Nauticus Robotics, Inc.

And welcome to today's Nauticus Robotics 2023 Q4 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star and 2. Please note this call is being recorded and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Kristen Moorman, Nauticus Special Project Leader.

Thank you and good morning everyone. Joining me today and participating in the call are John Gibson, CEO and President, Vicki Hay, Interim CFO, Nick Bigney, General Counsel, and other members of our leadership team. On today's call, we will first provide prepared remarks concerning our operations, vehicle testing, and financial results. Following that, we will answer questions. We have now released our results for the full year and fourth quarter of 2023, which is available on our website. In addition, today's call is being webcast and a replay will be available on our website shortly following the conclusion of the call. Please note that comments we make on today's call regarding projections or our expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Also, please refer to the reconciliations provided in our earnings press release as we may discuss non-GAAP metrics on this call. I will now turn it over to John.

Thanks, Kristen. Good morning and thank you for joining us on the call this morning. I'm pleased to be presenting our quarterly results for the first time as CEO. A great deal has transpired since the last conference call. First, over the last four months, we've initiated a transformation of the company from being a research and development organization to being a customer-centric innovation for profit enterprise. During the fourth quarter, we added an interim CFO, Vicki Hay, with 17 years of public company reporting and operational cost management skills. and we added a general counsel, Nick Bigney, with public company experience as well as complex deal and financing expertise. We've recently added to the team sales leadership with Jorge Magnesio. Jorge has experience in domestic and international sales, including in Brazil and Norway, two important countries to us, and has captained a nine-digit multi-year software and service sale in Latin America for a previous company. He brings superior skills and collaboration with customers combined with the full alignment of our company effort to deliver the contractual requirements we've signed up for. We also have an incredible team of engineers, mechanical, electrical, and software, who are currently certifying the Aquanaut Mark II for commercial work during the fall of 2024. As the year progresses, we will have the leaders from each of our business units present during the earnings call. With a great team, you can expect great results. As you will see in a moment, those results are beginning to be realized First, let me address a few historical matters. Previously, we announced a merger with 3D at Depth. When the announcement was made, the share price for Nautica exceeded $2, and the structure was an all-stock deal. After much consideration, both parties agreed the best path forward was to terminate the prior agreement as the situation has materially changed. We remain collaborative with 3D at Depth and continue to seek ways to work together on customer projects. I believe this termination best allows us to focus on transforming our own business. A stronger Nauticus benefits our shareholders in any transaction, and we intend to build a stronger Nauticus. We've built an excellent working relationship with 3D in-depth leadership, and we intend to maintain that as we go forward. Speaking of transforming our own business, we've changed our internal structure over the past few months. We've reorganized into four business units, Autonomous Solutions, electrical manipulators, autonomy software, and government solutions. Autonomous solutions, electric manipulators, and autonomy software were previously part of what was the bigger Aquanaut team. We changed them into three components because each has addressable markets and can grow independently. The capital required to deliver software manipulators is also significantly less than the capital needed to complete Aquanaut vehicles. Let's start out by talking about the autonomous solutions group. The autonomous solutions team has accountability for the Aquanaut Mark II vehicle. The Aquanaut vehicle is designed for subsea inspection, maintenance, and repair, commonly called IMR work, for projects including oil and gas, wind, telecommunications, midstream, and aquaculture. The level of difficulty increases as you move from inspection to repair. Our initial efforts are focused entirely on inspections. We have contracts currently with an international oil company and a super major oil company, both early adopters, to demonstrate the value of autonomy to the oil and gas operations. These untethered autonomy champions are providing regular guidance on what is required to replace their current methodology. The efficiency gains, decreases in staff, reductions in vessel size, and hence emissions, the move to electrification, and away from hydraulics to minimize the potential for hydraulic fluid leaks and the ability to work at depth regardless of weather make our AUV platform compelling to the industry. So where are we? We're currently doing full system testing in the Gulf of Mexico. And last week we did testing exceeding 1,300 meters with an ROV monitoring our activity. We've made the transformation from idea to product. During these dives, we're doing numerous systems tests to include practicing and improving our launch and recovery, testing acoustic communications, emergency procedures to recover, descending and ascending optimization, station keeping, and many more tests to prove the capabilities of the Aquanaut vehicle. It is going well thus far. The Nauticus team is performing well above expectations, as is the vehicle. We have much to learn and need to validate our ability to conduct several operational tasks to move from testing to commercial work later this summer. We posted a video of some of our testing to our YouTube channel. Best video I've ever posted, by the way. You can find a link to the video in our earnings release issued last night. It is also linked in the webcast for those of you listening online. Please take a moment to watch the video which shows our Aquanaut Mark II vehicle diving to depths of greater than 1,300 meters, performing maneuvers, and hovering less than a meter above the seabed, among other things. The aquanaut we're testing in the Gulf of Mexico is Vehicle 2. Vehicle 1 is being assembled in our shop now, and Vehicle 3 is being prepped for assembly in early 2025. I'd like to introduce you to a great leader and our chief engineer, Stu Donnan, to make a few comments on the testing thus far. Stu?