
−Removed: According to data collected by the Organization for Economic Co-operation and Development (OECD) (see OECD (2023), Old-age dependency ratio (indicator);
−Removed: as shown on March 14, 2023):
−Removed: as of 2022, 24.6% of the United States labor force was over the age of 65;
−Removed: by 2050, that percentage is expected to rise to 40.4%;
−Removed: worldwide (representing the average of all country data tracked by the OECD), as of 2022, 32.4% of the labor force was over the age of 65;
−Removed: and, by 2050, that number is expected to rise to 52.7%.
−Removed: Shrinking pool of manual laborers .
−Removed: Long-term trends suggest workers may avoid manual labor due to, among other factors, occupational hazards, resulting in labor shortages.
−Removed: According to a 2018 industry study, there will be a shortage of approximately 2.4 million workers in U.S.
−Removed: manufacturing by 2028 resulting in a $2.5 trillion negative impact on the U.S.
−Removed: Moreover, although the long-term effects of COVID-19 are largely unknown, COVID-19 has resulted in many people leaving the workforce and may continue to negatively affect the availability of the labor force.
−Removed: Costs associated with physically taxing occupations .
−Removed: In the United States alone, (a) in 2006 The Journal of Bone & Joint Surgery reported that healthcare costs, lost wages and decreased productivity associated with back injuries cost approximately $100 billion annually, and (b) according to a 2018 U.S.
−Removed: Bone and Joint Initiative study, back pain
−Removed: accounts for an estimated more than 264 million lost workdays a year, the equivalent of approximately two workdays for every full-time worker in the country.
−Removed: Falls from heights are the fourth most disabling and costly injury, coming after such injuries as overexertion and falling from the same level, according to the 2019 Liberty Mutual Workplace Safety Index.
−Removed: According to a 2007 publication, OSHA reported that approximately $136 billion is lost annually due to worker fatigue.
−Removed: Many manual labor jobs are conducted in dangerous environments.
−Removed: In the markets we are targeting, many manual labor jobs involve dangerous environments, such as working at height, underwater or near or using explosives or dangerous equipment.
−Removed: According to the CDC, 18% of the non-fatal work injuries resulting in days away from work in 2020 were related to slips, trips and falls.
−Removed: Another study reported that injuries related to falls accounted for approximately $4.8 billion per year in lost productivity and wages in the United States.
−Removed: Equipment that is not ideal for complex environments or the task at hand .
−Removed: Common equipment, such as cranes, forklifts and lift-assist devices often lack the flexibility needed to address the dynamic needs of a worksite.
−Removed: Larger equipment sizes and inflexibility in the range of tasks they can perform often do little to address some of the common issues faced by the labor force.
−Removed: The Sarcos Approach
−Removed: We design our robotic systems and solutions to augment human performance by combining human intelligence, instinct and judgment with the strength, endurance and precision of machines to enhance human safety and productivity while addressing many of the labor market’s challenges mentioned above.
−Removed: We aim to bring the benefits of robotics to dynamic, unstructured work environments involving dangerous or physically demanding tasks by moving humans from doing the task themselves to being an operator or supervisor of a robotic system or, in the case of exoskeletons, enhancing human capabilities to reduce the risk of physical injury by having the human and the robotic system operate as one unit.
−Removed: Our robotic systems and solutions combine technologically-advanced robotic hardware with advanced intelligent software, along with human operation or supervision, to increase capability, precision and productivity beyond unassisted human capabilities.
−Removed: As a result, we believe our robotic systems and solutions will provide the following benefits (in some cases, depending on the system):
−Removed: Fewer Injuries.
−Removed: Fewer employee injuries from physically demanding work, which should reduce costs associated with such injuries, such as medical costs and replacement or temporary labor costs and related delays (including hiring and training time and costs).
−Removed: Safer Work Conditions.
−Removed: Less hazardous job conditions, which should also reduce injury-related costs and certain other costs, such as employee insurance costs and hazard pay.
−Removed: Increased Productivity.
−Removed: Increased productivity through increased throughput and/or decreased time to completion, fewer errors or accidents that may compromise materials or work surfaces that then require repair or replacement and/or addressing labor shortages by enabling more work to be done with the same number of human workers (e.g., decreasing crew sizes to increase the number of available crews while increasing the productivity of any particular crew).
−Removed: Career Longevity.
−Removed: Increase the health and career longevity of human workers by transferring the physical demands associated with our target use-cases from humans to our robotic systems and solutions thereby enabling experienced, more productive workers to remain on the job with fewer injuries and reduced wear-and-tear on their bodies, which should reduce labor costs and shortages.
−Removed: Expanded Potential Workforce.
−Removed: Increased opportunities to fill jobs with workers with physical limitations that would otherwise make such jobs difficult or impossible for them by employing them to operate a robotic system, which should increase the potential labor pool.
−Removed: Mobility, which allows our systems and solutions to be deployed at a job site and to move around the job site rather than require that the job be brought to the robotic system in a factory or other controlled environment, thereby allowing robotic systems and solutions to tackle use-cases that previously could not be addressed easily or at all through robotics.
−Removed: Adaptable Systems.
−Removed: The ability to teach our robotic systems and solutions through software using AI and machine learning, or ML, so that our robotic systems and solutions can learn to do multiple and changing repetitive tasks with human supervision but without the need for human operation.
−Removed: For example, the software we are creating will
−Removed: allow some of our systems and solutions to enable operators to train the system to set autonomous tasks such as painting or sandblasting over a particular area and then operate on its own with human supervision.
−Removed: Ultimately, this should further increase productivity as one human worker supervises multiple robotic systems.
−Removed: Aligned Interests of Employers and Workers.
−Removed: Compatibility of objectives between employers and employees because our robotic systems and solutions are intended to empower, not replace, the labor force and enhance employee safety while reducing employer costs.
−Removed: We expect that our systems and solutions can benefit a wide variety of markets, including the aerospace and aviation, construction, defense, distribution and warehousing, industrial manufacturing, maritime, mining, power and utilities and solar energy industries, among others.
−Removed: Based on product testing and trials and customer feedback, we expect our robotic systems and solutions to increase productivity across a variety of use-cases, while significantly reducing the risk, and associated costs, of employee injuries.
−Removed: We believe that our core strength is in the design and development of highly complex and technologically advanced robotic systems and solutions, including associated software.
−Removed: As a result, we may integrate our systems with readily available third-party products, such as lifts, bucket trucks, ROVs and other components as part of creating solutions for specific markets or use-cases.
−Removed: Our technological innovations include or will include:
−Removed: Human-like Dexterity with Augmented Strength and Extended Reachability .
−Removed: We are designing our robotic systems to provide human-like ability to operate in dynamic, unstructured environments and augment humans with the strength, stamina, precision, reach and speed of robotics.
−Removed: Energetic Autonomy (untethered, battery-powered) .
−Removed: We are designing our systems and solutions to offer reduced power consumption via optimized power utilization.
−Removed: Our robotic systems and solutions are being developed to include advanced controls and comprehensive system recovery to increase their safety.
−Removed: Intelligent AI-Based Software .
−Removed: Our supervised autonomy framework uses multi-modal sensor data to optimally perceive, interact and conceptualize unstructured, outdoor environments.
−Removed: Combined with our advanced, success-based learning AI approach, our supervised autonomy software framework uses the power of real-time and learned-behavior data inputs that enable our robotic systems and solutions to successfully execute task-specific autonomy in unstructured environments.
−Removed: Our advanced, success-based AI enables human workers’
−Removed: flexibility, creativity and improvisation skills to deliver improved workflow performance and safer interactions between humans and machines in unstructured environments.
−Removed: In addition, we intend to offer our software solutions separately for sale or license.
−Removed: Simulations / Mixed Reality.
−Removed: Our robotic systems use augmented reality (AR), virtual reality (VR), digital twin and AI-enabled simulation techniques to create a simulations environment in which we can train and optimize the robot and the human operator.
−Removed: Simulations allow analysis of system performance in conditions otherwise too expensive, risky or time-consuming to investigate in the physical world.
−Removed: By virtually inserting a physics-based representation of our robot (a.k.a.
−Removed: a digital twin) into a simulated work environment, we can analyze how the robot is performing as well as predict how it may perform under varying conditions.
−Removed: The simulation also collects training data and helps to expand the behavior tree library for the robotic system so that it continues to get smarter in how it addresses real-time impediments or fault-situations when executing a work task.
−Removed: Natural Extended Reality (XR) Interactions between Human and Robots.
−Removed: We are advancing the state-of-the-art in fully immersive teleoperation technology for natural XR interactions between humans and robots, which combines VR/AR, new robot affordable motion capture technology based on magnetic motion tracking, haptic feedback from the teleoperated robot to the human and advanced intelligent controls software to provide a greater sense of realism and increased performance, as well as safety and control.
−Removed: This technology is robot agnostic.
−Removed: Our Systems, Solutions and Software
−Removed: Our core robotic systems consist of:
−Removed: the Guardian XM, the Guardian XT, the Guardian Sea Class and the Guardian XO.
−Removed: Based on product development progress, combined with our views of market readiness and demand, we are currently focused on the commercialization of three of our core robotic systems:
−Removed: the Guardian XM, Guardian XT and Guardian Sea Class.
−Removed: We have begun production of initial commercial versions of the Guardian XM and Guardian XT robotic systems and offer both for sale.
−Removed: We believe that we will also begin production of the initial commercial version of the Guardian Sea Class during 2023, and therefore we also offer that system for sale.
−Removed: During 2022, as a result of supply chain constraints, product readiness and perceived market demand, we decided to focus on the development and commercialization of the Guardian XM and Guardian XT rather than the Guardian XO.
−Removed: We used that time as an opportunity to do a full product evaluation of the Guardian XO and determined that it required additional development before commercialization, in particular with regards to weight and additional safety enhancements.
−Removed: Although this will result in further delays in the commercialization of the Guardian XO, we continue to develop the system for commercialization and reap the benefits of our product development work on the Guardian XO as we apply its technology to our other systems and solutions.
−Removed: We have also seen meaningful market demand for our Guardian Sea Class system and, as that system is nearing commercial readiness, have decided to also focus on the commercialization of that system.
