Greetings, and welcome to the Sidus Space Second Quarter 2023 Results and Business Update Call. At this time, all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Walter Pinto, Managing Director, KCSA. Thank you, Mr. Pinto. You may begin.

Good morning, everyone. Thank you for joining us today for the Sidus Space second quarter 2023 earnings conference call. Joining us today from the company is Carol Craig, Founder and CEO; and Teresa Burchfield, Chief Financial Officer. During today's call, we may make forward-looking statements. These statements are based on current expectations and assumptions, and as a result are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements made on this call. These factors include our ability to estimate operational expenses and liquidity needs, customer demand, supply chain delays, including launch providers and extended sales cycles. For more information about these risks and uncertainties, please refer to the risk factors in the company's filings with the Securities and Exchange Commission, each of which can be found on our Web site at sidusspace.com. Listeners are cautioned not to put any undue reliance on forward-looking statements. And the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call. We want to thank everyone who submitted their questions ahead of today's call. At the conclusion of our prepared remarks, we will be answering questions submitted within the time frame allotted for this morning's call. If for some reason we do not get to your question today, please email our team at sidus@kcsa.com. At this time, I'd like to turn the call over to Carol. Carol, the floor is yours.

Thank you, Walter. During the second quarter of 2023, we achieved several key milestones across virtually all facets of our business. Our mission is bringing space down to Earth. We are a space data-as-a-service and defense-as-a-service satellite company, focused on mission critical hardware manufacturing, multidisciplinary engineering services, satellite design, production, launch planning, mission operations and in-orbit support. During the second quarter, we made further progress on several fronts to produce our advanced hybrid 3D printed satellite constellation for a diverse customer base. Through our advanced technology, we expect to provide a commercial US spaceborne source and method for collecting customizable coincident or multi-censored driven geospatial intelligence and architecture for adaptable on-orbit AI processing to meet government and commercial emission requirements. Over the next 18 months, we have nine LizzieSat mission scheduled with our current launch provider at SpaceX. Recently, SpaceX announced that it will start launching a series of missions, dubbed Bandwagon, that will complement its existing transporter line of rideshare missions. The Bandwagon missions will deliver payloads at altitudes of 550 to 605 kilometers and inclinations of approximately 45 degrees. Those will be in addition to the transporter missions that SpaceX has been flying since 2021, which have gone to sun synchronous orbits. We executed a multiyear multi-launch contract with SpaceX that manifested our satellites on five launches for nine satellites originally planned for the transporter mission. The addition of the Bandwagon missions is exciting, because with our existing contract in place with SpaceX, we have the opportunity to modify our launch cadence and positioning the satellites in order to collect even more valuable and more broadly desired space based data from our sensors. The option to place multiple LizzieSats in these dissimilar orbits, 45 degree equatorial inclination and polar orbits in 2024, gives us the opportunity to improve…

Thanks, Carol. It's a pleasure to be here today to discuss our second quarter 2023 financial results. You can find more details on our results in our Q2 Form 10-Q filed with the SEC Monday, August 14, 2023. Sidus achieved revenue of $1.4 million for the second quarter ended June 30, 2023 compared to $1.8 million for the same period last year. While revenue declined period-over-period, primarily due to the timing of fixed price milestone contracts, our higher margin satellite revenue increased 126% year-over-year. As Carol mentioned, our gross profit was approximately $508,000 or 37% for the quarter ended June 30, 2023 compared to approximately $347,000 or 19% for the second quarter of 2022, an increase of 1,800 basis points. The increase in gross profit margin was primarily attributed to the mix of contracts and an increase in our higher margin satellite business. Second quarter operating loss was $3.5 million compared to a loss of $2.4 million for the same period last year. Overall, operating expenses increased approximately $814,000 to $3.6 million for the three months ended June 30, 2023 as compared to $2.7 million for the three months ended June 30, 2022. The increase is attributed to an approximate $470,000 increase in our payroll expenses to $1.9 million from $1.4 million for the three months into June 30, 2022, a result of the expansion of our staff to support the needs of the business, an approximate $251,000 increase in professional fees for the three months ended June 30, 2023 to $383,000, primarily driven by increased general legal expenses related to being a public company, as well as reviewing various corporate matters, such as contracts and licenses supporting the growth of the business. Moving to our capital structure. We remained focused on managing our operating expenses closely with only a small amount of debt on our balance sheet. As of June 30, 2023, the company had debt of approximately $2 million with cash of $7.9 million. During the quarter, the company executed a common stock and warrant offering in which the company sold an aggregate of approximately 34.1 million shares of our Class A common stock and common stock equivalents, as well as warrants to purchase up to approximately 34.1 million shares of Class A common stock. Gross proceeds from the offerings were approximately $11.2 million. Please reference our June 30, 2023 10-Q for additional details. We are using the proceeds to continue to execute our strategic plan, including continued satellite development at an accelerated pace and to fulfill a steady launch cadence, as Carol mentioned earlier. With that, I will hand the call back to Carol.

