Hello everyone, thank you for joining us and welcome to the Nauticus Robotics, Inc. second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Kristin Moorman, Corporate Development Lead. Kristin, please go ahead.

Thank you and good morning everyone. Joining me today and participating in the call are John Gibson, CEO and President, Jimena Begaries, Interim CFO, and other members of our leadership team. On today's call, we will first provide prepared remarks concerning our financial and operations results. Following that, we will answer questions. We have now released our results for the quarter ending June 30, 2026, which are 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.

Thank you, Kristin, and good morning, everyone. Glad you're joining us today. I'm going to save my remarks until the conclusion of the call today, and so at this point, I'd like to just turn it over to Jimena to walk through the financials. Jimena?

Thank you, John, and good morning, everyone. During our second quarter, we remained focused on strengthening the company's capital structure and preserving our NASDAQ listing. We completed several important financing initiatives, including finalizing the registration process for our equity line of credit, filing the Series D Certificate of Designation, and executing additional debt-to-equity exchanges that reduced outstanding debt by $5.5 million while supporting stockholder equity. I will now discuss our financial results for the second quarter of 2026. Revenue for the second quarter was $0.9 million, an increase of $0.7 million sequentially and a decrease of $1.2 million compared to the same quarter last year. Operating expenses for the quarter were $6.9 million, a decrease of $1.6 million between 2025 and an increase of $1 million sequentially. This reflects a continuous focus on cost management, partially offset by increased activity levels compared to the first quarter of 2026. GNA costs for the quarter were $3.3 million, representing an improvement of $1.1 million from the same quarter last year. Sequentially, GNA has remained mostly flat, increasing by less than $0.1 million quarter over quarter, demonstrating continued discipline in managing our corporate overhead. Net loss for the quarter was $11.1 million compared to $9.3 million in the first quarter of 2026 and $7.4 million in the second quarter of 2025. The increase was driven mostly by non-cash losses recognized on debt extinguishment transactions related to the exchange of outstanding debt for equity securities. Adjusted net loss for the quarter was $7 million compared to $7.4 million for the second quarter of 2025 and $6.4 million in Q1 2026. Cash at the end of Q2 2026 was $2 million compared to $7.6 million at the end of 2025. This decrease is related to cash used in operating activities. As we enter the second half of the year, our priorities remain clear, continuing to strengthen the balance sheet, maintaining disciplined cost management, and ensuring we have the financial flexibility to support commercial execution and future growth opportunities. With that, I will now hand the call over to Steve Walsh, our sales lead, for an update.

Thank you, Jimena, and good morning. Entering the year, many operators based their capital spending plans on oil prices in the mid $50 to $60 per barrel range, which led to a more cautious approach to offshore activity in the Gulf of America. As a result, several projects we had anticipated moving forward this year have been deferred into 2027, and in some cases beyond. In response to these market conditions, we've adjusted our operating model to better align our cost structure with current demand. Our objective has been to maintain flexibility to rapidly deploy our personnel and equipment when projects move forward, while avoiding the expense of maintaining a fully mobilized vessel throughout the entire work season. This disciplined approach allows us to remain responsive to customer needs while managing costs and preserving financial flexibility. While these market dynamics have impacted the timing of work in the Gulf, We have made meaningful progress in diversifying our business. We've expanded our presence in the offshore wind market along the East Coast, successfully completed work with one of the world's largest subsea cable land companies, have projects scheduled on the West Coast in the coming months, and currently have international tendering opportunities. We also achieved an important operational milestone by successfully deploying a Comanche ROV integrated with our Nauticus Toolkit software. The combined system performed exceptionally well for our client, demonstrating the value of integrating intelligent software with proven subsea hardware. Nauticus Toolkit demonstrated the ability to improve the ROV's operating efficiency while reducing pilot workload, allowing missions to be executed more effectively and consistently. This successful deployment further validates our technology strategy and provides another example of how our software-enabled solutions can help customers improve productivity, reduce operating costs, and enhance the overall efficiency of subsea operations. In addition, we are actively pursuing opportunities outside the United States where we believe our technology and capabilities are well aligned with growing demand for efficient, autonomous offshore operations. We are also seeing a growth in the number of opportunities in the defense sector. While these efforts remain in the early stages, we're making strategic investments in marketing, capabilities, alliances, and business development to position Nauticus to compete effectively for this work. We believe our autonomous subsidy technologies and software-driven solutions are well suited to support the evolving defense and national security missions creating another avenue for long-term growth and diversification. Although the near-term offshore oil and gas market remains challenging, we're encouraged by the strength of our opportunity pipeline, the continued expansion of our customer base across multiple offshore markets, and the progress we're making in positioning the company for long-term growth. We remain focused on executing our strategy, expanding our commercial footprint, and creating sustainable value for our shareholders. With that, I'll turn it over to Brian Allen, our revenue lead, for his thoughts on 2026.