−Removed: In addition, we offer for sale our Guardian S remote-controlled visual inspection and surveillance robotic system and our Guardian HLS heavy-lift pneumatic rescue and recovery system designed in collaboration with the Air Force Research Laboratory (AFRL) to lift armored tactical vehicles and other substantial payloads when the speed, timing and accuracy of operations are crucial.
−Removed: Our Guardian GT system is a custom product in the early stages of development and is being designed to be similar to the Guardian XT, but much larger in size.
−Removed: We expect future development and production of the Guardian GT to be on a bespoke basis in collaboration with each customer desiring the product.
−Removed: These systems are not currently a focus of our commercial efforts, and we do not expect the Guardian S, Guardian HLS or Guardian GT systems to comprise a meaningful part of our future revenue.
−Removed: Core Robotic Systems
−Removed: The Guardian XM system is an intelligent robotic manipulator that offers speed, dexterity, precision and strength in a compact, lightweight package.
−Removed: With six degrees of freedom, an optimized strength-to-weight ratio, embedded intelligence and a hardware design that can withstand extreme temperatures and environmental conditions, the Guardian XM system can be used for a variety of complex outdoor and indoor applications.
−Removed: It is compatible with our autonomy software, enabling semi-autonomous mobile manipulation in structured environments, such as in a factory with controlled lighting, and in unstructured environments like outdoor construction sites.
−Removed: When human-in-the-loop control is required, the Guardian XM system can be teleoperated.
−Removed: Key features of the Guardian XM system include:
−Removed: Enhanced Mobility.
−Removed: The Guardian XM is designed for enhanced mobile manipulation through:
−Removed: o an optimized strength-to-weight ratio;
−Removed: o not requiring an external control box due to being powered with low-voltage DC embedded computing and intelligence to minimize its footprint;
−Removed: o a hardened mechanical design that is resilient to shock and vibration and can operate both indoors and outdoors.
−Removed: Standard Interfaces.
−Removed: Standard power and communication interfaces allow for fast and easy integration with third-party tools and sensors.
−Removed: Capable of Many Tasks.
−Removed: A standard end-effector interface allows for the integration of a wide variety of interchangeable end-of-arm tools.
−Removed: Durable for Use in Harsh Conditions.
−Removed: The Guardian XM’s rugged hardware is tolerant to extreme temperatures and harsh environmental conditions, such as rain, sleet, snow and the corrosive effects of salt spray.
−Removed: Six degrees of freedom, including continuous wrist and elbow roll joints, allow for the precise placement of end-effectors.
−Removed: Semi-autonomous Capability.
−Removed: The Guardian XM has the capability to perform semi-autonomous manipulation using our proprietary Detect multi-modal computer vision software and our proprietary Intellect multi-algorithm AI software.
−Removed: The Guardian XT is a highly-dexterous, mobile robotic system designed to combine robotic strength and precision with human judgment and ingenuity via teleoperation and increase productivity and worker safety in dangerous, complex and unstructured industrial environments.
−Removed: Its versatile design enables mounting to various third-party mobile and lift platforms and allows operators to control their trade tools remotely while working at height, overhead or at ground level.
−Removed: The Guardian XT is based on the upper body of the Guardian XO exoskeleton and is designed to be a one- or two-armed system that is platform-agnostic and attachable to various mobile bases.
−Removed: The two-armed Guardian XT system can lift and manipulate up to 200 lbs.
−Removed: and accomplish precision tasks under various conditions.
−Removed: Key features of the Guardian XT system include:
−Removed: Remote, Safe and Intuitive Operation.
−Removed: The Guardian XT offers remote, safe operation to perform precise, dexterous tasks using intuitive, easy-to-use custom and off-the-shelf trade tools that provide situational awareness to the operator.
−Removed: The system comes with an intuitive Operator Control Station (OCS) that includes a controller to operate the system with an HD touch screen display for monitoring, programming and controlling the robotic system.
−Removed: The robotic system can be teleoperated intuitively, without any prior experience, by the human operator.
−Removed: Anthropomorphic.
−Removed: Operated in part by mimicking the natural movement of the operator.
−Removed: A robot head, equipped with cameras located consistent with where a human would see provides situational awareness with which the human operator is already familiar, including the spatial relationship between the sensory input and the robotic arm.
−Removed: The Guardian XT is capable of indoor and outdoor use, and is battery-operated for mobile use in unstructured environments (but can also accommodate installed power sources).
−Removed: Further, a combination of robotic arms, torso and actuated end-effectors enables a wide range of motion and dexterity (e.g., reach, grab, raise/lower, turn).
−Removed: The tasks carried out by the system can be complex, and occur in unstructured environments where automation is currently not a practical alternative.
−Removed: Each arm can lift and manipulate up to 100 lbs.
−Removed: We are also developing a variant of the Guardian XT for the U.S.
−Removed: military, the Guardian DX, for defense logistics and maintenance applications.
−Removed: Guardian Sea Class
−Removed: The Guardian Sea Class robotic system is designed to provide human-like manipulation capability in complex underwater environments.
−Removed: Whether used for commercial applications or military operations, the system can reduce the need to put divers in the water and can explore depths that are unsafe for humans.
−Removed: An electromechanical system that can stay submerged for up to two hours at a time, it remains fully operational in depths up to 1 kilometer.
−Removed: The system is a one- or two-armed system that is integrated into third-party ROVs from major manufacturers and that can be teleoperated or operated through optional semi-autonomous control.
−Removed: The electromechanical system’s low-power stand-by state enables the use of mobile power sources and helps extend run time for enhanced productivity.
−Removed: Key features of the Guardian Sea Class system include:
−Removed: Optimized for Size and Power Usage.
−Removed: Electronically driven, energy-saving system that provides reduced weight, size and expense as compared with hydraulic power unit systems.
−Removed: Lightweight, compact design allows for a smaller “footprint,”
−Removed: or volume, in constricted or precarious environments.
−Removed: Water Resistant.
−Removed: Fewer sealed surfaces than comparable hydraulic systems to significantly lower maintenance costs and risk of system downtime due to failure.
−Removed: Closed, sealed design protects the electrical system from water ingress.
−Removed: One- or Two- Armed System.
−Removed: Can be equipped with two mirrored six-degree-of-freedom arms to improve modularity and reduce training requirements for service and repair.
−Removed: Neutral buoyancy improves ROV/system balance and control.
−Removed: The Guardian XO is a full-body, powered exoskeleton designed to augment user strength, endurance and precision without materially restricting freedom of movement.
−Removed: We expect that the Guardian XO will enable the operator to safely lift significantly
−Removed: more than the 35-40 lbs.
−Removed: typically recommended by OSHA with small effort in a wide range of use-cases and industrial processes.
−Removed: The Guardian XO’s advanced sensing and control system is designed to provide both responsiveness and fluidity of movement, making it user-friendly and intuitive to operate.
−Removed: The Guardian XO is intended to enhance productivity, mitigate worker fatigue, reduce the risk of workplace injuries and democratize the labor force by augmenting the capabilities of individuals otherwise physically unable to perform the required tasks.
−Removed: We believe the Guardian XO has the potential to revolutionize the way work gets done in a variety of industries, such as aerospace/aviation, automotive, construction, defense, distribution and warehousing for ecommerce and other industries, industrial manufacturing, maritime and power and utilities.
−Removed: Key features of the Guardian XO will include:
−Removed: Added Strength and Endurance .
−Removed: The exoskeleton is expected to enable the operator to carry significantly more than the 35-40 lbs.
−Removed: typically recommended by OSHA.
−Removed: It is also designed to enable a smooth lifting motion by dynamically compensating for gravity and inertia.
−Removed: Battery-powered for Mobile Performance and Near-continuous Use .
−Removed: The Guardian XO will be powered by onboard hot-swappable batteries intended to provide near-continuous operation.
−Removed: Additionally, the XO Pod docking station is expected to facilitate battery charging, donning and doffing of the system and data management.
−Removed: Sensors and Advanced Control Systems for Enhanced Maneuverability and Mobility .
−Removed: Integrated sensors in the Guardian XO are expected to enable the system’s advanced controls system to detect movement (position, force, angular rate, orientation, torque and speed) in milliseconds to eliminate perceived latency.
−Removed: Maneuverability and mobility are intended to be provided through gravity compensation, which will cause the robot to feel almost weightless to the user, and many motorized joints, or degrees of freedom, which will allow the user to move freely and naturally in unstructured environments.
−Removed: The Guardian XO is also expected to include a “hands-free”
−Removed: mode in which the user can lock the suit’s arms while carrying a heavy load and simultaneously complete dexterous tasks requiring human hands.
−Removed: Each system will be equipped with a user-friendly control interface for user controls and diagnostics notification display.
−Removed: Ergonomic, Safety-first Features for User Comfort and Injury Prevention .
−Removed: We are designing the Guardian XO to include important safety features and accommodate customer-specialized protective gear and fall-prevention devices.
−Removed: In the event of a sudden power loss, redundant hardware and software are expected to enable “passive braking”
−Removed: to prevent or reduce user injury.
−Removed: In addition, the systems are expected to include a highly responsive control system to enable the user to execute fall-prevention motions such as stumble-recovery.
−Removed: We anticipate that users will be able to don and doff a system without assistance in less than 30 seconds, with additional provisions for sudden egress.
−Removed: To address the needs of our near-term target markets, we are developing use-case specific solutions:
−Removed: We are developing solutions to address aircraft servicing (such as de-icing) and baggage-handling (loading and unloading airplane baggage compartments) use-cases.
−Removed: We expect these solutions to reduce delays on the tarmac by enabling work to be done when humans are not able to perform the tasks (such as during lightning or other severe weather events) and to otherwise increase productivity by reducing the number of human workers needed to complete the tasks.
−Removed: Construction / Surface Preparation.
−Removed: We are developing a solution based on the Guardian XM to address surface preparation that we believe will be adaptable to a variety of contexts, such as buildings, ships and airplanes, to enable blasting and paint removal, painting, washing and similar activities.
−Removed: We expect this solution to address human safety and health concerns frequently associated with these activities, increase precision and productivity and reducing scaffolding work and costs.
−Removed: Some of our solutions have defense applications.
−Removed: For example, our surface preparation solutions can work on Navy ships and our maritime solutions can assist with mine clearing.