Thank you, Theresa. We will now move to the Q&A portion of the call. We received some submitted questions from investors that we would now like to address. So our first question is, what is your vision for the company over the next year? Well, we are working diligently to introduce new high margin recurring revenue streams to our three core business lines, and those are manufacturing services, space infrastructure as a service and space based data and insights. And the last two coincide with the proposed launch of our multiple LizzieSat satellites into orbit. These launches will be a major step as we work to build a satellite constellation capable of delivering industry leading coincident data from multiple sensors, imaging the same piece of the Earth at the same time to current and future customers with near real time data transmission. And we believe that this new revenue stream has the potential to significantly impact our profitability and as a result, our stock is valued by the market. Our second question is with all the hype around artificial intelligence and your planned integration of edge computing, confident space economy benefit from these technological advances. And I will let Jared Novick, our Senior Vice President of Strategy, provide an answer to this one as it is a key part of our strategic plans for the next few years and beyond. Jared?

Thank you, Carol. AI technologies provide immense potential for enhanced data collection and processing capabilities in particular. As Carol mentioned on the call today, we are focused on leveraging these technologies within our service offerings. By integrating AI technology into our constellation, like Exo-Space’s edge AI capability, we're expanding and enriching our services at the hardware and software level on orbit. These edge AI capabilities will facilitate real-time data processing, image analysis, anomaly detection, data compression, automated decision making, privacy, security and customization. The combination of advanced data collection and advanced processing will equip organizations with heightened decision making acumen, bolstered confidence, precision and accelerated insights. This enhanced functionality of LizzieSat will amplify our market presence and customer relationships. This will allow us to attract broader interest and elevate our market influence.

Thanks, Jared. Next question is how much data can the satellites transmit and what are the costs of this? And I mentioned this a little bit earlier, our LizzieSat satellite with its five year design life is expected to provide a return on investment within months of launch. At a cost of $1.75 million to $2 million per satellite, including sensors along with our low and fixed overhead, single satellite profitability can be achieved with only a fraction of available data being sold. But again, we believe, however, that there is a demand for all available data and at full capacity, the data collected from each satellite is expected to provide a 5 times return on the cost of satellite annually. We also have the ability to offer our data at significantly lower price than what's available in the current market because of the unique infrastructure we're building to provide the near real-time data transmission from our satellites back to Earth. And the amount of data is driven by the systems onboard LizzieSat and the number of ground stations available for transfer of data to Earth. We expect to collect between a 100,000 to 200,000 megabytes of data per day per satellite with the ability to process that data on orbit for a more targeted transfer of useful and high value data. Next question is, what contracts do you currently have with NASA? Well, we've been supporting NASA directly and indirectly through its large prime contractors for over a decade, and we continue to do so today. One of our significant areas of expertise is the manufacturing of complex space rated and ground support hardware, including assembly integration and testing. And we manufactured several key pieces of assembly and integration equipment for the Lockheed Martin Orion program. We also developed…

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.