Thanks, Steve. Jimena has taken you through the numbers, and I want to cover why this business has been hard to forecast and what we're doing about it. Now, looking at our revenue the way an investor would, I see a business that's hard to model, and there are four reasons for that, and we are changing all of them. First, where we sit in the contracting chain, our services business is mostly time and materials orientated, and we normally bid as a subcontractor. That means we win work only if the company above us wins theirs first, their timing sets ours, their price affects ours, and when their contract slips, our revenue moves with it, and that's what's been happening. Second, time and materials pricing hands the customer the efficiency our technology creates. So we finish faster, they pay for fewer days, and we earn less overall. And third, our software has only recently become a defined product. While it was maturing, it wasn't able to be sold easily. and lastly pipeline coverage. You carry more opportunity than you need because not everything converts and in a soft market that coverage has to be higher. So here's what changes. We're targeting a significant increase in pipeline coverage for 2027 and widening where it comes from, starting up sales activity internationally and across the defence sector. Defence inquiries are already up and those use cases align well with what our technology does reliably today and we have active proposals out now. The services business that we're building internationally will bid as the main contractor on work where our autonomy gives us a real advantage. And when we hold the contract, we set the price and the scope and we keep the margin our technology creates. We're putting the quality systems in place to bid at that level. Those contracts will be fixed price. When our autonomy takes days out of the job, that shows up in our margin. And finally, I'm extremely pleased to announce the first formal release of our Nauticus Toolkit software for ROVs, now on sale to underwater fleet operators across the energy sector and defense groups. Jason will tell you a little bit more about that shortly, but for the business, it starts bringing in recurring, predictable revenue from 2027. and we will communicate our bookings and backlog in future calls. I'll now hand you over to Jason.

Thank you, Brian. While we move towards growing product revenue, we continue to make meaningful progress across the technical validation and commercial pathways supporting our product portfolio this quarter. One of the clearest examples was the continued use of Nauticus Toolkit in active ROV projects. The software exceeded expectations in customer operations, particularly improving vehicle stability, survey consistency, and the quality of the resulting data. Feedback from both our operators and the customer was highly positive and reinforced that Nauticus Toolkit can deliver meaningful operational value on existing ROV fleets. These deployments provide important field validation and proof points, which help us refine and continue to deploy the commercial adoption model. With Aquanaut, we completed the planned freshwater phase of an autonomous mooring line and riser inspection workflows for our customers at the Florida test location. We will continue to leverage the lake for our mission training, while further progress for a mooring line and riser inspection now require access to a suitable offshore test environment. We remain engaged with participating organizations and other interested parties regarding the next phase, and the timing will depend on customer budget cycles and site availability. We also reached an important milestone in our manipulation program by completing the prototype of our next generation electric manipulator, which has a much lower capital requirement for manufacturing supported by our strategy to manufacture in the UAE. We have validated the movement through our software controls architecture and now functional load testing are underway with further prototype builds and design refinement planned. This provides an important foundation for future commercial and defense missions requiring autonomous subsea interaction. As we look at the near-term market, we're placing greater emphasis on defense and government opportunities. This is not a change in our underlying technology strategy or a move away from commercial markets. Aquanaut, Nauticus Toolkit, and our manipulation technologies can be configured and trained around different commercial government and defense missions. What is changing is where we see the strongest near-term environment for revenue. Defense and government customers are focused on autonomous systems, subsea awareness, and infrastructure security. and their programs are often structured to fund phase development which match our product strategy. This gives Nauticus an opportunity to advance reusable software, sensing, vehicle and manipulation capability through funded mission work. Aligned with this focus, we have prioritized our defense and government opportunities. During the quarter, Nauticus completed an initial scope of work intended to support the evaluation of a broader multi-phase defense project. If awarded, we anticipate revenue this year and into 2027. In parallel, we expanded our participation in next generation ocean sensing opportunities. Nauticus is currently involved in multiple collaborative proposal efforts with government, commercial defense, and academic participants evaluating autonomous approaches to deploying and operating persistent subsea sensing infrastructure. These activities bring together Aquanaut, Nauticus Toolkit, Manipulation, and Advanced Sensing Technologies into Broader Customer Solutions. They illustrate how Nauticus addresses missions that are difficult or costly to perform using traditional vessel-based approaches. Our solution offers a platform to deploy infrastructure that supports new forms of long-term value for persistent subsea data. Together, these activities represent progress across multiple routes to broad product revenue. Nauticus Toolkits is being validated in real customer operations, Aquanaut is being developed around specific commercial and defense applications, and our manipulation technology is advancing through internal product development and industry collaboration. The work completed during this quarter expanded the way we can bring high-value technology to the market. