Rotor Acquisition : Sarcos Announces Third Quarter 2022 Financial Results

Began production of commercial units of Sapien 6M robotic system ahead
of schedule

On target to commence initial production of commercial units of Guardian^® XT^TM teleoperated dexterous robotic system by end of 2022

Successful field demonstrations of innovative shipyard solutions for U.S. Navy

SALT LAKE CITY - November 8, 2022 -Sarcos Technology and Robotics Corporation ("Sarcos") (NASDAQ: STRC and STRCW), a leader in the design, development, and manufacture of advanced robotic systems that redefine human possibilities, today announced financial results for the quarter ended September 30, 2022.

Recent highlights include:

• Met customer field trial milestones in shipyard maintenance and repair and airport logistics industries and met program deliverables in vegetation management
• Continued development of supervised autonomy and software-as-a-service capabilities designed to be offered as additional services for Sarcos customers
• Successfully demonstrated the capabilities of the company's technology at the first-of-its-kind Repair Technology Exercise (REPTX) hosted by the U.S. Navy

"We achieved two vital milestones in the third quarter as we started production of commercial systems of our Sapien 6M and demonstrated the effectiveness of our technology in the field to the U.S. Navy," said Kiva Allgood, President and CEO, Sarcos. "These achievements and the advancement in our software are a testament to the ability of our team to work together to achieve our goals and position Sarcos for success.

Financial results
The discussion in this press release regarding Sarcos' results of operations for the three months ended September 30, 2022, includes the financial results of RE2. The discussion of the results of operations for the nine months ended September 30, 2022, includes the financial results of RE2 for the period after the closing of the acquisition on April 25, 2022.

Third quarter total revenue was $4.7 million, up from $1.1 million in the equivalent period of 2021. The increase was primarily due to a $3.8 million increase in revenue from research and development services following the acquisition of RE2.

Total operating expenses in the third quarter were $31.9 million, a decline of $9.7 million from the third quarter of 2021. This decrease was primarily a result of a $21.9 million reduction in stock-based compensation expense year-over-year, offset by increased research and development and general and administrative expense associated with higher headcount following the RE2 acquisition and additional expense associated with a focus on the commercialization of the company's products.

The third quarter net loss was $22.5 million, compared to a third quarter 2021 net loss of $37.0 million. The decrease was primarily the result of the year-over-year decline in stock-based compensation expense and deferred income tax benefits related to the acquisition of RE2, offset by the increased headcount and commercialization expenses outlined above.

Excluding certain items, third quarter non-GAAP net loss was $18.6 million or $0.12 non-GAAP net loss per diluted share, compared to non-GAAP net loss of $8.8 million or $0.08 non-GAAP net loss per diluted share in the third quarter of 2021. The increase in non-GAAP net loss was primarily the result of the increase in research and development and general and administrative expense referenced earlier. Non-GAAP net loss excludes, among other items, the impact of stock-based compensation expense, changes in the value of the company's warrant liability, and certain acquisition costs and tax benefits. A reconciliation of net loss to non-GAAP net loss is included at the end of this release.

Sarcos ended the quarter with $135.4 million in unrestricted cash, cash equivalents, and marketable securities.

Development outlook and financial guidance
Sarcos began initial production of commercial units of its Sapien 6M robotic systems ahead of schedule during the third quarter and continues to expect to commence initial production of commercial units of the Guardian XT teleoperated robotic system by the end of 2022, in both cases to be available for delivery to customers in the first half of 2023. In addition, Sarcos continues to expect to begin initial production of commercial units of the Guardian XO full-body powered industrial exoskeleton in the second half of 2023.

Including the impact of the RE2 acquisition, Sarcos now believes that its total revenue will be between $13 million - $15 million in 2022. This revenue forecast is slightly lower than previous guidance as the delivery of services on certain contracts is now expected to move from the fourth quarter of 2022 into the first quarter of 2023.

