Nauticus Robotics, Inc.

Hello, and welcome to the Nauticus Robotics Earnings Conference call for the fourth quarter and full year 2022, ended December 31st, 2022. My name is Joe, and I will be your operator today. Today's press release, including the financial tables, is available at the investor relations section of the company's website at www.nauticusrobotics.com. The company also plans to file its Form 10-K with the SEC later today. Nauticus's founder and CEO, Nikolaus Radford, and its CFO, Rangan Padmanabhan, join us on today's call. Following the remarks, we will open the call for questions. Before management begins the formal remarks, we would also like to remind everyone that some statements we're making today may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties. As a result, we caution you that this many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the SEC. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. We refer you to our filings with the SEC for detailed disclosures and descriptions of our business, as well as uncertainties and other variable circumstances, including, but not limited to, risks and uncertainties identified under the caption Risk Factors in our filings. You may get Nauticus' SEC filings for free by visiting the SEC website at www.sec.gov. I would also like to remind everyone that this call is being recorded and will be made available for replay via a link available in the investor relations section of Nauticus' website. Now, I will turn the call over to Nauticus' founder and CEO, Niklaus Radford.

Thank you, and welcome to our fourth quarter and full earnings call.

I'd like to begin by giving a brief overview of the remarkable opportunity that lies ahead and, more importantly, how we capitalized on it during 2022. After that, I'll pass it off to our CFO, Rangan Padmanabhan, to discuss our fourth quarter and full earnings for 2022 in detail. To finish, I'll provide closing remarks before taking your questions. Nauticus was born out of this idea of taking spaceflight robotics technology, essential to exploring the unknown in our solar system, and applying it to our oceans as they cover 70% of our planet, remaining largely unexplored, and are mostly untapped in their potential for sustainable economic activity. Despite being estimated at a massive $2.5 trillion of value, the ocean economy has lagged in technology innovation. Let me give you an example. The most common legacy solutions for offshore services are mainly unchanged since their inception over 50 years ago. They are costly, at up to $100,000 per day or more, riddled with operational inefficiencies. and endanger our planet by emitting up to 70 metric tons of CO2 into the atmosphere daily. That's the equivalent emissions of more than 5,000 cars. And when you multiply that by all the vessels doing work in the ocean, you can see how significant an impact removing this greenhouse gas could have. In contrast, Nauticus is pioneering new technologies that can not only be performed at a lower cost than the incumbent offerings, but are more environmentally friendly, removing over 90% of the emissions. While we want to be known by our big orange robots, at our core we're an AI company employing more software engineers than any other category of personnel. We are deeply committed to being a technology-forward company that can lead the way with advanced software-enabled solutions. Through our premier software platform Toolkit, we use artificial intelligence to power autonomous, untethered surface and subsea robotic platforms. Toolkit unifies all our products into a single control architecture. allowing for controls, user interfaces, sensor integration, simulation, data analysis, and communication frameworks that are purpose-built to enable SEPC work. We're on a mission to create a future where more autonomous and intelligent robots, like Aquanaut, are used to reduce the environmental impact and human safety issues significantly. We want to revolutionize the way in which services are performed in the ocean and lead the industry's transformation to an economically efficient and environmentally sustainable model. As I mentioned, our service offerings result in not only a meaningful cost and safety improvement, but also significant carbon footprint reductions. Our mission is supported by a massive acceleration in interest from customers and investors in the emerging $30 billion industry of ocean robotics and their applications in ocean data and the services market as innovative and sustainable solutions like ours becomes a reality. Our go-to-market strategy is twofold. First, we have partnered with the defense industry and the U.S. government to help fund the maturation of our groundbreaking technologies, as well as aid in national security. In doing so, we are developing and validating our technology in one of the most demanding use cases. Second, we are commercializing the ensuing broad IP portfolio that comprises our solutions for the private sector in order to innovate ocean services. The market for our technology is immense and covers numerous market segments, including offshore renewables, oil and gas, defense, telecommunications, aquaculture, mining, ports, and shipping, just to name a few. Let me start with an update on our collaboration with government. The U.S. continues to invest billions in autonomous naval capabilities, and the ongoing geopolitical tensions are accelerating that investment. The budget for research, development, testing, and evaluation for solutions like ours continues to increase, and the maritime services, the U.S. Navy, the U.S. Marine Corps, and U.S. Coast Guard have expressed a commitment to the deployment of AI-driven technologies into their fleets. Just last week, Air Force General Glenn Van Herk said at a Senate Armed Services Committee hearing on fiscal 2024 spending that, quote, the future of homeland defense is vastly different than what we see today. It's likely including autonomous platforms, airborne, maritime platforms, unmanned platforms with domain awareness sensors and effectors that are kinetic and non-kinetic, end quote. This is a testimonial for the priority the U.S. government assigns to our mission and capabilities and bodes well for future demand for our technology. We continue to work with Leidos, a significant prime, to apply technology derived from Aquanaut to build a new class of vehicles. This cutting-edge vehicle has the potential to tackle a wide range of tasks that would be hazardous and impossible for humans and has the potential to enhance our national security. As previously announced, we have been awarded two contracts by the Defense Innovation Unit, or DIU, the most recent of which was a multi-million dollar award that we announced in October for the development of a derivative robot based in part on our advanced software capabilities. This unmanned amphibious robot called Terranaut utilizes our premier autonomy software package toolkit for more intelligent command and control of the mine countermeasures technology. Terranaut could be used in the surf zone and beach areas to support US Marine Corps during critical beach landings and have the potential to save lives. We have successfully passed the first phase of the project and are advancing towards the next rigorous milestone. We also have good news from our other DIU contract. We have successfully completed live testing of our AI-enhanced underwater response vehicle for the US Navy. We are committed to supporting DIU through its process of bringing autonomy to the forefront of defense problem-solving in order to reduce risks to the U.S. Navy divers and mitigate disruption to global supply chains, logistics, and critical sea lanes. We will provide further updates on the next steps as soon as they become publicly available. Let me dive into how we are utilizing our advanced robotics to innovate the blue economy commercially. Our core commercial offering is called the Nauticus Fleet. a pair of robotic assets comprised of an 18-meter optionally crewed small surface vessel named Hydronaut and Aquanaut, its undersea counterpart. The deployment of the Nauticus fleet in multiple offshore industries represents one of the most promising operational and technological step changes in the industry. We continue to make excellent progress with the production of our commercial aquanauts. While we've been impacted by material shortages, we've successfully resolved these challenges and currently expect all three units to be completed by the end of the second quarter, with the first unit starting in-water commissioning this week. As for hydronaut production, we're also expecting them to be ready in the third quarter. We're eager to get the fleet into the water, and our potential customers are as well, as we continue to experience strong demand signals for our offering. To better service one of the key geographical areas, the North Sea, we've recently initiated operating bases in Stavanger, Norway, and Aberdeen, Scotland. We expect at least one of our aquanauts to be deployed in this region following commissioning. Another great news, we're successfully progressing through the phases of our previously announced contract with Shell and look forward to growing this collaboration. We are extremely honored to be testing our technology with customers of Shell's caliber and are delighted to share the results with investors in the future. With that, I'll hand it over to our CFO, Rangan.