Palladyne AI Corp.

Good day, and thank you for standing by. Welcome to the Q4 2021 Sarcos Technology and Robotics Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star and zero. I would now like to hand the conference over to your speaker today, Ben Minnick, Head of Investor Relations. Please go ahead.

Thanks, Judy. Good afternoon, everyone, and welcome to the Sarko's 4th Quarter and 4-Year Earnings Call. Joining us on the call today are Sarko's President and Chief Executive Officer, Keeba Aldred, and Chief Financial Officer, Steve Hansen. Keeba will start the call with an overview of the and Steve will then talk in more detail about our financial results before we take questions from analysts. Before we begin, we must state that today's call will contain forward-looking statements, including statements concerning future commercial availability of our products, market trends, revenues, costs, and liquidity. In addition, statements about our planned acquisition of RE2, including our expectations regarding the benefits to be achieved, the financial performance of the combined company, The timing of the closing of the transaction, future market or revenue opportunities, integration plans and other statements regarding the combination of the two companies are forward-looking statements. These statements represent management's beliefs and expectations as to future events as of today, but there are many risks and uncertainties that could cause the actual results to differ from what we have projected. Among those risks and uncertainties are those described in our annual reports on Form 10K part of the SEC and those mentioned in our own press release and our press release announcing our planned acquisition of RE2. We encourage you to review the risks and uncertainties described in these press releases and in our filings with the SEC for further information regarding these actual and potential risks and uncertainties. We also encourage you to review the special note regarding forward-looking statements included in our earnings release files with the SEC this afternoon and in our template, both of which will be posted in the investor section of our website at sarcos.com and on the SEC's website. In addition, we will be discussing certain non-GAAP financial measures on our call today. Throughout this call, all financial measures will be GAAP unless otherwise noted. A reconciliation of any non-GAAP measures to their most directly comparable GAAP measures, as well as the description, limitations and rationale for such measures are included in the earnings release filed with the SEC this afternoon and which is available on our website and on the SEC's website. A recording of this call will also be archived on our website. The information that we're giving you on the call is out of today's date and we undertake no obligation to update the information subsequently. So, thanks again for joining us. At this point, I'd like to turn the call over to our President and CEO, Kiba Horvath.

