Q4 2023 Sidus Space Inc Earnings Call

Okay.

Unknown Attendee: Greetings and welcome to the Sidus Space fourth quarter and full year 2023 results conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Greetings and welcome to decided space fourth quarter and full year 2023 results conference call.

Speaker Change: At this time all participants are in a listen only mode.

Unknown Attendee: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Valter Pinto, Managing Director, KCSA. You may begin. Please proceed.

Speaker Change: As a reminder, this conference is being recorded.

Speaker Change: It is now my pleasure to introduce your host Valter Pinto managing director Casey I think you may begin. Please proceed.

Speaker Change: Yeah.

Valter Pinto: Good morning, everyone, and thank you for joining us for the Sidus Space fourth quarter and full year 2023 financial results conference call. Joining us today from the company are Carol Craig, founder and chief executive officer, and Bill White, 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 uncertainty. Many factors could cause actual results to differ materially from the forward-looking statements made on this call.

Valter Pinto: Good morning, everyone and thank you for joining us for the face space fourth quarter and full year 2023 financial results conference call joining us today from the company Carol Craig founder and Chief Executive Officer, and Bill White, Chief Financial Officer. During today's call. We may make forward looking statements. These statements are based.

Valter Pinto: <unk> 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.

Valter Pinto: 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 website, www.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.

Valter Pinto: Factors include our ability to estimate operational expenses and liquidity needs.

Valter Pinto: From a 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 website www dot scientists space Dot com listeners are cautioned not to put any undue reliance on them.

Valter Pinto: Forward looking statements and the company specifically disclaims any obligation to update the forward looking statements that may be discussed during this call at the conclusion of our prepared remarks, we'll be answering questions submitted in advance if we do not get to your question within the time frame of laden for this morning's call. Please email our team I'd status at Casey S. A dotcom.

Valter Pinto: At the conclusion of our prepared remarks, we'll be answering questions submitted in advance. If we do not get to your question within the timeframe allotted for this morning's call, please email our team at sidus at kcsa.com. Now, Carol, please go ahead.

Valter Pinto: At this time I'd like to turn the call over to Carol Carol. Please go ahead.

Carol M. Craig: Thank you, Valter, and welcome, everyone. 2023 was a pivotal year for Sidus as we worked toward the launch of LZSAT. Earlier this month, we successfully deployed from the SpaceX Transporter-10 rideshare mission, followed by successful establishment of communications and retrieval of health and status data. LZSAT-1 is the first of several satellites planned for launch into low Earth orbit.

Carol M. Craig: Thank you Walter and welcome everyone.

Only 23 was a pivotal year for scientists as we work towards the launch of live with that.

Carol M. Craig: Earlier this month, we successfully deployed from the Spacex transport or 10, Rideshare, Michigan, followed by successful establishment of communications and retrieval of health and status data.

Carol M. Craig: So as he sat one is the first of several satellites planned for launch to low Earth orbit.

Carol M. Craig: We are quickly building our multi-mission constellation of 3D-printed AI-enhanced satellites with two more LISISATs manifested for launch with SpaceX before the end of this year. The steps we took to prepare since our IPO and through 2023 led us to the successful deployment of LISISAT-1. These steps were both technical and organizational.

Carol M. Craig: We are quickly building a multi mission constellation of three D printed AI enhanced satellites to more or less eat that manifest for launch with Spacex before the end of this year.

Carol M. Craig: The steps, we took to prepare since our IPO and through 2023 letters to the successful deployment of let's say it that way.

Carol M. Craig: The steps, we took were both technical and organizational.

Carol M. Craig: We built a foundation for the future that included investment in people, processes, and technology. We focused on critical areas that contributed to the success of our initial launch and deployment and, at the same time, to our strategic plan for the next several years. This includes the development of simulation, guidance, and navigation, and flight software, and combined with our hardware innovations, establishes a new line of products with flight heritage and experience. Integrating established design and processes related to environmental testing, redundancy of systems, and agile development resulted in not only success right out of the gate the first time, but also a rapid development capability that will allow us to grow and evolve as the space ecosystem grows and evolves. We've streamlined and matured our leadership team and our board of directors with a focus on the long-term outlook.

Carol M. Craig: We built a foundation for the future that included investment in people processes and technology.

Carol M. Craig: We focus on critical areas that contributed to the success of our initial launch an appointment and at the same time, so our strategic plan for the next several years.

Carol M. Craig: This includes development of stimulation guidance and navigation and flight software and combined with our hardware innovation establishes a new line of products with flight heritage and experience.

Carol M. Craig: Integrating established design and processes related to environmental testing redundancy of systems and agile development resulted in not only success right out of the gate first time, but also our rapid development capability that will allow us to grow and evolve as the space ecosystem, where I wasn't involved.

Carol M. Craig: We streamlined and matured our leadership team and our board of directors with a focus on the long term outlook. This means bringing in leadership with the ability to connect flex and grow as we look to capture more of both government and commercial markets benefiting from Leo the Moon and Mars programs.

Carol M. Craig: This means bringing in leadership with the ability to connect, flex, and grow as we look to capture more of both government and commercial markets benefiting from Leo, the moon and Mars program. 2023 also brought significant upgrades to our LISIFAT, including the addition of an artificial intelligence-based edge computing solution. This is made possible through the acquisition of ExoSpace in the third quarter of 2023. This acquisition allowed us to add the FeatherEdge AI hardware and software solutions to our product line and also integrate AI into our satellites, giving us a significant edge when capturing data for sale to our customers. AI processing of data using what is called edge computing reduces the time between data collection and decision-making, which is critical to time-sensitive applications such as autonomous systems and even remote sensing applications.