−Removed: We are developing maritime solutions based on the Guardian Sea Class system to address a variety of underwater use-cases, such as ship inspection (damage or security), rudder and prop shaft clearing, contraband recovery, mine clearing, salvage and infrastructure (locks, dams, power plants) inspection and debris removal and obstruction clearing.
−Removed: We believe the Guardian Sea Class solutions will reduce the need for divers to be in dangerous, underwater conditions and increase the depths and duration at which work can be done.
−Removed: Power and utilities .
−Removed: We are developing a solution to address vegetation management for the power and utilities market.
−Removed: This solution is based on the Guardian XT system and is being designed to remove vegetation at a height of up to 45 feet and be able to cover over a kilometer of distance per day.
−Removed: Based on customer feedback, we expect this solution to extend daily work hours (multiple-shifts), reduce the impact of weather conditions (heat, wind, rain) on productivity and reduce the dependence on human workers.
−Removed: Solar Field Construction .
−Removed: We are developing a solar field construction solution to automate the installation of photovoltaic, or PV, panels at utility scale solar sites.
−Removed: Early prototypes have been based on the Guardian XM, but we expect the commercial version of this solution to be based on a new system comprising aspects of both the Guardian XM and Guardian XT systems.
−Removed: We believe that our solar field construction solution will increase productivity through increasing the number of panels that can be installed in a given day, reducing damage to PV panels arising from human accidents or mishandling and reducing the size of installation crews to help address the labor shortages facing the industry.
−Removed: Our robotic systems and solutions are the combination of advanced robot technology and software.
−Removed: As a result, our software is a critical part of our systems and solutions and our ability to create robotic solutions for dynamic, unstructured environments.
−Removed: In part with initial funding from the U.S.
−Removed: Airforce, we have developed and are developing software leveraging artificial intelligence and machine learning technologies that is designed to optimize the significant capabilities of our robots.
−Removed: Among other things, we are developing our software to enable:
−Removed: Intelligent teleoperation
−Removed: Supervised and multi-algorithm autonomy
−Removed: Multi-modal computer vision and fused perception
−Removed: Success-based reinforcement learning
−Removed: Motion planning and optimization
−Removed: Predictive fault compensation
−Removed: Fused perception
−Removed: Cybersecurity
−Removed: Physics-based simulation
−Removed: Each of our robotic systems and solutions comes with a baseline software package that enables basic operation and useability of the system, teleoperation and semi-autonomous capabilities, cybersecurity, controls and communications.
−Removed: For our market and use-case specific solutions, we will also include additional software designed to meet the base requirements of the particular use-case.
−Removed: In either case, for customers who want additional features, we will sell or license upgrades to the baseline package.
−Removed: For example, we intend to offer supervised autonomy as an incremental service.
−Removed: Combined with our advanced, success-based learning AI approach, our supervised autonomy software framework uses multi-modal sensor data to optimally perceive, interact, and conceptualize unstructured environments to harness the power of real-time and learned-behavior data inputs that allow the applicable robotic systems to successfully execute task-specific autonomy in unstructured environments.
−Removed: Our advanced, success-based AI enables human workers’
−Removed: flexibility, creativity and improvisation skills to deliver improved workflow performance and safer interactions between humans and machines in unstructured environments.
−Removed: Other enhancements that we intend to develop and offer include advanced teleoperation capabilities, task libraries (predefined data
−Removed: sets, tools, inferencing models and scripts for controlling specific workflow execution) and fleet management and remote monitoring to allow a human operator to remotely control or supervise several robots from a central control location.
−Removed: Further, we are exploring opportunities to sell and license our software separate from our own robots for use in third-party systems.
−Removed: We anticipate that this will largely be done through a software-as-a-service license model.
−Removed: Robot Service Platform
−Removed: We refer to the combination of our software and the web-based portal we are developing to enable customers to monitor and configure the robotic systems and solutions they purchase as our “robot service platform.”
−Removed: We are designing our robot service platform to enable us to provide customers with additional data analytics, operational tools, systems diagnostics, bug fixes and software upgrade deployment and other features, as well as a web-based portal where the customer can access information and request upgrades.
+Added: Robots have been commercially available and used in industrial and manufacturing automation for many decades.
+Added: These industrial robots are typically large, stationary robotic arms designed to automate repetitive tasks in a controlled environment (e.g., a factory assembly line) that require consistency, speed and strength greater than what a human can accomplish.
+Added: Industrial robots generally execute plans by rote programming (functions that are programmed in advance by a human engineer).
+Added: Over time, industrial robots have become more sophisticated and are now widely adopted in a host of applications and across many industries.
+Added: While this kind of automation brings significant benefits to industrial and manufacturing efforts, it also has its limitations.
+Added: For example, these robots are typically deployed in controlled settings, fixed in place, used to accomplish a single repetitive task and not easily reprogrammed without costly and time-consuming retraining.
+Added: In the industrial and manufacturing automation space, productivity and cost-effectiveness depend greatly on avoiding downtimes.
+Added: Downtime can be caused by many factors, but we believe the most significant are due to programming and reprogramming of robotic systems, disruptions to the controlled environment, whether due to physical obstacles or imprecise positioning, and the need to implement production change-overs.
+Added: Initial programming or reprogramming of robotic systems is a costly and time-intensive task, requiring highly skilled programmers.
+Added: We understand from early customer engagement that reprogramming a single robotic arm can take weeks to months in some cases.
+Added: Reprogramming thousands of robotic arms on a full assembly line to build a different product or accommodate a new component is therefore costly and can put the line out of commission for a significant period of time, reducing or delaying production and sales.
+Added: Further, many industrial or manufacturing robotic systems deployed today are not designed to perform tasks in dynamic or unstructured environments.
+Added: As a result, a change or disruption in the environment, such as the insertion of an obstacle or the imprecise placement of parts, can result in the system shutting down until human assistance resolves the situation, resulting in additional costs and lost production.
+Added: Recent efforts to use AI technologies to address issues such as changing and dynamic environments typically depend on access to enormous databases with large language models (LLMs) residing in the cloud and using enormous amounts of real-world robotic data sets collected over time.
+Added: In these cases, training occurs by connecting to these databases, doing extensive searching to try to find case-applicable data and models and then attempting to use the new data to recommend a viable solution.
+Added: This process requires persistent cloud connectivity, driving increased costs, and is time-consuming, significantly reducing the benefits of these AI technologies.
+Added: We are designing our AI/ML Software Platform to enable industrial and manufacturing robots, such as robotic arms to:
+Added: • be programmed and reprogrammed quickly with training capable of occurring experientially through teleoperation in as little as a few examples taking only a few minutes;
+Added: • observe and assess their environment with our perception functionality that enables robots to distinguish between components essential to their tasks, obstacles to be avoided and irrelevant externalities without the need to connect to LLMs and extensive cloud-based databases;
+Added: • learn to recognize and manipulate different objects to accomplish planned tasks quickly and precisely, even in dynamic or unstructured environments, requiring far less training data than traditional AI models;
+Added: • quickly reason and determine how to accomplish the desired task in a stable, safe, and controlled manner in the face of obstacles or other unexpected environmental changes;
+Added: • make real-time, AI-enabled decisions on the edge without the need to maintain connectivity to the cloud, eliminating the cost and latency associated with cloud-based AI computing;
+Added: • work with most industrial robots being sold today.
+Added: To accomplish this, we are incorporating our proprietary full stack, closed-loop autonomy technology into our AI/ML Software Platform that operates on the edge, enabling robotic systems to observe, learn, reason and act in real-time without the need to connect to the cloud to try to find an applicable LLM.
+Added: Unlike LLMs, which are generally used to predict an outcome and make
+Added: a recommendation, our AI methods are designed to enable a robot to make real-time decisions and act while using much less data and taking much less time.
+Added: In many instances, we believe our solution will be significantly more data-efficient as compared to deep learning-based methods due to its ability to make decisions with just hundreds of parameters rather than billions.
+Added: We aim to address current challenges in automation by developing a software platform that:
+Added: • enables humans to intuitively re-train a robot to perform a different task quickly thereby reducing costly delays resulting from the need to reprogram assembly lines;
+Added: • enables robots to be capable of dynamic reasoning such that the robot can work around a physical obstacle or dynamically adjust its orientation to achieve the task, thereby reducing the need to reprogram robots and incur costly delays;
+Added: • operates “on the edge” without the expense or delay of having to connect to the cloud to exhibit human-like reasoning in real time.
+Added: The AI/ML Software Platform’s ability to operate “on the edge” is a key differentiator because, without the need to use large amounts of cloud-based computing, our AI/ML Software Platform can efficiently operate autonomously in dynamic environments while reacting to new circumstances without the need to access new data sets or be reprogrammed or retrained.
+Added: In addition, our AI/ML Software Platform is being designed to fuse multi-sensor data inputs together to improve system situational awareness, increasing its flexibility and adaptability.
+Added: We expect other important future capabilities to include solving for system stability and automated end-effector orientation to match the target object, enhanced computational efficiencies achieved through the use of our domain-specific language models and the use of dynamic model inference methods to generalize with only a few demonstrations.
+Added: Because our AI/ML Software Platform is being designed to work with most industrial robots being sold today, we expect that our AI/ML Software Platform can benefit a wide variety of industries such as industrial manufacturing, warehousing and logistics, defense, infrastructure maintenance and repair, energy and aerospace and aviation, among others.
+Added: Based on product testing and trials, we expect our AI/ML Software Platform to greatly increase productivity across a variety of use-cases, while significantly reducing associated costs of programming and deploying these systems.
+Added: The AI/ML Software Platform
+Added: Artificial Intelligence & Machine Learning
+Added: We are designing our AI/ML Software Platform to enable robots to be capable of human-like reasoning in their ability to learn multiple tasks and efficiently manage disruptions or obstacles.
+Added: Once initial training/programming occurs, our closed-loop autonomy is expected to enable the robot to adapt to changes in its environment without human intervention or reprogramming.
+Added: After minimal initial training, robots using our AI/ML Software Platform are expected to operate in a closed-loop to continuously observe, learn, reason and act so that they can adapt and continue to complete the desired tasks in the face of a changing environment.