Thanks, Ben, and thank all of you for joining us today. It's a very exciting time for Sarko. On a personal note, this earnings call is my first as President and CEO of Sarko, having succeeded Ben Wolf in December of last year when he stepped into a new role as the Executive Chairman. Although I've only been CEO for a few months, my involvement with Sarko goes back much further to my time at GE. when GE invested in Sarkos. I am impressed with the Sarkos revolutionary technology, and my enthusiasm has only grown since then. I am delighted to be continuing my journey with Sarkos as president and CEO, and meeting our company on a path to the commercial release of our flagship robotic system, with the first products ready for commercial production late this year. This afternoon, I'll update you on the current state of the business. After that, I'll hand the call over to our CFO, Steve Hansen, who will provide financial update on the company before we end with taking questions from all of you. Before I turn to the fourth quarter, I first want to say how excited we are about welcoming RE2 to the Sarkos family once the transaction closes. Many of you may be aware that yesterday we announced that we had reached an agreement to acquire RE2. Like Sarkos, RE2 is a leader in the development of teleoperated robotic systems with a primary focus on use cases and markets that SARCOS does not currently have progress. For example, RE-squared safety and range of robotic arms are designed for use in subsea and medical applications, two markets that SARCOS does not currently address today. In addition to expanding Carcose's addressable market, RU's products will also allow us to offer our industrial and military customers a wider range of potential solutions. Because RU's products offer different lifting capabilities, dexterity, manipulation, price points, which we believe will create even better opportunities and use cases to augment human workers in ways that increase productivity and enhance safety. Following the combination, Sarko's product line will consist of a following flagship product. The Guardian XO, industrial exoskeleton, which is capable of lifting up to 200 pounds with little to no effort and makes it possible to improve worker efficiency by a multiple of two, three, or even more, while making workers safer at the same time. The teleoperated Guardian XT, an avatar robot, a one- or two-armed upper-body robot which mounts on various mobile and lift platforms, making it ideal for a wide variety of industrial applications, including at-height, overhead, and ground-level configurations. It allows operators to carry out work in dangerous environments or at-height while remaining on the ground and out of harm's way. The same can't range of robotic arms, which feature several different models with capabilities ranging from precision arms for surgical applications, rugged outdoor arms for construction tasks, and the safety and sea class systems that can operate in shallow and deep water to perform inspection and maintenance tasks across multiple industries. In addition to increasing the breadth of our product line, we believe this combination will strengthen us in a number of other ways. Star Coast expects to benefit from revenue associated with RE Squared's partnerships with the government and commercial customers who are funding the development of a number of RE Squared's advanced robotic systems. At a time when the competition for talented individuals continues to be high, the combination will also be an additional development location in Pittsburgh's robotic field, a key robotic development center in the country. Financing the transaction will enable us to combine the potential of SICAR machine learning program with RE4's detect computer vision and RE4 and elect AI, software solutions that enable autonomy on their system. We believe that this work to bring autonomy in unstructured environments have huge potential and that combining our two programs offer a compelling opportunity to lead the industry in this effort. Above all, we believe the combination of Barco to ArtiSquared will be a good cultural and commercial fit for both parties. In purely financial and stock terms, this may seem like a relatively small transaction based on the modest stock solutions, but it's a big deal for us. In the terms of technology team and market presence, we believe the plan combination with RE Squared has the potential to significantly increase our future revenues and profitability. According to industry studies, both at best-seed and medical markets alone are projected to grow at double-digit cater in coming years, and RE Squared has a presence in both those markets. We're delighted they agreed to join us. Turning to our commercialization efforts. a shortage of workers to perform physical tasks is a challenge we often hear about from our partners and potential customers. And the challenge, in addition to expanding car courses, and the challenge is predicted to continue to grow for decades. Demographic changes are likely to continue to lower population rates, With recent research suggesting almost 55 million job openings are expected this decade in the U.S. alone, most of them related to older workers leaving the workforce. As a result, there is an increasing focus on ways that technology can solve the labor shortage challenge. A number of industries have seen significant utilization of robotic solutions to resolve these issues. But there are tens of thousands of jobs, particularly in unstructured environments, where automation is impossible or impractical today. and likely to be for this foreseeable future. This is where StarCraft comes in. Our range of robots that augment humans by combining the intelligence and skill of human workers with the strength and endurance of machines, improving efficiency, and keeping workers safe is, we believe, the future of skilled labor in the U.S. and mature economic economies around the world. As we have discussed over the past year, our primary focus, and the key milestones which we believe investors should focus on has been on commencing initial production of commercial units by the end of 2022 and the steps necessary to accomplish that, including successfully development of beta versions of the Guardian XO and the Guardian XD products. We achieved a notable milestone at the end of the fourth quarter when we completed assembly of the first Guardian XD beta units. This beta unit is substantially more capable than the alpha version with substantially greater dexterity, range of motion, strength, and the ease of use. I'm delighted to be able to tell you that earlier this month, we successfully completed a demonstration of the new XT for a government customer, which was a key contractual milestone. The customer was delighted with the progress and has indicated a desire to substantially expand its engagement with us. We're also making solid progress on the Guardian XO. In the fourth quarter, in a significant step towards BICAR autonomous operation efforts, we successfully deployed, developed, and demonstrated an algorithm that enabled the XO to balance independently of a human operator. This is a key development milestone in meeting our safety protocols for the XO, and earlier this year, we began testing and updated the body portion of the XO skeleton, including adjustable weights, which will allow a more diverse range of users to operate the robot, which is great for me because I am vertically challenged. On our last call, we told you that we expected to have a fully assembled XO data unit ready for testing in the first quarter of this year. However, since that call, we decided to collapse our iterative development efforts in an effort to shorten the overall commercialization effort, which means doing more work up front, as part of the EXO's data development effort, rather than complete the beta unit first and then tackle some of the other, more inner issues, such as moving from the scope components to off-the-shelf parts or comps later. These decisions were made in large part through the ongoing supply chain challenges that we and many others continue to face. As I mentioned earlier, we have assembled and are testing the key parts of the beta EXO. Final assembly of the EXO beta unit is now not expected to take place until later in 2022, but we remain on track to commence initial production and commercial units with both CSO and SP at the end of this year, with customer testing and trials occurring prior to that. We mentioned on our last call that the hiring of people to fill technical roles was a challenge. This is still the case. Candidates for positions in the engineering and product side are high in demand, and all pet companies are competing very hard for scaring pool of talent. This is why we're so pleased to move into our new headquarters in the Granary District of Salt Lake City in November of last year. At more than 60,000 square feet, our new headquarters has more than twice the size of the facility that we outgrew and offers state-of-the-art facilities for the start coach team. The new facility has a dedicated pet lab and a free space for customer use cases. validation and trials, but most importantly, it offers a collaborative work environment and a beautiful space for SharePoint employees. We are already seeing the benefits of moving into the building and the opportunity to work in our new headquarters is a powerful recruiting tool. Overall, we believe SharePoint's success is dependent on three factors. The first of these is having sufficient liquidity. to bring our products to market. Thanks to the business combination we closed last year, Starbucks has a significant tax position, and we will update you later in the call on our liquidity expectations for the rest of the year. The second factor is whether we can develop the technology to meet our customer requirements. As outlined today, we are committed to meeting our customer expectations and our key milestones on the development of both the XO and XG. We continue to believe that initial production of our commercial units We will commence by the end of this year. The final factor is persuading customers that our products provide the solutions that they need at the price point that provides an accessible ROI. As I mentioned earlier in the call, we expect to send out our XT and XO beta units to customers for use in our operations later this year, and we are confident that we will prove their worth in the real-world trials. Overall, this is a very exciting time to be part of Sarkos as we look forward to closing our acquisition of ArtiSquared and continue on the path to commercialization. We believe that robotics will transform the industrial sector and that Sarkos technology will be a fundamental part of that transformation. I would like to conclude by thanking all the members of the Sarkos team who've worked tirelessly through 2021 and into this year to continue the development of our products, complete our public listing, and move us into our new fantastic headquarters. Thank you all for welcoming me to the team over the past four months. You are a great group, and I'm delighted to be part of the team. With that, I'll turn it over to Steve Hansen to take you through the final report.