Carol M. Craig: Well I'm twenty-three also brought significant upgrades to our lazy fat, including the addition of an artificial intelligence edge computing solution. This is made possible through the acquisition of extra space in the third quarter of 2023.

Carol M. Craig: This acquisition allowed us to add the other edge AI hardware and software solutions to our product line and also integrate AI into our satellites, giving us a significant edge when capturing data for sale to our customers.

Carol M. Craig: And the processing of data using what is called edge computing reduces the time between data collection and decision, making which is critical at a time sensitive applications shut as autonomous systems and even remote sensing applications.

Carol M. Craig: Outfitting our satellite to function as an edge device with local compute unlocks a host of operational benefits, including reduced transmission time, greater security, and lower transmission costs. Specifically, the two key areas that benefit from AI are on-satellite data storage and transmission of data back to Earth. Our Feather Edge AI solves both of these potential issues.

Carol M. Craig: Outfitting, our satellite to function as an edge device local compute unlocks a host of operational benefits, including reduced transmission time, greater security and lower transmission costs.

Carol M. Craig: Specifically the two key areas that benefit from AI are on satellite data storage and transmission of data back to Earth.

Carol M. Craig: Our further edge AI solves both of these potential issues.

Carol M. Craig: The proprietary Feather Edge AI hardware enclosure allows us to continue to rapidly upgrade our memory and processors on future LISI stats, allowing us to remain state-of-the-art as computer hardware continuously progresses. The Feather Edge AI software is capable of being updated on orbit as well, which allows our customers to rapidly adapt to changing market and mission requirements. Additionally, this proprietary software solution uses on-board machine learning to parse out the data that's most valuable to our customers. This dramatically increases the quality of the data that we download to ground stations. So, essentially, instead of incurring the delay and cost of moving large volumes of raw data back to Earth, the processing can be moved into space, including to the point where actionable insight can be delivered directly to the end user without that raw data even touching Earth. While we're extremely proud of our recent successes, it's important not to forget that space is a very difficult environment. Space is hard, and executing the right way takes time and experience.

Carol M. Craig: The proprietary Featheredge AI hardware enclosure allows us to continue to rapidly upgrade our memory and processors on future levies that allowing us to remain steady and they are as computer hardware continuously progresses.

The other edge AI software is capable of being updated on orbit as well, which allows our customers to rapidly adapt to changing market and mission requirements.

Carol M. Craig: And Additionally, this proprietary software solution using onboard machine learning to parse out the data that's most valuable to our customers.

Carol M. Craig: This dramatically increases the quality of the data that we download to ground stations. So essentially instead of incurring the delay and cost of moving large volumes of raw data back to Earth. The processing can be moved into space, including to the point, where actionable insight can be delivered directly to the end user without that raw data even touching earth.

Carol M. Craig: Well, we're extremely proud of our recent successes, it's important not to forget that space is a very difficult environment.

Carol M. Craig: It makes it hard and executing the right way takes time and experience.

Carol M. Craig: Our decade-plus of manufacturing space hardware is one of the reasons our first satellite is in the satellite catalog right now. But it's important to note that this would not have been possible without the successful collaboration with other companies and government agencies during and after the launch. After deploying from the Falcon 9 rocket, we worked with other Transporter 10 riders to share location information and confirm the orbit state of LZSAP.

Carol M. Craig: Our decade plus of manufacturing space hardware is one of the reasons. Our first satellite isn't the satellite catalog right now.

Carol M. Craig: Important to note that this would not have been impossible without the successful collaboration with other companies and government agencies during and after the launch.

Carol M. Craig: After deploying from the Falcon nine rocket, we work with other transport or 10 writers to share location information and confirm the orbit state of living that we saw the space community come together to sort of correlate. These tracks for our closely spaced group of vehicles, which is common for rideshare deployments into lower orbit.

Carol M. Craig: We saw the space community come together to sort and correlate these tracks for our closely spaced group of vehicles, which is common for ride share deployments into low Earth orbit. And we're truly grateful for this information sharing and the spirit of collaboration with our peers in the space industry. Not only is the design, build, and test of a satellite very complex, but the follow-on stages, including launch and early orbit, the commissioning phase, and mission preparation are all very complicated endeavors. After the successful launch and deployment of our first LISI sat, we're excited to report that we have achieved the critical milestones related to understanding the health and status of our operational satellite. Now that LISISAT is in orbit, circling the Earth approximately every 95 minutes and providing two-way communication, we're looking forward to focusing on data collection, onboard processing and filtering, download of data, and sales. We're currently in the commissioning stage, which includes sequential activation and checkout of the spacecraft subsystems, the calibration of payload sensors and control systems, which we think will take between 60 to 90 days.

Carol M. Craig: And we're truly grateful for this information sharing and the spirit of collaboration with our peers in the space industry.

Carol M. Craig: Not only is design build and test the satellite very complex, but the follow on stages, including launching early orbit commissioning phase and mission preparation are all very complicated endeavors.

After the successful launch and deployment of our first thing is that we're excited to report that we have achieved a critical milestone related to understanding the health and status of our operational satellite.

Carol M. Craig: Now that leaves me sad isn't orbit circling the Earth approximately every 95 minutes in providing two way communication, we're looking forward to focusing on data collection.

Carol M. Craig: Onboard processing and filtering download them data and sales work.

Carol M. Craig: We're currently in the commissioning stage, which includes sequential activation and checkout of the spacecraft subsystems.