+Added: We are designing our AI/ML Software Platform to enable robots to:
+Added: Using a variety of sensors (e.g., vision, LiDAR, radar and acoustic) to perceive a dynamic and unstructured environment with situational awareness.
+Added: Typically learn a task in approximately one to five human-controlled demonstrations via a variety of methods including, remote manipulation, virtual reality manipulation or natural language instruction.
+Added: We believe our dynamic reasoning model will require much less training data than traditional models.
+Added: Using this learning data, the AI/ML Software Platform is expected to create a mathematical model of the data and store it in the platform as a task.
+Added: The model is then updated over time as more data is obtained.
+Added: Over time, each robot will create its own library of tasks (a “Task Library”).
+Added: By operating “on the edge” and not accessing external large data sets, the learning process can happen faster and cheaper and without the need for a connection to the cloud.
+Added: Reason using probabilistic ML techniques, in a similar manner to human logic, when an unexpected or unknown event occurs.
+Added: The robot would rely on its Task Library as a starting point and then infer to adjust to circumstances in real time.
+Added: Applies human-like logic and adapts its task model in real-time to translate observations into a control message that adjusts the behavior in a safe and controlled manner to complete the task.
+Added: For example, in our testing lab an arm robot has continued the task of sorting items by color even after an obstacle was placed in its way.
+Added: As a result, we expect there will be no need to shut-down production to teach a new task after a disruption in the environment.
+Added: We anticipate that our AI/ML Software Platform will enable each robot to have a Task Library such that each robot can perform multiple tasks in a variety of situations and switch between them quickly with no reprogramming and minimal, if any, retraining.
+Added: Hardware and Management Platform
+Added: We envision that our AI/ML Software Platform will be provided to customers along with the following baseline edge computing and training hardware components:
+Added: a controller component that houses the closed-loop autonomy software framework that interfaces with the robot baseline system;
+Added: a sensor package for situational awareness;
+Added: and a human/machine interface system for training and teleoperation .
+Added: The training and teleoperation interface system is expected to include a motion capture device and hand controller that is available as a standalone package.
+Added: Along with our AI/ML Software Platform we are developing a cloud-based customer portal to facilitate software purchases, updates, and online customer support.
+Added: This customer portal is expected to also include the data analytics, operational tools, and the functionality to monitor, configure, and train the AI/ML Software Platform.
Market Opportunity
−Removed: In the long run, we believe that we will be able to offer robotic systems and solutions that will benefit many markets and industries.
−Removed: As a result, we believe that the global total addressable market, or TAM, for our robotic systems and solutions is large and will reach approximately $600 billion in 2029, which we estimated based on independent third-party research regarding the TAM for the solar power, construction, aerospace/aviation and maritime markets.
−Removed: Of the global TAM, we estimate our global serviceable addressable market, or SAM, will be approximately $9.3 billion in 2029.
−Removed: Finally, we believe that our global serviceable obtainable market, or SOM, will be approximately $1.2 billion by 2029, which is calculated as 13.5% of 2029 global SAM and assumes that our products will penetrate the Early Adopters phase of the Rogers' Innovation-Adoption Lifecycle by 2029.
−Removed: We assume that our initial customer base will be comprised of innovators and early adopters in the industries we are targeting.
−Removed: Following successful deployment with these early adopters, we believe that there will be many potential customers that are fast-followers.
−Removed: The 2029 TAM and SAM estimates for our principal target industries were:
−Removed: (1) solar power - $373.8 billion and $334 million, respectively;
−Removed: (2) construction - $156.2 billion and $2.4 billion, respectively;
−Removed: (3) aerospace/aviation - $68.6 billion and $1.9 billion, respectively;
−Removed: and (4) maritime - $8.0 billion and $4.5 billion, respectively.
−Removed: Other than construction, each 2029 industry TAM estimate is from independent third-party research.
−Removed: To calculate the construction TAM, we projected from 2023 TAM using a 2023-2030 compound annual growth rate, or CAGR, where the 2023 TAM and 2023-2030 CAGR are from independent third-party research.
−Removed: To calculate each 2029 industry SAM, we projected from 2023 or 2024 industry SAM, which are from commissioned third-party research, using the industry CAGRs from the independent third-party TAM research, and assume the following:
−Removed: (a) average selling price (ASP) of $127,000 for each industry except maritime, where we assume $590,000 ASP, and (b) no material change in SAM from 2023 to 2024.
−Removed: Furthermore, global SAM assumes target markets in (a) 13 countries (Australia, Brazil, China, France, Germany, Italy, Japan, South Korea, Mexico, New Zealand, Spain, the United Kingdom and the United States) for solar power;
−Removed: (b) the same 13 countries plus Canada and Norway for maritime;
−Removed: (c) the same 13 countries for commercial aerospace/aviation and the United States only for defense aerospace/aviation;
−Removed: and (d) the United States only for construction.
−Removed: We believe our estimates are based on reasonable assumptions given our technology's leadership position in the category of industrial, highly-dexterous mobile robotic systems, the general lack of directly competitive products in this new category, our plans to further differentiate our products via AI-enabled performance enhancing software and our interactions with leading industrial companies across a number of verticals.
−Removed: However it is possible that these assumptions will proved incorrect, and, as a result, actual results and market sizes may deviate materially from our estimates.
−Removed: See Part I Item 1A Risk Factors - “Our operating and financial projections rely on management assumptions and analyses.
−Removed: If these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results.
−Removed: In the near-term, due to a combination of size, growth opportunities and our current product portfolio, we have decided to focus our commercialization efforts on six primary markets and related use-cases:
−Removed: aviation, construction, defense, maritime, power and utility and solar energy.
−Removed: Further, we believe that many of the potential customers within these markets for the solutions we are currently commercializing have additional use-cases beyond what we are currently targeting that we could choose to address in the future as we continue to develop our systems and solutions to expand their capabilities and applications.
−Removed: We are initially focused on providing a baggage-handling solution and certain other solutions (such as de-icing and aircraft servicing) for the aviation ground services market.
−Removed: Construction.
−Removed: According to an August 2022 report by Associated Builders and Contractors, as of July 2022 there were more than 375,000 unfilled construction jobs in the United States and construction workers were quitting
−Removed: their jobs at a faster rate than they were laid off or discharged for the 17 th consecutive month.
−Removed: Further, based on 2022 U.S.
−Removed: Bureau of Labor Statistics, the construction industry has the highest level of workplace injuries resulting from falls, slips and trips.
−Removed: As a result, we believe the construction market is a significant opportunity for our solutions, primarily for surface preparation and other at-height work use-cases, to increase productivity and address the labor shortage while increasing worker safety.
−Removed: We believe the defense industry will be an important market for us.
−Removed: We have worked with the U.S.
−Removed: Department of Defense for many years on product development to address its needs.
−Removed: Further, some of our commercial solutions have defense applications.
−Removed: For example, our surface preparation solutions can work on Navy ships and our maritime solutions can assist with mine clearing and ship inspection and repair.
−Removed: With the capability to work underwater for up to 2 hours, at depths of up to 1000 meters and to perform dexterous tasks semi-autonomously or by teleoperation, such as inspection, repair or object removal, we believe our Guardian Sea Class system and solutions have a large market opportunity while increasing safety by reducing the need for human divers to work in dangerous underwater conditions.
−Removed: Power and Utility .
−Removed: We are developing solutions for vegetation management and utility pole top repair, as well as underwater dam and other infrastructure inspection or repair use-cases, for use by power utilities.
−Removed: We believe these use-cases are significant opportunities for our solutions because they are designed to decrease the need for humans to work at height and in dangerous weather conditions or underwater and to increase productivity.
−Removed: Solar Field Construction .
−Removed: President Biden has announced that the United States is targeting a carbon pollution-free electrical grid by 2035.
−Removed: According to the Solar Energy Industries Association, achieving the PV installation target to meet this goal will require roughly 900,000 solar panel installers.
−Removed: SEIA has estimated that as of 2020, there were approximately 230,000 such installers in the United States and that this number has declined since 2016.
−Removed: As a result, we believe there is a significant opportunity for our solution in the solar field construction market.
−Removed: Growth Strategy
−Removed: The key elements of our growth strategy include:
−Removed: Focused Effort on Commercialization
−Removed: We will continue to focus on the commercialization of select systems and solutions to increase speed to market and accelerate market penetration by targeting specific use-cases, while demonstrating our ability to sell, manufacture and service our products.
−Removed: We believe this will prove the benefits of our systems and solutions in everyday working conditions while confirming market demand and achieving and growing product revenue.
−Removed: Continue to Develop our Robotic Systems and Solutions
−Removed: We plan to pursue continuous improvement of our current systems and solutions and to develop additional systems and solutions over time.
−Removed: We believe that as we show the commercial viability and benefits of our products in our initial target markets and use-cases, customers and potential customers will want to use robotics, and specifically our products, to address other use-cases that previously have not been conducive to automation.
+Added: We believe the market for AI/ML software for industrial robotics has been experiencing and is expected to continue to experience significant growth, which we believe is driven by a need for more efficient and flexible manufacturing processes.
+Added: Companies such as ABB, Fanuc, Yaskawa, KUKA, and Universal Robots are prominent in providing both robotic hardware and AI-based software solutions to a wide range of industries to promote automation.
+Added: We believe our AI/ML Software Platform augments their existing capabilities and will be complementary to their products offerings.
+Added: Collaborative robots, or cobots, which can work alongside humans, are also an area of opportunity for our AI/ML Software Platform.
+Added: We expect our AI/ML Software Platform to enhance cobots’ ability to adapt to dynamic or unstructured environments.
+Added: Further, we believe our AI/ML Software Platform has applicability to the unmanned aerial vehicle (UAV), remotely operated vehicle (ROV) and unmanned ground vehicle (UGV) markets to enable autonomous navigation and functionality especially as it relates to the defense sector.
+Added: We have a contract with Air Force Research Laboratory (AFRL) that provides funding to explore this potential.
+Added: Should this be a viable opportunity, we may consider selling our AI/ML Software Platform into the UAV, ROV and UGV markets.
+Added: We believe that our initial customer base will be comprised of innovators and early adopters in the industrial manufacturing, warehousing and logistics, defense, infrastructure maintenance and repair, energy and aerospace and aviation industries.
