Nauticus Robotics, Inc.

Good day, and welcome to the Nauticus Robotics Earnings Conference Call for the first quarter ended March 31, 2023. My name is Danae, and I will be your operator today. Today's press release, including the financial tables, are available at the Investor Relations section of the company's website at www.nauticusrobotics.com. The company also plans to file its Form 10Q, for the SEC later today. Joining us on today's call are Nauticus's founder and CEO, Nick Radway, and its CFO, Rangan Padmanabhan. Following their remarks, we will open the call for questions. Before management begins their formal remarks, we would like to remind everyone that some statements we're making today may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond the company's 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 the forward-looking statements, please see the disclosures in the company's earnings release and public filings made with the SEC. Nauticus disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made, except as required by law. Nauticus will also discuss non-GAAP financial metrics and encourages you to read disclosures and the reconciliation tables to applicable GAAP measures in the earnings release carefully as you consider these metrics We refer you to its filings with the SEC for detailed disclosures and descriptions of the business, as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption Risk Factors in the Company's 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 the Nauticus's website. Now I will turn the call over to Nauticus's founder and CEO, Nick Bradford. Please go ahead, sir.

Thank you. And hello everyone. And welcome to our first quarter 2023 earnings call. The past quarter was a significant one for the company. representing a major inflection point in Nauticus' history as we officially began the commissioning exercises for the next generation of our commercial subsea robot, Aquanaut. This puts us one step closer to getting the Aquanauts in the field and to start doing work for our customers. We've also continued to progress the assembly of our second and third units and expect to have them in the water later this year. We've been working towards this goal over the years, establishing manufacturing partners as well as undergoing testing trials, where we've been able to refine our technology to offer solutions that will transform the way industries operate in the blue economy. Customers from all over the world have expressed significant interest in working with our services and robots, and as these opportunities materialize, we will have significant revenue upside. In addition, we've also continued to make progress on the government side of our business, Starting with our contract with Leidos, we were awarded a $2.7 million contract extension for activities related to an Aquanaut-derived subsidy platform. This extension allows us to further progress toward meaningful future revenue upside pending the successful results of the program. As previously announced, our proprietary software platform toolkit was a key driver of two DIU contract wins, one for A2RV and the other one for AEMR. In our work to support the U.S. Navy, Nauticus completed a live offshore demonstration of our AI-enhanced mine countermeasure vehicle, which led to the company's progression into the next phase of DIU's AEMRV program. In this, we're working to transform an existing mine countermeasures platform into an untethered autonomous drone. This allows the vehicle to remotely identify and neutralize subsea mines and other targets of interest while taking U.S. Navy EOD divers out of harm's way. As for A2RV, we successfully completed the first phase and have moved on to the next one. In this program, we are tasked to deliver another autonomous mine countermeasure robot known as Terranaut for use in both the surf zone and the beach areas to support the U.S. Marine Corps during amphibious operations. Our ongoing collaborations with the IU and Leidos demonstrate the value of our comprehensive solutions, which will enable unprecedented autonomous capabilities for our government customers. The success of our government partnerships serves as validation as we look forward to providing future updates on these projects as they become publicly available. With that, I will now turn the call over to Rangan Padmanabhan to discuss our financials. Rangan?

Thank you, Nick, and hello, everyone. For the first quarter of 2023, we generated revenue of $2.8 million, compared to $2.2 million in the year-ago comparable period. The 26% increase in revenue is primarily due to one new contract, as well as the continuation and increased performance on existing contracts from the prior year. Our net loss for the quarter was 26 cents per share, compared to a net loss of 36 cents per share in the prior year period. Excluding non-recurring items, Our adjusted net loss per share for the quarter was 17 cents compared to 36 cents in the prior year period. Our adjusted net loss excludes a $2.2 million non-cash charge for the change in the fair value of warrant liability associated with our convertible debt and a $1.2 million non-cash charge associated with the preliminary sales tax assessment related to prior years. We currently expect to significantly mitigate this assessment. Moving on to our balance sheet and capitalization. As of quarter end, we had $12.7 million of cash and cash equivalents, including our restricted CD. Our net working capital position at the end of the quarter was $25.5 million. As of March 31st, 2023, we had approximately 47.3 million shares outstanding. As we've mentioned before, this includes 7.5 million shares in an escrow account that won't vest unless the stock price reaches at least $15 a share. Per GAAP rules, these shares are not included in our weighted average number of shares used to calculate earnings per share. While Q1 revenue exceeded our forecast, some of this was due to revenue on our government contracts being pulled forward from Q2. As a result, we're expecting revenue to dip in Q2 before bouncing back to a more normal range in Q3. That completes my financial summary. Now I'll turn the call back to Nick.