Carol M. Craig: Calibration of payloads sensors and control systems.

Carol M. Craig: Which we think it will take between 60 to 90 days.

Carol M. Craig: Following this, we expect to have the first censored data and images collected with revenue realized from LizzySat in the later months of this year. Additionally, the heritage of building, launching, and operating a commercial satellite of our size, greater than 100 kilograms, puts Sidus Space in a very small group of companies with the ability to pursue more advanced and long-term opportunities with both government and commercial entities. Even though we are successfully operating LISISat-1, the experience has resulted in both technical and cost efficiency that will support our economies of scale and cost reduction in the next few years. As we continue with production for our next few satellites, including the two manifested for the end of this year, we're able to integrate the improvements that we identified as a result of the success of our first laser sat.

Carol M. Craig: Following this we expect to have the first sensor data and images collected with revenue realized from Lizzie sat in later months of this year.

Carol M. Craig: Additionally, the heritage of building launching and operating a commercial satellite of our size greater than 100 kilogram put side of space in a very small group of companies with the ability to pursue more advanced and long term opportunities with both government and commercial entities.

Carol M. Craig: Even though we are successfully operating loses that one they experienced as a resulted in both technical and cost efficiencies that will support our economies of scale and cost reductions in the next few years.

Carol M. Craig: As we continue with production for our next few satellites, including the two manifest as per the end of this year, we're able to integrate the improvement that we identified as a result of the success of our first one is that.

Carol M. Craig: We've become an even more efficient operating unit going forward, and we anticipate expanding as an organization with new technologies and new markets. One of the reasons that we can so quickly adapt and integrate recognized solutions and lessons learned is that, at Sidus, we practice smart vertical integration. We manufacture our own bus, and we use selected space-proven subcomponents, which allow us to select the best technology to suit the mission objective. LizzySat-1 is a full production satellite, not just a proof of concept.

Carol M. Craig: We'd become and even more efficiently efficient operating unit going forward and we anticipate expanding as an organization with new technologies and new markets.

Carol M. Craig: One of the reasons that we can so quickly adapt and integrate recognized commissions and lessons learned.

Carol M. Craig: Scientists, we've practiced smart vertical integration with manufacturer are owned by and we used selected space proven sub components, which allow us to select the best technology.

Carol M. Craig: The mission objective.

Carol M. Craig: Let's see if that one is a full production satellite not just a proof of concept. This is all part of our plan to establish a steady production cadence of our satellites.

Carol M. Craig: This is all part of our plan to establish a steady production cadence for our satellites. While most other companies their size have had a gap between their first mission and subsequent missions, LS-2 and LS-3 are in full production and currently on schedule for their manifested launch in Q4 this year. LS4 is manifested for Q1 2025, and LS5 and 6 are in the design phase as we are determining the technology payloads and enhancements. Once full production cadence is achieved, the expected time to manufacture the satellites is 45 days, including printing and assembly.

Carol M. Craig: While most other companies our size had had a gap between their first nation and subsequent mission.

Carol M. Craig: It's two <unk> three are in full production and currently on schedule for their manifestos launch in Q4 this year.

Carol M. Craig: So as far as manifested for Q1, 2025 and L. S. Five and six are in the design phase and we are determining technology payloads and enhancements.

Carol M. Craig: Once full production cadence is achieved the expected time to manufacture satellite, it's 45 days, including printing and assembly.

Carol M. Craig: As we look toward the future, we continue to collaborate with our industry partners to ensure the path forward to launch and subsequent revenue is smooth and uninhibited. As small satellite launch options increase with the introduction of dedicated small satellite launchers, we continue to augment our existing rideshare agreements by expanding our options for low-cost rides to space to accommodate an accelerated launch cadence. All of our products and services that we offer through our four business units are critical to our future growth and strategy. Space Capabilities, Space and Defense Hardware Manufacturing, Satellite Manufacturing, and Payload Integration.

Carol M. Craig: As we look toward the future we continue to collaborate with our industry partners to ensure the path forward to launch and subsequent revenue.

Carol M. Craig: And uninhibited.

Carol M. Craig: As small satellite launch options increased with the entrance of dedicated small satellite launches, we continue to augment our existing rideshare agreement by expanding our option for low cost rides to space to accommodate an accelerated launch cadence.

Carol M. Craig: All of our products and services that we offer through our four business units are critical to our future growth and strategy. These.

Carol M. Craig: These capability based on defense hardware manufacturing.

Carol M. Craig: Light manufacturing and payload integration.

Carol M. Craig: Space Data Solutions and AI products and services allow us to support multiple industries and markets from concept to low Earth orbit, the moon, Mars, and beyond. And as the government increasingly seeks to leverage small satellites or include them in architecture planning to augment as needed, we're focused on building a stable business model with complementary dual use to support both government and commercial needs. The ability of our LISISAT space platform, with a purpose to flexibly and rapidly integrate and launch technologies to deliver actionable geospatial data or other sensor solutions is key to creating a catalyst to help accelerate the space ecosystem and the benefits space can provide to all industries and consumers. And I will now hand the call over to Bill to discuss how our recent successes impact our business strategy and to discuss our financial highlights. Thanks, Carol, and a good day to our shareholders, guests, and listeners.

Carol M. Craig: Space data solutions.

Carol M. Craig: And AI products and services allow us to support multiple industries and markets from concept to lower orbit, the moon Mars and beyond.

Carol M. Craig: And as the government increasingly seeks to leverage small satellites or include them in architecture planning to augment as needed. We're focused on building a stable business model with complementary dual used to support both government and commercial needs.