+Added: We believe that if we are successful demonstrating the value of our AI/ML Software Platform with these early adopters, there will be many potential customers that are fast followers.
+Added: In the long run, we believe that our AI/ML Software Platform will benefit many markets and industries.
+Added: However, it is possible that these beliefs and assumptions will prove incorrect, and, as a result, actual results and market sizes may deviate materially from our estimates.
+Added: See Part I Item 1A Risk Factors - “Our operating and financial projections rely on management assumptions and analyses.
+Added: If these assumptions or analyses prove to be incorrect, as they often have in the past, our actual operating results may be materially different from our expected or forecasted results.
+Added: Commercialization & Growth Strategy
+Added: Our Anticipated Sales Model
+Added: At launch, we anticipate offering our AI/ML Software Platform in at least two different packages:
+Added: (a) the AI/ML Software Platform with teleoperation devices including a full set of software and hardware needed to facilitate autonomy training and deployment, which is recommended for all first-time customers;
+Added: and (b) the AI/ML Software Platform without teleoperation devices, which is recommended for customers who have already purchased the AI/ML Software Platform and wish to expand their capabilities across multiple robotic systems.
+Added: Continued Development of our AI/ML Software Platform
+Added: Our research and development efforts are primarily focused on the further improvement of our AI/ML Software Platform, although some de minimis hardware-related research and development efforts continue.
+Added: We plan to pursue continuous improvement of our AI/ML Software Platform and to develop additional functionalities, for example certain specific Task Libraries.
+Added: We believe that as we show the commercial viability and benefits of our AI/ML Software Platform in our initial target markets and use-cases, customers and potential customers will want to use our AI/ML Software Platform to address other use-cases that previously have not been conducive to automation.
As our products are highly complex, we want to ensure that we continue to develop new systems and solutions to address new markets and use-cases, and thereby grow our business.
−Removed: Continued Investment in Innovation
−Removed: We will continue to invest significant resources in developing proprietary technologies across hardware, firmware, software and controls to commercialize our robotic systems and solutions.
−Removed: We expect our research and development activities to focus on areas such as human-like dexterity with augmented strength and reach, energetic autonomy, safety, intelligent AI-based software, simulations/mixed reality and natural extended reality interactions between humans and robots.
−Removed: We believe that these investments will be critical to our future growth as we seek to expand the capabilities of our systems and to create new solutions to address new markets and use-cases, as well as to sell upgrades and additional functionality to previous customers.
−Removed: Capital Efficient Manufacturing
−Removed: We have decided to focus on a standard product sales model for our robotic systems and solutions instead of the robot-as-a-service, or RaaS, model we previously expected to pursue particularly for the Guardian XO and Guardian XT.
−Removed: The standard sales model has the benefit of reducing our capital requirements since we do not need to wait to recover our production costs over many months or years of RaaS subscription payments.
−Removed: As a result, we expect that our capital requirements will be reduced and that we can manufacture our systems and solutions in a more capital efficient manner.
−Removed: We plan to engage one or more contract manufacturing partners and that, over time, our manufacturing partner(s) will be responsible for most of our manufacturing.
−Removed: We believe that leveraging the core strengths of a contract manufacturing partner will have the long-term benefits of increased speed to market, high-quality volume production and the ability to scale more quickly to meet demand, as well as potentially decreasing supply chain costs, reducing delays and expanding our supplier-base.
−Removed: Further, we would not need to build large-scale manufacturing facilities and incur the up-front capital investment and the recurring fixed costs and overhead that would be required for us to own and operate such manufacturing facilities.
−Removed: We expect outsourced manufacturing to allow us to focus on our core competencies while significantly reducing overall risk and give us the flexibility to quickly scale volumes up or down to match demand levels since we can leverage an established manufacturing operation and supply chain.
−Removed: See “—Manufacturing and Suppliers ”
−Removed: Collaborate with Development Customers to Expand Target Markets
−Removed: We have engaged, are engaging and intend to engage in the future with development customers in various industries, including aerospace/aviation, construction, defense, utilities, solar, distribution and warehousing, industrial manufacturing, maritime and power and utilities.
−Removed: In many cases, these development customers pay us to develop our products, and this constitutes the bulk of our services revenue.
−Removed: This allows us to reduce our net loss and use of cash while continuing product development efforts to improve and commercialize our products, develop new products and establish relationships with potential commercial and government customers that have helped us create products designed to meet their needs.
−Removed: We believe working with these development customers will allow us to accelerate our brand awareness within these and adjacent industries and develop products that will meet the needs of a variety of potential customers.
−Removed: These relationships have already played an important role in helping us select the markets, use-cases and product capabilities we are currently pursuing.
−Removed: Additionally, while our focus has been primarily on the U.S.
−Removed: domestic market, we intend to explore opportunities in select non-U.S.
−Removed: markets as and when we deem appropriate.
−Removed: Pursue Selective Strategic Acquisitions and Partnerships
−Removed: We may pursue strategic acquisitions from time to time that we believe will be complementary to our existing business or otherwise increase the value proposition we deliver to our customers.
−Removed: We may pursue acquisitions that we believe will help us add new or enhanced capabilities or technology, expand our product offering, accelerate customer growth, enter new markets or add talent and expertise to our organization.
−Removed: For example, our acquisition of RE2, Inc.
−Removed: in April 2022 provided many of these benefits, including bringing much needed and hard to hire engineering talent into our company.
−Removed: In addition, the RE2 acquisition has brought us additional technology, products and customers that are key elements of many of our currently targeted markets, use-cases and solutions, such as solar field construction, baggage-handling and maritime.
−Removed: We may also enter into strategic partnerships from time to time, including to combine our product offerings with those of our partners.
−Removed: For example, we may partner with companies whose products may serve as a mobile base for the Guardian XT or an integrated ROV for the Guardian Sea Class and offer the combined unit as a standalone product or solution.
−Removed: Among other benefits, these partnerships could reduce barriers to customer adoption and use of our products, allow us to leverage the partner’s existing sales and distribution channels or provide lead generation and conversion of additional potential customers for our other product offerings.
+Added: Focused Effort on Commercialization while Collaborating with Development Customers
+Added: Our AI/ML Software Platform is in its development phase.
+Added: We will continue to focus on the development and commercialization of our AI/ML Software Platform to bring the initial commercial version to market in a timely manner targeting specific use-cases.
+Added: We believe this will prove the benefits of our AI/ML Software Platform in everyday working conditions while confirming market demand and achieving and growing product revenue.
+Added: We intend to engage in the future with development customers in various industries.
+Added: In some cases, these development customers may pay us to develop our products.
+Added: This approach allows us to reduce our net loss and net use of cash while learning from our future customers’ experience with the AI/ML Software Platform, continuing product development efforts to improve and commercialize our product, and establish relationships with potential commercial and government customers.
+Added: We believe working with these development customers will allow us to accelerate our brand awareness within our targeted industries and develop products that will meet the needs of a variety of potential customers.
+Added: We anticipate that these relationships will play an important role in helping us select the markets, use-cases and product capabilities we are currently pursuing.
Competitive Strengths
−Removed: Differentiated and Proprietary Technology
−Removed: We believe our technology distinguishes us from others in the industrial robotics space because our technology seeks to augment, rather than replace, humans by combining human intelligence, instinct and judgment with the strength, endurance and precision of machines.
−Removed: We are a pioneer in the robotic systems industry and benefit from lessons learned over more than 30 years and $375 million in research and development investment in our proprietary technologies, as well as our extensive patent portfolio.
−Removed: We believe that our innovations, including advances in energetic outdoor mobile manipulation, human like dexterity, intelligent AI-based software for controls and outdoor autonomy and immersive teleoperation technology for natural
−Removed: extended reality interactions between humans and robots, together with advances in electronics, materials, motors and other components of our products, will enable us to produce machines that do not suffer from historical limitations and are intuitive to use and relatively quick and easy for setup and workflow changeover.
−Removed: We often have opportunities to use technology developed for one system or solution in other systems or solutions.
−Removed: For example, many of the technologies we developed for the Guardian XO have been incorporated into the Guardian XT and our intelligent software for controls and simulations developed for the Guardian XO has been extended to our other core products.
−Removed: -Intellectual Property ”
−Removed: Early Mover Across Wide Range of Industries
−Removed: We believe we are creating a new category of industrial robotics –
−Removed: intelligent systems and solutions designed to be mobile, highly-dexterous, used in changing, unstructured environments and capable of different tasks as directed by human operators.
+Added: 30+ Years of Robotics Experience
+Added: As a pioneer in the robotic systems industry, we benefit from lessons learned over 30-plus years and significant investment in research and development.
+Added: Through our development efforts, including our software development efforts, we have developed a significant amount of advanced technology that we are leveraging to develop our AI/ML Software Platform.
+Added: Our extensive robotics history gives us valuable perspective on how to use software to tackle the challenges associated with training and managing industrial robots in complex and dynamic environments.
+Added: We believe that leveraging our previous innovations in hardware and related software, including advances in energetic outdoor mobile manipulation, human like dexterity and immersive teleoperation technology for natural extended reality interactions between humans and robots will enable us to transition our previous software development into a hardware agnostic AI/ML Software Platform to bring the benefits of our software to a much broader base of robots.
We have spent many years working with and listening to people with experience in the industries we expect to target, including advisors and development customers.
−Removed: These early engagements have helped us form relationships with potential customers, helped fund our development efforts and provided critical customer insight and feedback into our development plans and product designs.
−Removed: We believe our early efforts to get this feedback and build these relationships with potential customers situate us well to create robotic systems and solutions that meet customer needs.
+Added: These early engagements have helped us form relationships with potential customers, helped fund our development efforts and provided critical customer insight and feedback into our development plans and software design.
+Added: We believe our early efforts to get this feedback and build these relationships with potential customers situate us well to effectively commercialize our AI/ML Software Platform.
Visionary and Experienced Management
−Removed: We have a proven and experienced team with deep operational expertise in bringing emerging technologies to market.
−Removed: Our team is led by Kiva Allgood, our Chief Executive Officer, who has many years of executive-level, operational experience within global telecommunications and technology companies, including Ericsson and Qualcomm.
−Removed: Our engineering and design efforts are led by a highly experienced robotics team with hundreds of years of cumulative robotics experience, with some members of our engineering team working together for over 20 years.
−Removed: Members of our board of directors have extensive experience across a wide array of disciplines, including experience in many of the industries that we intend to serve and in the production and delivery of complex hardware and software solutions.
−Removed: Strategic Collaborators
−Removed: We collaborate or have collaborated with various companies, including development customers, in the development of our systems and solutions, such as Delta Air Lines, Changi Airport Group, Mortensen and Microsoft.
−Removed: Some of the companies with which we have collaborated have also invested in Sarcos.
−Removed: We have also worked closely with the U.S.
−Removed: Department of Defense and the U.S.
−Removed: Department of Energy on the development of some of our products or technologies.
−Removed: We believe these collaborations provide valuable feedback that will enhance our early mover advantage and product development efforts.
−Removed: We believe we are developing a new category of industrial robotic systems and solutions that augment, rather than replace, humans.
−Removed: In many cases, our primary competition will be traditional modes of human labor, sometimes assisted with material handling products such as overhead cranes, forklifts and pallet jacks.
−Removed: To overcome potential resistance to innovation and the adoption of new products and ways of working, we must demonstrate to customers the value proposition of our products, including increasing productivity, reducing costly occupational injuries and broadening the pool of available employees by equalizing workers’
−Removed: physical capabilities to include older and less physically strong workers.
−Removed: Additionally, our product offerings compete in a broad competitive landscape that includes robotics and automation companies that have both directly competing as well as alternative solutions ranging from exoskeletons, collaborative robots, industrial robots, traditional lift-assist equipment and unmanned robotic vehicles.
−Removed: We also view our competitive landscape to include companies who have different product lines in the automation space, such as ABB Robotics, Siasun Robot & Automation, Teradyne and Berkshire Grey.
−Removed: Also included in our broader competitive landscape are robotic solution suppliers, like Rockwell Automation, Honeywell, Keyence Corporation, COGNEX Corporation and Hexagon AB, which may not have a directly competing product today, but which could become competitors through diversification;
−Removed: these companies have existing customer relationships and channels, as well as significant financial and other resources, that could enable them to emerge as formidable competitors in the future.
−Removed: The following is a breakdown of the competitive landscape for our core systems and solutions:
−Removed: Our Guardian XM and Guardian XT systems face a varied competitive landscape that includes collaborative robotics companies, such as Kuka, Fanuc, Doosan Robotics and Universal Robotics, as well as automation
−Removed: companies like Teradyne, ABB Robotics, Siasun Robot & Automation, Berkshire Grey, Ready Robotics and OMRON.
−Removed: Our Guardian Sea Class competes with robotic arm manipulator companies like Deep Trekker, Nauticus Robotics, Reach Robotics and QYSEA that provide manipulators and grippers for light and working-class ROVs.
−Removed: Our Guardian XO competes with robotics and automation solutions that help workers with heavy materials handling, heavy lift-and-transport-assist and overhead assembly type jobs.
−Removed: Principal competitors include Hyundai and Daewoo, who have previously shown powered exoskeleton prototype units, and companies like Cyberdyne, Samsung, Ekso Bionics, Ottobock, Lockheed Martin, SuitX and Levitate who currently sell powered, partial-body exoskeletons or passively-powered, partial-body variants.
−Removed: Our vegetation management solution competes indirectly with general purpose mechanical brush clearing solutions like the Mini-Jaraff by Jarraff Industries and the Kershaw SkyTrim product by Progress Rail and modified lift trucks, such as the BIK Boom Truck and Sennebogen, that are marketed for vegetation management.
−Removed: We believe our PV panel installation solution will compete with products under development by AES and Bailey Crane.
−Removed: AES, a large utility company, announced in 2021 it was developing an autonomous solar module installation point-solution.
−Removed: Bailey Crane has announced that it is developing a solar panel installation robot that could compete with our solution.
−Removed: Our baggage-handling solution competes with AMR and automated guided vehicle (AGV) products designed for baggage-handling by companies such as Vanderlande, Addverb Technologies, Alstef Group, Siemens and Lloyd W.
−Removed: Aubry Company and baggage-loader/unloader systems such as those provided by Beumer Group and BBHS.
+Added: We have an experienced and talented team with deep operational expertise.
+Added: Our team is led by Benjamin Wolff, our Chief Executive Officer, who has many years of executive-level, operational and corporate board experience.
+Added: Our engineering efforts are led by Denis Garagić, our Chief Technology Officer, with over twenty-five years of experience in AI and ML.
+Added: Members of our board of directors have extensive experience across a wide array of disciplines.
+Added: We believe we are redefining automation to bring human-like reasoning, intelligence and autonomy to robotics through a unique application of AI and ML that has the potential to significantly accelerate growth for our commercial and defense customers.
+Added: Our AI/ML Software Platform will compete with companies that have developed or are developing both directly and indirectly competing solutions and capabilities.
+Added: While there are many automation-centric companies who are active, especially in early-adopter segments such as warehouse and logistics, and select manufacturing or assembly verticals, we believe our primary competitors are those who are focused on addressing key challenges in robotic deployments via autonomy or automation-enhancing software capabilities.
+Added: In the broader automation landscape, we will compete (both directly and indirectly) with companies such as Bright Machines, C3.ai, Dexterity, Gray Matter Robotics, Intrinsic, Mujin, Olis Robotics, Rapid Robotics, and Ready Robotics.
+Added: We believe that our competitors are seeking to solve the same or similar industry challenges as we are, but that most are focused on a particular aspect of the functionality of our AI Software Platform rather than a fully competitive solution.
+Added: While we view industrial robotics manufacturers, large system integrators, and consulting companies such as Fanuc, Kuka, ABB, Yasakawa, Honeywell, Reply, and Rockwell Automation, as potential target customers and/or channel partners for our software platform, we also recognize that these companies could also emerge as formidable competitors through their own internal development efforts or future technology partnerships with and acquisitions of our direct competitors.
+Added: They may bring their robust customer relationships, channels and significant financial resources to help accelerate the market viability of one of our direct or indirect competitors.
Many of our competitors and potential competitors have products that are commercially available and/or in development.
−Removed: We expect some products currently in development to become commercially available in the next few years.
−Removed: In addition, we compete or may compete with companies that develop artificial intelligence and industrial automation solutions, such as those offered by Hyundai-Boston Dynamics, Grey Matter, Canvas Technology, DroneSense, Intuitive, iRobot, Hahn Robotics, Kuka, Fanuc, Neurala, Ready Robotics, Rethink Robotics and Yaskawa.
−Removed: Our competitor base may change or expand as we continue to develop and commercialize our robotic systems and solutions in the future.
−Removed: These or other competitors may develop new technologies or products that provide superior results to customers or are less expensive than our products.
+Added: We expect some products currently in development by such competitors and potential competitors to become commercially available in the next few years.
+Added: Our competitor base may change or expand as we continue to develop and commercialize our AI/ML Software Platform and develop new functionality or products, or if we return to efforts to develop and commercialize hardware systems.
+Added: These or other competitors may develop new technologies or products that provide superior results to customers or are less expensive
+Added: than our products.
Our technologies and products could be rendered obsolete by such developments.
−Removed: See Part I Item 1A Risk Factors - “
−Removed: We operate in a competitive industry that is subject to rapid technological change, and we expect competition to increase.”
−Removed: We expect that we will compete on the following factors:
−Removed: technological innovation;
−Removed: product quality, reliability and safety;
−Removed: product features and performance, including from our intelligent software;
−Removed: product pricing;
−Removed: manufacturing efficiency and resources;
−Removed: customer experience, including support;
−Removed: existing customer relationships.
−Removed: We believe we do and will compete favorably on the basis of these factors;
−Removed: however, our potential competitors may have greater financial, technical, manufacturing and other resources than we have.
−Removed: Our competitors may be able to deploy greater resources
−Removed: to the design, development, manufacturing, distribution, promotion, sales, marketing and support of their cobot and industrial robotics programs than we can.
−Removed: Additionally, our competitors may have greater name recognition, longer operating histories, larger sales forces, broader customer and industry relationships and other tangible and intangible resources than we have.
+Added: See Part I Item 1A Risk Factors - “ We operate in a competitive industry that is subject to rapid technological change, and we expect competition to increase.
+Added: Our products may not be competitive with other alternatives.”
+Added: We expect that we will compete favorably due to our technical innovation and product features and performance.
+Added: Some of our potential competitors have greater financial, technical and other resources than we have.
+Added: Our competitors may be able to deploy greater resources to the design, development, distribution, promotion, sales, marketing and support of competitive products than we can.
+Added: Additionally, some of our competitors have greater name recognition, longer operating histories, larger sales forces, broader customer and industry relationships and other tangible and intangible resources than we have.
These competitors also compete with us in recruiting and retaining qualified research and development, sales, marketing, and management personnel, as well as in acquiring technologies complementary to, or necessary for, our products.
−Removed: Additional mergers and acquisitions in the cobot and industrial robotics market may result in even more resources being concentrated in our competitors.
+Added: Additional mergers and acquisitions by our existing or potential competitors may result in even more resources being concentrated in our competitors.
Customers and Partners
−Removed: We engage with a wide-variety of potential customers in many different industries, including some of the largest companies in our target markets, small and medium-sized businesses and government agencies such as the U.S.
−Removed: Department of Defense and the U.S.
−Removed: Department of Energy.
−Removed: Our development customers include some of the largest enterprises in our target markets, including Delta Air Lines, Changi Airport Group, Mortenson and the U.S.
−Removed: Department of Defense.
−Removed: We have also partnered with such companies as Microsoft and Array.
−Removed: Through the end of 2022 our customers have primarily been development customers –
−Removed: customers paying us to fund our product research and development efforts.
−Removed: While we expect our revenue to continue to include product development contract revenue, we also expect to begin to see meaningful product sales revenue in 2023 as we begin to sell and deliver commercial versions of our Guardian XM, Guardian XT and Guardian Sea Class systems and solutions.
−Removed: However, we have only recently begun to offer these systems for sale and, while we are having discussions with many potential customers that have expressed strong interest in purchasing our systems and solutions, at this time we do not yet have binding customer sales contracts for the commercial versions of these products.
