Palladyne AI Corp. has filed a 10-Q report for the quarter ending March 31, 2024. The company is a non-accelerated filer and a smaller reporting company. It had 26.6 million shares of common stock outstanding as of April 24, 2024. The report includes condensed consolidated financial statements, management’s discussion and analysis of financial condition and results of operations, and other information such as legal proceedings, risk factors, and unregistered sales of equity securities.
Cogniac was originally focused on developing hardware and software for industrial robots. However, in November 2023, Cogniac announced it would shift its focus to developing AI software for industrial robots made by other companies. This software uses artificial intelligence and machine learning to help robots learn on their own, without needing extensive reprogramming or retraining.
Cogniac believes this software will allow robots to be more flexible and productive in dynamic environments where conditions are constantly changing. The software is designed to work with many different kinds of industrial robots.
Cogniac expects to complete development of the software by June 2024. It then plans to conduct customer trials in late 2024, with the goal of beginning commercial sales in 2025.
To conserve cash while developing the AI software, Cogniac has laid off employees and closed most of its Pittsburgh office.
Cogniac believes it has enough cash to fund continued operations for at least 12 months without needing to raise additional capital. However, further delays in commercializing the AI software could require Cogniac to raise more money sooner than expected.
In the first quarter of 2024, Cogniac had:
The reduced net loss reflects Cogniac’s cost cutting efforts, including layoffs. Lower research and development costs accounted for most of the drop in operating expenses.
At March 31, 2024, Cogniac had $31.8 million of cash, cash equivalents and marketable securities. This is projected to fund continued operations for at least 12 months without needing to raise additional capital.
While interest in AI software is growing, demand for Cogniac’s specific offering is still unproven. Cogniac is dependent on customers choosing to purchase and implement the new software. Failure to accurately forecast demand could negatively impact financial results.
Cogniac has incurred significant losses in the past and expects to continue losing money for the foreseeable future. If the AI software platform fails to attract customers at scale or costs more to develop than anticipated, losses could persist longer than expected.
With limited capital and human resources, Cogniac faces challenges commercializing the AI software and may have to make difficult tradeoffs in product development. Past resource allocation decisions have not always panned out.
Revenue | Q1 2024 | Q1 2023 | Change |
---|---|---|---|
Product Development | $0.9 million | $2.3 million | -62% |
Product Sales | $2.6 million | $0 | n/a |
Total | $3.4 million | $2.3 million | +50% |
Operating Expenses | Q1 2024 | Q1 2023 | Change |
---|---|---|---|
Cost of Revenue | $1.9 million | $1.8 million | +6% |
R&D | $2.9 million | $9.4 million | -69% |
G&A | $5.1 million | $9.7 million | -47% |
Sales & Marketing | $0.8 million | $3.7 million | -78% |
Total | $10.8 million | $25.5 million | -58% |
In summary, the report covers Cogniac’s strategic shift to focus on AI software, recent financial performance, outlook for the future, and key risk factors investors should consider. While making progress on the AI platform, Cogniac continues to operate at a loss and faces risks related to uncertain product demand, history of losses, and limited resources.
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