Carol M. Craig: The ability of our lazy fat based platform with a purpose to flexibly and rapidly integrate and launch technologies to deliver actionable geospatial data or other sensor solutions is key to creating a catalyst to help accelerate the space ecosystem and the benefit space can provide all industry and consumers.

And I now hand, the call over to Bill to discuss how our recent successes impact our business strategy and to discuss our financial highlights.

Unknown Attendee: Thanks, Carol and good day to our shareholders guests and listeners.

Unknown Attendee: It's a pleasure to be here today to discuss our fourth quarter and full year 2023 financial results and also provide an update on our business strategy. Launching LizzieSAT-1 is a major step in executing our strategy of building high-margin, recurring revenue streams from our satellite data. As Carol highlighted, by putting LizzySat-1 into orbit, we have achieved the most difficult part of our long-term strategy to shift the company towards greater revenues and higher margins. With LS-2 and LS-3 in production and manifested for launch this year, we are well on our way to establishing a multi-satellite constellation to capture and sell satellite data as a service to our customers. To put it in perspective, each of our satellites is capable of downloading a minimum of 100,000 megabytes of data back to Earth each day.

Unknown Attendee: It's a pleasure to be here today to discuss our fourth quarter and full year 2023 financial results and also provide an update on our business strategy.

Unknown Attendee: Launching Lizzie sat one is a major step in executing our strategy of building high margin recurring space data as a service revenue streams from our satellite data.

Unknown Attendee: Carol highlighted by putting literally sat one into orbit, we have achieved the most difficult part of our long term strategy to shift the company towards greater revenues and higher margins.

Unknown Attendee: Oh, that's too and L. S. Three in production and manifest it for lunch. This year, we're well on our way to establishing a multi satellite constellation to capture and sell satellite data as a service to our customers.

Unknown Attendee: We put it in perspective each of our satellites are capable of downloading a minimum of 100000 megabytes of data back to Earth each day.

Unknown Attendee: This translates into our ability to theoretically generate 14 million in revenue per year per satellite, assuming we sell 100% of this data a single time. Interestingly, we may be able to sell this data multiple times. As you can imagine, this business model has the capacity to scale rapidly and generate meaningful cash flow as we develop a steady cadence of LISI Sats going into orbit. While we do have current data contracts in place, now that LS1 is in orbit and fully operational, we are increasing our pipeline of new potential customers for our space data as a service. We recently hired a vice president of business development to drive the sales process.

Unknown Attendee: Translates into our ability to theoretically generate $14 million in revenue per year per satellite assuming we sell 100% of this data a single time.

Unknown Attendee: Interestingly, we may be able to sell this data multiple times.

Unknown Attendee: As you can imagine this business model has the capacity to scale rapidly and generate meaningful cash flow as we develop a steady cadence of Lizzie sets going into orbit.

Unknown Attendee: Well, we do have current data contracts in place now that L. S. One is in orbit and fully operational we are increasing our pipeline of new potential customers for space data as a service we recently hired a vice president.

Unknown Attendee: The bill on that to drive the sales process.

Unknown Attendee: Now for our 2023 financial results. Total revenue for the 12 months ended December 31, 2023 totaled approximately $6 million, a decrease of $1.3 million compared to total revenue for the 12 months ended December 31, 2022. This decrease was primarily driven by the timing of fixed price milestone contracts offset by satellite payload revenue. Cost of revenue decreased 26% for the 12 months ended December 31, 2023, to approximately $4.3 million, as compared to approximately $5.9 million for the 12 months ended December 31, 2022. This decrease was primarily driven by a mix of contracts and milestone billings, which helped offset continued increased supply chain costs on the manufacturing side of our business.

Unknown Attendee: Now for our 2023 financial results.

Unknown Attendee: Total revenue for the 12 months ended December 31, 2023 totaled approximately $6 million a decrease of $1 3 million compared to total revenue for the 12 months ended December 31 2022.

Unknown Attendee: This decrease was primarily driven by the timing of fixed price milestone contracts offset by satellite payload revenues.

Unknown Attendee: Cost of revenue decreased 26% for the 12 months ended December 31, 2023 to approximately $4 3 million as compared to approximately $5 9 million for the 12 months ended December 31 2022.

Unknown Attendee: Decrease was primarily driven by a mix of contracts with milestone billings, which help offset continued increased supply chain cost in the manufacturing side of our business.

Unknown Attendee: Gross profit increased 14% for the 12 months ended December 31, 2023, to approximately $1.6 million, as compared to approximately $1.4 million for the 12 months ended December 31, 2022. Our gross profit margin increased to 28% for the full year 2023 as compared to 20% for the full year 2022. SG&A expenses for the 12 months ended December 31, 2023 totaled $14.2 million as compared to $13.5 million for the same period the prior year. This increase was primarily due to an increase in professional fees, including legal costs associated with the acquisition of ExoSpace, as well as an increase in employee expenses. This is offset by a decrease in insurance rates, license fees, and IRPR.

Gross profit increased 14% for the 12 months ended December 31, 2023 to approximately $1 6 million as compared to approximately $1 4 million for the 12 months ended December 31 2022.

Unknown Attendee: Our gross profit margin increased to 28% for the full year 2023, as compared to 20% for the full year 2022.

Unknown Attendee: SG&A expenses for the 12 months ended December 31, 2023 totaled $14 2 million as compared to $13 5 million for the same period the prior year.

Unknown Attendee: This increase was primarily due to an increase in professional fees, including legal costs associated with the acquisition of extra space as well as increase in employee expenses.