−Removed: Research and Development
−Removed: Our research and development team is comprised of technology experts from fields including controls, perception and simulations engineering, artificial intelligence and machine learning, software/firmware engineering, mechanical and electrical engineering, systems engineering, finite element analysis, human factors and design and applications engineering.
−Removed: Our primary areas of focus in research and development are centered around supervised autonomy solutions, including multi-modal sensor data to optimally perceive, interact and conceptualize unstructured environments.
−Removed: Combined with our advanced, success-based learning AI approach, our supervised autonomy software framework uses the power of real-time and learned-behavior data inputs that enable our robotic systems and solutions to successfully execute task-specific autonomy in unstructured environments.
−Removed: More specifically, among other things, we are focusing research and development efforts on:
−Removed: for the Guardian XM, supervised autonomy for outdoor environments that enable dexterous manipulation for aviation, solar panel construction, surface preparation and other use-cases;
−Removed: for the Guardian XT, immersive teleoperation technology for natural extended reality interactions between humans and robots and using the motions and task solutions of the human operator to train the system for increasing levels of autonomy;
−Removed: for the Guardian Sea Class, an autonomy solution for multi-modal sensor perception and dexterous manipulation of robotic arms and guidance, navigation and control of an ROV to increase autonomy for underwater applications;
−Removed: and for the Guardian XO, optimized bipedal walking controllers and supervised learning techniques to develop a novel, stable motion control framework to enable a hybrid use of the Guardian XO (either with or without a human operator).
−Removed: Our research and development efforts also include our DfX (design for excellence) work, including comprehensive design for manufacturing, design for cost and procurement, design for testing and design for assembly.
−Removed: These efforts are aimed at ensuring the manufacturability, serviceability and robustness of our products.
−Removed: Our research and development expenses were $34.1 million and $17.5 million in 2022 and 2021, respectively, (which does not include the research and development expenses of RE2 prior to the acquisition on April 25, 2022).
−Removed: Our customer first, collaborative approach is a cornerstone of our research and development processes.
+Added: Through the end of 2023, our customers have primarily been development customers:
+Added: customers funding our hardware product research and development efforts for which we have suspended development efforts.
+Added: However, our many years of work with potential customers in many different industries and the U.S.
+Added: Department of Defense, in particular the Air Force Research Laboratory, has contributed to the development of our AI/ML Software Platform.
+Added: We do not yet have any customers for our AI/ML Software Platform.
+Added: We anticipate initial commercial customers for our AI/ML Software Platform will be in industries such as industrial manufacturing, warehousing and logistics, defense, infrastructure maintenance and repair, energy and aerospace and aviation, among others.
Intellectual Property
−Removed: Our research and development efforts over many years has resulted in significant intellectual property.
Our ability to create, obtain and maintain intellectual property is important to our business.
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We pursue patent protection at times when we believe we have developed a patentable invention and the benefits of obtaining a patent outweigh the risks of making the invention public through patent filings.
−Removed: Our patents and patent applications are focused primarily on robots and robotic systems, including wearable exoskeletons to enhance human operations, humanoid robots, teleoperated robots, mobile platform-based robotic arms, teleoperated robots, unmanned ground robots and end-effectors, including patents in the areas of safety, robot vision, sensors, power efficiency, control strategies and cybersecurity.
−Removed: We also have patents and patent applications covering technology in the fields of counter-attack unmanned aerial vehicles (drones) for enemy drone neutralization, various micro-camera and other medical devices, augmented reality, sensors, valves, motors, actuators and others.
−Removed: As of February 2023, we had approximately 90 issued and unexpired U.S.
−Removed: patents and approximately 100 issued and unexpired international patents, as well as approximately 135 patent applications filed in the United States or internationally.
+Added: We are in the process of attempting to secure patent protection for aspects of our AI/ML Software Platform but none of these patent applications have yet been granted.
+Added: Due to the fact that our extensive patent portfolio is expensive to maintain, we are in the process of culling patents and applications from our portfolio that we do not believe are essential or likely to add value to our ongoing business operations.
Many of our previously issued patents have expired, with others set to expire on dates ranging from 2023 to 2040, exclusive of any patent term adjustment or patent term extension.
−Removed: We do not know whether all of our pending patent applications will result in issued patents, or whether the examination process will require a narrowing of claimed subject matter.
−Removed: Furthermore, in light of the highly active fields of technology in which we are involved, particularly the field of robotics, our patents and pending patent applications may not provide us with broad-level protection.
−Removed: In an effort to protect our brand, we also pursue the registration of our domain names and various trademarks in the United States and in select international locations.
+Added: We do not know whether our pending patent applications will result in issued patents, or whether the examination process will require a narrowing of claimed subject matter.
+Added: Considering the highly active fields of technology in which we are involved, particularly the field of artificial intelligence, our patents and pending patent applications may not provide us with broad-level protection.
+Added: To protect our brand, we also pursue the registration of our domain names and various trademarks in the United States and in select international locations.
Sales and Marketing
−Removed: We currently offer for sale our Guardian XM, Guardian XT and Guardian Sea Class systems through a direct sales model.
−Removed: We focus our sales and marketing efforts on industries that we believe show a strong potential for growth and a significant need based on worker shortage, limited innovations for their tasks (such as for outdoor tasks in unstructured environments) and risk of injury.
−Removed: Due to their size and their potential opportunity and willingness to be early adopters, we generally direct our sales efforts toward leading companies in the industries and markets we target as we believe these companies have the potential and ability to serve as referenceable customers and drive additional sales.
−Removed: Notwithstanding the foregoing, we also target small and medium-sized businesses and government agencies such as the U.S.
−Removed: Department of Defense and the U.S.
−Removed: Department of Energy.
−Removed: We intend to continue to invest in our sales and marketing efforts in support of the commercialization of our robotic systems and solutions.
−Removed: We intend to pursue strategic relationships with systems integrators, companies with complementary technologies, software application providers, distributors and consulting firms to expand the channels in which our robotic systems and solutions are marketed.
−Removed: We believe working with these partners will accelerate our brand awareness within various industries and provide complementary capabilities and differentiation that will attract new customers while helping us expand our customer base.
−Removed: We expect that initial sales of our robotic systems and solutions will be a standard sales model where the customer pays an upfront amount to purchase the system or solution, rather than the RaaS leasing model that we previously expected to pursue particularly with our Guardian XO and Guardian XT systems.
−Removed: We had expected the RaaS model to be enticing to customers for a variety of reasons, though we had expected to follow a sales model for the Guardian XM, Guardian Sea Class and other products that were part of the Sapien product line acquired from RE2.
−Removed: However, based on interest shown by our development customers and potential commercial customers in purchasing our systems, we have decided to pursue a standard sales model and we expect that our product revenue will primarily result from standard product sales.
−Removed: As a result, while we could consider a RaaS or other model for a particular customer, we do not expect the RaaS model to be a focus of our business model going forward.
−Removed: We expect that the standard sales model will enable us to reduce our capital requirements as we will not need to bear the upfront manufacturing costs associated with building our systems and solutions and then wait to recover those costs over many months or years of RaaS subscription payments.
−Removed: With respect to our software, to the extent we are successful in commercializing it separately from our robotic systems and solutions, we expect to favor a software-as-a-service (SaaS) model that would result in a recurring revenue stream, though we will also consider one-time sales.
−Removed: Similarly, we would also favor a SaaS model but consider one-time sales for software upgrades.
−Removed: We expect to continue discussions with potential customers to ultimately determine the appropriate model for us in light of market conditions.
−Removed: Manufacturing and Suppliers
−Removed: We believe we can manufacture 300-500 systems per year in our current facilities, depending on the mix.
−Removed: However, we do not expect to use all of that capacity in 2023, especially after engaging a contract manufacturing partner to provide additional capacity and expertise.
−Removed: While we currently do not anticipate high-volume production by a contract manufacturing partner to be in place until at least the end of 2023, we have signed an agreement and begun initial engagement activities with a contract manufacturing partner.
−Removed: We expect that this contract manufacturing partner will initially focus on helping us produce sub-systems for the Guardian XT.
−Removed: We believe that leveraging the core strengths of a contract manufacturing partner will have the long-term benefits of increased speed to market, high quality volume production and the ability to scale more quickly to meet demand, as well as potentially decreasing supply chain costs, reducing delays and expanding our supplier-base.
−Removed: Further, we would not need to build large-scale manufacturing facilities and incur the up-front capital investment and the recurring fixed costs and overhead that would be required for us to own and operate such manufacturing facilities.
−Removed: We expect outsourced manufacturing to allow us to focus on our core competencies while significantly reducing overall risk and give us the flexibility to quickly scale volumes up or down to match demand levels since we can leverage an established manufacturing operation and supply chain.
−Removed: See above discussion under “Growth Strategy - Capital Efficient Manufacturing.”
−Removed: We maintain a diverse set of suppliers.
−Removed: Most of our suppliers are based in the United States and we often target suppliers that are local to our facilities, though we also pursue consolidation of suppliers between facilities when we deem it more cost-effective or to otherwise be beneficial.
−Removed: Most of our supplier relationships are purchase order based and we do not have many long-term supply contracts.
+Added: Our AI/ML Software Platform is currently under development.
+Added: While we continue to focus on the further development and commercialization of our AI/ML Software Platform, our sales efforts are underway to engage with potential customers.
+Added: We intend to leverage many of our relationships built through our previous hardware efforts to sell our AI/ML Software Platform.
+Added: We anticipate our potential customers to be in a wide variety of industries such as industrial manufacturing, warehousing and logistics, defense, infrastructure maintenance and repair, energy and aerospace and aviation, among others.
+Added: We intend to invest in our sales and marketing efforts in support of the commercialization of our AI/ML Software Platform.
+Added: We intend to pursue strategic relationships with systems integrators, companies with complementary technologies, software application providers, distributors, and consulting firms as and when we deem appropriate to expand the channels in which our AI/ML Software Platform is marketed.
+Added: We believe working with these partners will accelerate our brand awareness and path
+Added: to market within various industries and provide complementary capabilities and differentiation that will attract new customers while helping us expand our customer base.