As previously disclosed, Sarcos' monthly cash used in operating activities during the fourth quarter of 2022 will be higher than previous quarters. The Company estimates cash used in operating activities to average approximately $7.0 million per month during the fourth quarter of 2022 due primarily to certain annual lump sum payments, including insurance premiums and lease payments, that do not occur in the first three quarters of the year and approximately $1.0 million of tax withholding obligations related to the settlement of equity awards. As a result, Sarcos believes it will have a total estimated monthly average use of cash, or cash burn, of approximately $7.5 million in the fourth quarter.

Lead-times and the availability of certain materials and components remains uncertain. As a result, Sarcos has continued to source certain items required for the manufacture of its commercial units in 2023. These purchases are not expected to impact the company's operating expenses for 2022, but Sarcos continues to expect an additional impact to the 2022 year-end cash total of up to $3.0 million. At the end of the third quarter, approximately $1.0 million of this amount had been used for such purchases.

Sarcos anticipates that initial manufacturing of its commercial products will take place at a mix of its own facilities in Salt Lake City and Pittsburgh, and the facilities of a contract manufacturing partner. Sarcos currently does not anticipate high-volume production by a contract manufacturing partner to be in place until at least the end of 2023, but has begun to engage with a contract manufacturing partner that the Company expects will produce a high percentage of its products during 2023.

Sarcos continues to believe that during 2023 the company will have the internal capability to manufacture between 300 to 500 units of some combination of its Guardian XT robotic system, Guardian XO exoskeleton, Sapien 6M robotic system, Sapien Sea Class units, and its existing commercial products, depending on the mix. Sarcos continues to expect that it will not use all of that capacity in 2023, especially after engaging a contract manufacturing partner.

In the long-term, Sarcos continues to target a gross margin (which includes the impact of service revenues) of between 25% to 30%, once high-volume production and sales are achieved, and the Company can take advantage of volume manufacturing and purchasing economies of scale. However, for the next few years, until high-volume production and sales are achieved, Sarcos continues to expect its gross margin to be lower than this, perhaps significantly.

Webcast
Sarcos will hold a conference call to discuss the third quarter 2022 financial results, along with management's business outlook, at 5:00 p.m. ET on Tuesday, November 8, 2022. Interested investors can access the webcast at investor.sarcos.com under the events section. A replay will also be available at investor.sarcos.com for one month after the call.

For more information on Sarcos, its leadership team, and its award-winning product portfolio, please visit www.sarcos.com.

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About Sarcos Technology and Robotics Corporation
Sarcos Technology and Robotics Corporation (NASDAQ: STRC and STRCW) designs, develops, and manufactures a broad range of advanced mobile robotic systems that redefine human possibilities and are designed to enable the safest most productive workforce in the world. Sarcos robotic systems operate in challenging, unstructured, industrial environments and include teleoperated robotic systems, a powered robotic exoskeleton, and software solutions that enable task autonomy. For more information, please visit www.sarcos.com and connect with us on LinkedIn at www.linkedin.com/company/sarcos.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Sarcos' product roadmap, including the expected timing of product commercialization or new product releases; Sarcos' performance following the acquisition of RE2; future manufacturing of its products; customer interest in Sarcos' products; estimated 2022 operating results and use of cash; and Sarcos' use of and needs for capital. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words "believes," "estimates," "expects," "projects," "forecasts," "may," "will," "should," "seeks," "plans," "scheduled," "anticipates," "intends" or "continue" or similar expressions. Forward-looking statements inherently involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These forward-looking statements are based on Sarcos' management's current expectations and beliefs, as well as a number of assumptions concerning future events. There can be no assurance that the events, results, or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and Sarcos is not under any obligation and expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Readers should carefully review the statements set forth in the reports which Sarcos has filed or will file from time to time with the Securities and Exchange Commission (the "SEC") for a more complete discussion of the risks and uncertainties facing the company and that could cause the forward-looking statements no to occur, in particular the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in documents filed from time to time with the SEC, including Sarcos' Quarterly Report on Form 10-Q filed with the SEC on November 8, 2022. The documents filed by Sarcos with the SEC may be obtained free of charge at the SEC's website at www.sec.gov.