Unknown Attendee: It was offset by a decrease in insurance rates of license fees and IR PR expenses.

Unknown Attendee: To provide investors with additional information in connection with our results as determined in accordance with GAAP, we also include in our 2023 Form 10-K non-GAAP measures to determine our adjusted EBITDA. We use adjusted EBITDA in order to evaluate our operating performance and make strategic decisions regarding the future direction of the company. Adjusted EBITDA loss, a non-gap measure, for the 12 months ended December 31, 2023, totaled $10.9 million as compared to an adjusted EBITDA loss of $9.7 million for the same period in the prior year.

Unknown Attendee: To provide investors with additional information in connection with our results as determined in accordance with GAAP. We also include in our 2023 Form 10-K, non-GAAP measures to determine our adjusted EBITDA.

Unknown Attendee: We use adjusted EBITDA in order to evaluate our operating performance and make strategic decisions regarding the future direction of the company.

Unknown Attendee: Adjusted EBITDA loss, a non-GAAP measure for the 12 months ended December 31, 2023 totaled $10 9 million as compared to an adjusted EBITDA loss of $9 7 million for the same period in the prior year.

Unknown Attendee: Total non-GAAP adjustments for interest expense, depreciation, and amortization, acquisition deal costs, severance costs, capital markets, and advisory fees, equity-based compensation, and more costs are provided in the reconciliation table listed in our fourth quarter and full year 2023 earnings press release released earlier this morning. The net loss for the 12 months ended December 31, 2023 was $14.3 million as compared to a net loss of $12.8 million for the same period Turning to the balance sheet, as of December 31, 2023, the company had cash of $1.2 million as compared to $2.3 million at December 31, 2022. Subsequent to December 31, 2023, the company bolstered its balance sheet by raising gross proceeds of $15.2 million, putting us in a stronger financial position as we continue to expand our constellation later this year and into the future. With that, I'll hand it back to our CEO, Carol. Thank you, Bill.

Unknown Attendee: Total non-GAAP adjustments for interest expense depreciation and amortization acquisition deal costs severance costs capital markets and advisory fees equity based compensation and more it costs are provided in the reconciliation table listed in our fourth quarter and full year 2023 earnings press release released earlier.

Unknown Attendee: This morning.

Unknown Attendee: Net loss for the 12 months ended December 31, 2023 was $14 3 million as compared to a net loss of $12 8 million.

Unknown Attendee: Same period last year.

Unknown Attendee: Turning to the balance sheet as of December 31, 2023, the company had cash of $1 2 million as compared to $2 3 million at December 31 2022.

Unknown Attendee: Subsequent to December 31, 2023, the company bolstered our balance sheet by raising gross proceeds of $15 2 million, putting us in a stronger financial position as we continue to expand our constellation later this year and into the future.

Unknown Attendee: With that I'll hand, it back to our CEO Carol.

Thank you Bill.

Carol M. Craig: The launch of LS1 marks the beginning of a new era for Sidus. Our 3D-printed, AI-enhanced LISI staff are at the core of our high-margin, data-as-a-service business model with the capability to integrate multiple technologies into a single satellite. Our satellites facilitate simultaneous data collection to support agriculture, maritime, oil, and gas, and other industries, and we intend to expand into these industries to generate additional revenue for our shareholders. We have big plans for 2024 as we are quickly building our Constellation satellites with two more LZSATs manifested for launch with SpaceX on their bandwagon mission before the end of the year. With LS1 in orbit and LS2 and 3 in production, we're focusing on attracting new data customers to expand our data as a service business.

Carol M. Craig: The launch of L. S. One marks the beginning of a new era of her side.

Carol M. Craig: Our three D printed AI enhanced Lizzie staffs are at the core of our high margin data as a service business model with a capability to integrate multiple technologies into a single satellite.

Carol M. Craig: Our satellites facilitate simultaneous data collection to support agriculture maritime oil and gas and other industry and we intend to expand into these industries to generate additional revenue for our shareholders.

Carol M. Craig: We have big plans for 2024, and we are quickly building a constellation of satellites with two more lazy SaaS manifesting for launch with Spacex on the Bandwagon mission before the end of the year.

Carol M. Craig: With L F. One in orbit and L. S. Two and three in production, we're focusing on attracting new data customers to expand our data as a service business.

Carol M. Craig: Additionally, we're looking at expanding our other lines of business as we focus on more than just lower Earth orbit. We expect the next 24 months to demonstrate our focus on remaining lean as we grow revenue and capabilities with a plan for rapid response development of space solutions for all areas of the space ecosystem. successfully designing, building, launching, and deploying an operational 100 kilogram 3D printed satellite is not an easy feat, and there are very few companies who get to this level. I could not be more proud of our team and all we have accomplished.

Carol M. Craig: Additionally, we're looking at expanding our other lines of business as we focus on more than just lower Earth orbit.

Carol M. Craig: The next 24 months to demonstrate our focus on our remaining lean as we grow revenue and capabilities with a plan for rapid response development space lists for all areas of the space ecosystem.

Carol M. Craig: Successfully designing building launching in deploying an operational 100 kilogram three D printed satellite is not an easy feat and there are very few companies who get to this level.

Carol M. Craig: I could not be more proud of our team and all we have accomplished we have methodically executing on our strategy of building a meeting space and space data as a service company with an experienced team.