+Added: We currently expect to offer our AI/ML Software Platform through a term-based licensing model that would result in a recurring revenue stream.
+Added: We may also offer add-on functionality for an additional license fee.
+Added: We may charge an upfront fee for the teleoperation devices needed to facilitate autonomy training and deployment or embed the cost into the license fee.
+Added: We expect to continue discussions with potential customers to ultimately determine the appropriate model.
+Added: Additionally, while the initial focus of our sales and marketing efforts has been primarily on the U.S.
+Added: domestic market, we intend to explore opportunities in select non-U.S.
+Added: markets as and when we deem appropriate.
+Added: We have a limited set of suppliers for the minimal hardware components that will be offered with our AI/ML Software Platform.
+Added: We expect most of our suppliers to be based in the United States and expect most of our supplier relationships to be purchase order based rather than long-term supply contracts.
In some cases, we have sole source (where the component is only available from a single vendor, often as a result of customization for our use) or single source (where we purchase from a single vendor but there are alternative sources of the component) suppliers.
We seek to minimize our dependence on sole or single source suppliers in order to reduce risk in our supply chain, including the risk of losing a sole or single source supplier due to bankruptcy, discontinuing production of the particular component or some other reason.
+Added: For additional information related to supply chain issues, see “ Risk Factors— Our AI/ML Software Platform requires certain limited hardware components, and we are dependent on our suppliers, some of which are currently single, sole or limited source suppliers, and any inability of these suppliers to deliver necessary components of our products at the prices, volumes, performance, timing and specifications acceptable to us, could have a material adverse effect on our business, prospects, financial condition and operating results.
Government Regulation
1 unchanged sentence
federal, state, and local laws and regulations governing the occupational health and safety of our employees and wage regulations, including the requirements of the U.S.
−Removed: Occupational Safety and Health Act, as amended, or OSHA, and comparable state laws that protect and regulate employee health and safety.
+Added: Occupational Safety and Health Act, as amended, and complementary state requirements (including the Utah Occupational Safety and Health Division’s Utah State Plan) that protect and regulate employee health and safety.
We are also subject to U.S.
−Removed: laws and regulations that may limit and restrict the export of some of our products and services and may restrict our transactions with certain customers, suppliers, business partners and other persons.
−Removed: These laws and regulations may include outright prohibitions or export license requirements.
−Removed: We must also comply with export restrictions and laws imposed by other countries affecting trade and investments to the extent applicable.
−Removed: We maintain export compliance controls and procedures but there are risks that these compliance controls might not be effective, in which case we could be exposed to legal liabilities.
−Removed: Compliance with these laws has not significantly limited our sales or other transactions with third parties but could significantly limit them in the future.
+Added: laws and regulations that may limit and restrict the export of our products and services and may restrict our ability to transact with certain potential customers, suppliers, business partners and other persons.
+Added: These laws and regulations include outright prohibitions on certain types of transactions and impose license or other government authorization requirements on others.
+Added: We must also comply with export restrictions and other laws affecting trade and investments imposed by other countries to the extent applicable.
+Added: We maintain export compliance controls and procedures as part of our broader compliance program, but, as with any compliance program, there are risks that these controls might not prevent every instance of non-compliance, in which case we could be exposed to legal liability.
+Added: To date, compliance with these laws has not significantly hampered our efforts to engage and transact with third parties but could further limit them in the future.
Changes in, and responses to, U.S.
−Removed: trade policy could reduce the competitiveness of our products and cause our sales to drop or make it difficult or impossible to enter affected markets, which could have a material adverse effect on our business, prospects, financial condition or results of operations.
−Removed: Our robotic platforms must comply with the rules of the Federal Communications Commission (FCC) with respect to:
−Removed: any radio frequency, or RF, spectrum utilized for such components as the remote control or teleoperation system;
+Added: trade policy could reduce the competitiveness of our products by making it difficult or impossible to enter affected markets, which could have a material adverse effect on our business, prospects, financial condition or results of operations.
+Added: Aspects of our use of sensors in connection with our AI/ML Software Platform must comply with the rules of the Federal Communications Commission (FCC), including with respect to:
+Added: the use of any radio frequency, or RF, spectrum utilized for such components as the remote control or teleoperation system;
the power level and frequency of any RF energy emitted (intentionally or otherwise);
1 unchanged sentence
Such rules require, among other things, specific consumer disclosures with respect to RF emissions and proper installation and operation of the device components and any modular transmitters in our products.
−Removed: We are subject to requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that will require us to diligence, disclose and report whether our products contain conflict minerals.
−Removed: The implementation of these requirements could adversely affect the sourcing, availability and pricing of the materials used in the manufacture of components used in our products.
+Added: Further, as a U.S.
+Added: government contractor, we are subject to various government procurement and other laws, regulations, and contract requirements, including provisions and clauses of the Federal Acquisition Regulation (FAR), the Defense Federal Acquisition Regulation Supplement (DFARS), and other agency-specific regulations.
+Added: government contracting
+Added: requirements further implicate a broad variety of subjects in addition to the areas described above, including security, data management and disclosure, cybersecurity, cost and pricing activity and finance.
Legal Proceedings
From time to time, we may be subject to legal proceedings.
−Removed: We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results
−Removed: of operations.
+Added: We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, or results of operations.
Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Human Capital
−Removed: Our employees are critical to our success.
−Removed: As of December 31, 2023, we had approximately 280 full-time and part-time employees with the majority of our employees based in the Salt Lake City, Utah and Pittsburgh, Pennsylvania areas.
+Added: We conducted two reductions in force (each a “RIF” and together the “RIFs”) in the past 12 months, one in July 2023 (the “July RIF”), affecting approximately 24% of our workforce at the time, and another in November 2023 (the “November RIF”), affecting approximately 70% of our workforce at the time, ultimately resulting from our decision to shift our product development and commercialization strategy to focus on our AI/ML Software Platform.
+Added: Following the completion of the RIFs, as of February 1, 2024, we had approximately 70 full-time and part-time employees, with most employees located in our Salt Lake City, Utah office.
We also engage consultants and contractors to supplement our permanent workforce on an as-needed basis.
2 unchanged sentences
None of our employees are subject to a collective bargaining agreement or represented by a labor union.
−Removed: We currently operate in a corporate and manufacturing facility in Salt Lake City, Utah consisting of approximately 61,000 square feet, and in three facilities in Pittsburgh, Pennsylvania.
−Removed: The lease of our Salt Lake City facility expires in May 2033 and has two options to extend the lease for a three-year period each.
−Removed: The leases for our facilities (or portions thereof) in Pittsburgh, including outdoor test space and indoor office, test, manufacturing, production and warehouse space, expire in August 2023, March 2025 and June 2025, with various renewal or extension options.
+Added: We currently operate in a corporate and manufacturing facility in Salt Lake City, Utah consisting of approximately 61,000 square feet, The lease of our Salt Lake City facility expires in May 2033 and has two options to extend the lease for a three-year period each.
+Added: As announced on November 14, 2023, we are in the process of winding down our operations in our Pittsburgh, Pennsylvania office.
We believe that should we need additional or different space we will be able to obtain such space on commercially reasonable terms.
+Added: History, Corporate Information and Website
+Added: Sarcos is the result of a decades-long effort in research and development of robotic systems and solutions.
+Added: Our original predecessor was spun-out of the University of Utah in 1983.
+Added: In 2007, our predecessor was acquired by Raytheon and was operated until 2014 as a division of Raytheon known as Raytheon Sarcos.
+Added: During this period, Raytheon Sarcos was focused primarily on developing cutting-edge technologies for use by U.S.
+Added: governmental agencies.
+Added: In December 2014, the assets of Raytheon Sarcos were acquired by a consortium led by the former Raytheon Sarcos President and our current Chief Innovation Officer, Dr.
+Added: Fraser Smith, and technology and telecom entrepreneur Benjamin Wolff, our Chief Executive Officer, President and member of the Board of Directors.
+Added: This acquisition was the basis for the establishment of Sarcos Corp., a Utah corporation (“Old Sarcos”), which was incorporated in Utah in February 2015 as Sarcos Corp.
+Added: On September 24, 2021, Old Sarcos merged with Rotor Acquisition Corp.
+Added: (“Rotor”), a Delaware corporation.
+Added: On September 24, 2021, Rotor changed its name to Sarcos Technology and Robotics Corporation.
+Added: In April 2022, we acquired RE2, Inc., (“RE2”) a Pittsburgh, Pennsylvania based robotics company.
+Added: On November 14, 2023, we announced a pivot in business strategy to prioritize the development of our commercial AI/ML Software Platform and suspend further commercialization efforts on hardware products, although some de minimis hardware-related research and development efforts continue.
+Added: After continued analysis of our products and programs and careful consideration of our available cash and other resources, as well as third party dependencies, customer decision timing, and the cost and time to develop and achieve a significant and steady revenue stream from our hardware products, we concluded that focusing on our AI/ML Software Platform and suspending our hardware commercialization efforts gave us the best risk-adjusted opportunity to meet our previously announced goal of pursuing significant near-term revenue tied to acute customer needs and reduce our capital requirements and related risks in line with available resources.
+Added: We believe that the expected capabilities described above, combined with a large potential addressable market, create an opportunity to build a robust
+Added: software business that has the potential to scale at a substantially faster rate than our hardware solutions.
+Added: This pivot in strategy builds on our prior announcement, on July 12, 2023, that we had refined our strategy to focus on products that we believed had the most potential for near-term revenue growth and strategic opportunities, which at the time included our Guardian Sea Class system, certain aviation solutions (baggage handling and exterior aircraft maintenance), a solar (solar field panel installation) solution and our commercial AI/ML Software Platform.
+Added: Our principal executive offices are located at 650 South 500 West, Suite 150, Salt Lake City, Utah, 84101.
+Added: Our telephone number is 888-927-7296.
+Added: We maintain a company website with the address www.sarcos.com.
+Added: We are not including the information contained on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.
+Added: We make available free of charge through the www.sarcos.com website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
+Added: These reports and other information are also available, free of charge, at www.sec.gov.
+Added: In addition, our Code of Business Conduct and Ethics is available through the www.sarcos.com website and any amendments to or waivers of the Code of Conduct will be disclosed on that website.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.