Carol M. Craig: We have methodically executed on our strategy of building a leading space and space data as a service company with an experienced team, innovative and advanced technologies, a vertically integrated manufacturing facility, and a robust spacecraft supply chain. It's exciting to show proof of this capability for both our customers and our shareholders. We have much to do, and we're looking forward to the future as we continue to execute on our vision and bring value to our shareholders, our customers, and the world. I want to thank all of our shareholders for your continued support of Sidus. And we will now move to the Q&A portion of the call. We've received some questions from investors that we'd like to address. Bill, I'll let you start. Thank you, Carol.

Carol M. Craig: Innovative and advanced technologies.

Carol M. Craig: <unk> integrated manufacturing facility and a robust space craft supply chain.

Carol M. Craig: It's exciting to show proof of this capability for both our customers and our shareholders. We have much to do and we're looking forward to the future as we continue to execute on our vision and bring value to our shareholders our customers and the world.

Carol M. Craig: I want to thank all of our shareholders for your continued support of side as well.

Speaker Change: I will now move to the Q&A portion of the call. We've received since the many questions from investors that we'd like to address.

Speaker Change: Bill I'll, let you start.

Unknown Attendee: Thank you Carol.

Unknown Attendee: The first question was with respect to revenue and growth. What were the key drivers behind the revenue decline this year? The primary drivers were the function of our milestone contract billings and the timing of those billings for manufacturing and satellite revenue. A second question: how do you anticipate revenue trends evolving in the next quarter or fiscal year? While revenue will evolve as we continue to have more satellites in orbit, we've talked about our three revenue streams, manufacturing, payload, and data. While we anticipate to start seeing some satellite data revenue in 2024 as we continue our planned launch cadence, Payload and data are higher margin and are expected to favorably impact our overall results. Thanks, Bill.

Unknown Attendee: First question was with respect to revenue and growth.

Unknown Attendee: What were the key drivers behind the revenue decline this year.

Unknown Attendee: The primary drivers.

Unknown Attendee: Is the function of our milestone contract billings and the timing of those billings for manufacturing and satellite revenue.

Speaker Change: Second question, how do you anticipate revenue trends evolving in the next quarter or fiscal year.

Speaker Change: While revenue will evolve as we continue to have more satellites in orbit, we've talked about our three revenue streams manufacturing payload and data.

Speaker Change: While we've had manufacturing in payload revenue in 2022 and 2023.

Speaker Change: We anticipate to start seeing some satellite data revenue in 2024, as we continue our planned launch cadence.

Speaker Change: Payload data are higher margin and are expected to favorably impact our overall results.

Speaker Change: Thanks, Bill. So the next question is what strategies are you employing to acquire and retain customers and an increasingly competitive market.

Carol M. Craig: So the next question is, what strategies are you employing to acquire and retain customers in an increasingly competitive market? So our number one strategy was demonstrating that we could successfully launch, deploy, and operate 100 kilogram commercial satellites. The significance being the complexity of the satellite because of its size and the fact that it's a commercial endeavor, and therefore, we control the revenue generation in addition to all the operations of the upcoming constellation. Also, as Bill mentioned, we hired a VP of Business Development with an increased focus on government opportunities now that we've flown. We expect more government opportunities over the next year due to the timing of existing contracting vehicles that are out there and also because of the successful execution of our satellite manufacturing and operating capability. This also means an increased pipeline for data as well as manufacturing with an additional focus on engineering services.

Speaker Change: So our number one strategy was demonstrating that we can successfully launch deploy and operate 100 kilogram commercial satellite.

Speaker Change: The significance being the complexity of the satellite because of the size and the fact, it's commercial endeavor and therefore, we control the revenue generation. In addition to all the operations of the upcoming constellation.

Speaker Change: Also as Bill mentioned, we hired a VP of business development with an increased focus on government opportunities now that we've flown.

Speaker Change: We expect more government opportunities over the next year due to the timing of existing contracting vehicles that are out there and also because of the successful execution of our satellite manufacturing and operating capability and this also means an increased pipeline for data as well as the manufacturing with an additional focus on engineering services.

Carol M. Craig: And of course, we're attending industry events; Satellite 2024 was attended in March, and an upcoming space symposium in April. And all of these combined are helping us increase our pipeline and work toward acquiring more and retaining those customers. Next question is, are there any notable customer wins or expansions during the reporting period? So, we did announce that we are one of the teams that was selected by the National Geospatial Intelligence Agency, NGA, to provide research and development services to their research and development directorate. The NGA's primary mission is collecting, analyzing, and distributing geospatial intelligence in support of national security.

Speaker Change: And of course, we're attending the industry events satellite 'twenty 'twenty four was attendant in March in an upcoming as the space Symposium in April and all of these combined are helping us.

Speaker Change: Increased our pipeline and work toward acquiring more and retaining those customers.

Speaker Change: Next question is are there any notable customer wins or expansion during the reporting period, but we did announce that we are in one of the teams that was selected by the National Geospatial Intelligence Agency NGA.

Speaker Change: <unk> research and development services to their research and development Directorate.

Speaker Change: And then James primary mission of collecting analyzing and distributing geospatial intelligence and support of National security and that contract is expected to start to gain some momentum and we will be bidding on task orders as a part of that team upcoming in 2024.

Carol M. Craig: And that contract is expected to start to gain some momentum, and we will be bidding on task orders as a part of that team in 2024. We also signed a commercial IDIQ contract for lunar support, and we'll be pursuing government contract task orders on that contract as well. And that shows our commitment to not only LEO but the moon, Mars, and beyond. And we're also booking customers for subsequent launches up to two years out from now. So, a lot of times, customers don't allow us to make public announcements, but that doesn't mean that we aren't doing something.

Speaker Change: We also signed a commercial IQ contracts for lunar support and we'll be pursuing government contract task orders on that contract as well and that shows our commitment to not only Leo but the moon and Mars and beyond.

Speaker Change: And we're also booking customers just subsequent launches up to two years out from now so a lot of times the customers don't allow us to have public announcements, but that doesn't mean that we aren't doing something. So we are we are looking at our our cadence and ensuring that we are booking those customers or is that a subsequent satellites.

Carol M. Craig: So, we are looking at our cadence and ensuring that we are booking those customers for those subsequent satellites. The next question is, how has operational efficiency improved or been impacted during the quarter? So we have now completed design, development, testing, and the successful flight of our LISISAT-1 satellite.

Speaker Change: Next question is how has operational efficiency improved have been impacted during the quarter.

Speaker Change: So we now completed design development testing and the successful flight of our Lizzie sat one satellite with past all the space and the regulatory requirements are less two in Australia, a really build to print from that L. S. One design, so they're not what they called the nonrecurring engineering costs are N. R. E are reduced as compared to L. S. One.

Carol M. Craig: We passed all the SpaceX and the regulatory requirements, and LS-2 and LS-3 are really built-to-print from that LS-1 design, so what they call the non-recurring engineering costs, or NRE, are reduced as compared to LS-1. So we will see efficiencies there, including cost reduction. We have our Sidus Mission Control Center now fully operational, which has worked flawlessly since we launched on March 4th.

Speaker Change: So we will see efficiencies there including cost reduction.

Speaker Change: We have our scientist mission control center now up fully operational which has worked flawlessly since we launched on March 4th and this is the same mission control center Thats going to be utilized for L. S. Two in Australia and beyond all the other missions. So again that enter either nonrecurring engineering and those costs are not repeated so it's near zero since we use the same.

Carol M. Craig: And this is the same mission control center that's going to be utilized for LS2 and LS3 and beyond, all the other missions. So again, that NRE, that nonrecurring engineering, and those costs are not repeated. So it's near zero since we use the same mission control center for all those missions. The next question is, are there any significant operational challenges or successes that have influenced financial results? So, of course, getting the first LS approved for flight by SpaceX and the regulatory bodies is always the hardest and most costly. So now that we've successfully launched, deployed, and currently operating the LS1 satellite, that NRE, again, associated with getting approval, is significantly reduced for the subsequent mission.

Speaker Change: Mission control center for all of those missions.

Speaker Change: Next question is are there any significant operational challenges our successes that influenced financial result, so of course getting the first L. S approved for my space tax and the regulatory bodies is always the hardest and most costly. So now that we've successfully launched deployed currently operating.

L. S. One satellite that NRG again associated with getting approval is significantly reduced for the subsequent missions.

Carol M. Craig: On the manufacturing front, we continue to manage through supply chain challenges and higher prices. Through a mix of contracts and increased satellite-related revenue, we were able to more than offset the supply chain challenges in achieving a 28% overall growth margin versus 2022, which was 20%. The next question has to do with financial health and capital allocation. The question is, can you discuss the company's liquidity position and any measures taken to manage cash flow effectively? The company's growing concern was removed from our 10k, indicating that we have sufficient liquidity to operate for at least the next 12 months. The next question is, what is the capital, and what is the company's approach to managing debt and leverage in the current market environment? The company has historically operated on a very tight budget and has raised a fraction of the capital of some of our competitors.

Speaker Change: On the manufacturing front, we continue to manage through supply chain challenges and higher prices through a mix of contracts and increased satellite related revenue, we were able to more than offset the supply chain challenges and achieve a 28% overall gross margin versus 2022, which was 20%.

Speaker Change: The next question has to do with its natural health and capital allocations.

Speaker Change: The question is can you discuss the company's liquidity position and any measures taken to manage cash flow effectively.

Speaker Change: The company is growing concern was removed from our 10-K, indicating that we have sufficient liquidity to operate for at least the next 12 months.

Speaker Change: The next question is what is the capital what is the company's approach to managing debt and leverage in the current market environment.

Speaker Change: The company has historically operated on a very tight budget and has raised a fraction of the capital in some of our competitors.

Carol M. Craig: We will continue to operate efficiently and effectively. How do you plan to deploy capital in the coming quarters? Any update on investment plans or acquisitions? We have no immediate M&A plans but are always looking for accretive strategic investments.

Speaker Change: We will continue to operate efficiently and effectively.

Speaker Change: How do you plan to deploy capital in the coming quarters any update on investment plans or acquisitions.

Speaker Change: We have no immediate M&A plans, but are always looking for accretive strategic investments.

Carol M. Craig: So, the next question is related to the competitive landscape, which is always one of my favorites. How do you view the competitive landscape in the satellite services industry, and how is the company positioned relative to competitors? So, last year, 2,860 satellites were launched. Seventy-nine percent of those were communication-related, and only 13 percent were remote sensing like ours.

Speaker Change: So next question as it related to competitive landscape, which is always one of my favorite how do you view the competitive landscape in the satellite services industry and how is the company positioned relative to competitors.

Speaker Change: So last year 2860 satellites were launched 79% of those were communication related and only 13% remote sensing like ours and out of those 2116 were for Spacex and one related to comps.

Carol M. Craig: And out of those, 2,116 were for SpaceX and OneWeb related to communications. In the remote sensing and earth observation market, most of the companies seem to be focused on one type of sensor or industry. And we built LizzySat to be a flexible and dynamic platform to allow for multiple technologies and the rapid integration of new and emerging technologies. This allows us to pivot when needed to address emerging industry or customer needs more rapidly. Also, most, if not all, of our competitors in the public market went public via SPAC and had some significant overhead.

Speaker Change: In the remote sensing and Earth observation market most of the companies seem to be focused on one type of sensor or industry and we built disease that can be a flexible and dynamic platforms to allow for multiple technology and rapid integration of new and emerging technologies. This allows us to pivot when needed to address the emerging industry or customer.

Needs more rapidly.

Speaker Change: Also most if not all of our competitors in the public market went public back and have some significant overhead as we launch more satellites, we will see our losses reduced because of the invested and I read that I mentioned previously and the lean operating structure that we've created.

Carol M. Craig: As we launch more satellites, we will see our losses reduced because of the invested NRE that I mentioned previously and the lean operating structure that we've created. Additionally, governments are moving more towards commercial models and looking to industry to build and operate their own satellites and provide data, as opposed to paying contractors to build a government-owned satellite. This means that there's more opportunity for companies like ours who are building satellites that are larger than the typical CubeSat and doing it at a lower cost than many of our competitors. But how do we define a successful mission? Each mission has different objectives. But for LS1, we were initially looking at three main ones, and those were the successful launch, successful separation and deployment, and then establishing two-way communication so we can monitor the health and status of the satellite. And we achieve those goals. And the fourth is collecting data.

Speaker Change: Additionally, governments are moving more towards commercial models and looking to industry to build and operate their own satellites and provide data as opposed to paying contractors to build a government owned satellite.

Speaker Change: This means that there's more opportunity for companies like ours, who are building satellites that are larger than the typical cubes that and doing it at lower cost than many of our competitors.

Speaker Change: So how do we define a successful mission.

Each mission has different objectives.

Speaker Change: But for L. S. One we were initially looking at three main and those were the successful launch.

Speaker Change: Successful separation and deployment and then establishing two way communications. So we can monitor the health and status of satellite and we achieved those in the floor is collecting data and that's where we're moving into right. Now we're focused on the successful collection of data and therefore, the revenue generation that comes out of Dallas one.

Carol M. Craig: And that's where we're moving into right now. We're focused on the successful collection of data and, therefore, the revenue generation that comes out of LS1. The next question is, what recent technological advancements or innovations have contributed to the company's competitive advantage? I mentioned this before.

Speaker Change: Next question is what recent technological advancements our innovations have contributed to the company's competitive advantage I've mentioned this before it was one of them is the acquisition of extra space. The AI company integrating onboard software and hardware AI solutions is critical to maximizing revenue generation.

Carol M. Craig: One of them is the acquisition of ExoSpace, the AI company. Integrating onboard software and hardware AI solutions is critical to maximizing revenue generation. Another question is, how do you plan to leverage emerging technologies, for example, small satellites or advanced analytics, to drive future growth? Well, one thing we're focused on is increasing our onboard computing speed using VPX technology, also leveraging software-defined radios and modularizing the control and data handling subsystems to reduce complexity and mass while improving our computing speed. And what this does is it reduces the total time required from receipt of that critical data onboard LizzySAT to the time that it's downlinked and transferred to customers, which means more revenue generation.

Speaker Change: Another question is how do you plan to leverage emerging technologies for example, small satellites or advanced analytics to drive future growth. One thing we're focused on increasing our onboard competing speed using GPS technology also leveraging software defined radios and marginalising, they control and data handling.

Speaker Change: Subsequent to reduce complexity of math, while improving our companion suite and what this does is it reduces the total time required from receipt of that critical data onboard literally sat to the time that downlink and transfer them to customers, which means more revenue generation.

Carol M. Craig: And I'll pass it back to Bill for our last question. All right, the last question is, can you provide any visibility into future revenues and earnings growth expectations? We're an emerging growth company, and we currently don't provide guidance. But with LISISAT-1 now in orbit, our sales team is aggressively pursuing additional data contracts. We have a plan for a steady cadence. Most other companies our size have had a gap between their first mission and subsequent missions. Lizzie said that two and three are in production and currently on schedule for manifested launch in Q4 of this year. LizzySat 4 is manifested for Q1 of 2025, and LizzySats 5 and 6 are in the design phase currently.

And I'll pass it back to Bill for our last question.

Unknown Attendee: Okay. Last question is can you provide any visibility into future revenues and earnings growth expectations.

Unknown Attendee: We are an emerging growth company and we currently don't provide guidance.

Unknown Attendee: But we're literally sat one now in orbit our sales team is aggressively pursuing additional data contracts.

Unknown Attendee: We have a plan for a steady cadence most other companies our size that had a gap between their first mission and subsequent missions.

Unknown Attendee: He said two and three are in production and currently unscheduled for manifest at launch in Q4 this year.

Unknown Attendee: We've set for as manifested for Q1 of 2025, and Lindsay <unk> five and six are in the design phase currently.

Unknown Attendee: This means continued revenue growth from satellite operations and, as mentioned, with less non-recurring engineering and other costs that were incurred over the last two years as we built our first and deployed our first LISISAT-1. Thank you, Bill, and thank you to everyone who submitted questions. Lastly, thank you to all of you for joining us today for Sidus Space's fourth quarter and full year 2023 earnings conference call. Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day!

Unknown Attendee: This means continued revenue growth from satellite operations and as mentioned with less nonrecurring engineering and other cost that was incurred over the last two years as we built our first and deployed our first Lizzie sat one.

Speaker Change: Thank you Bill and thank you to everyone who submitted questions.

Speaker Change: Lastly, thank you to all of you for joining us today for scientists basis fourth quarter and full year 2023 earnings conference call.

Speaker Change: Thank you. This does concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.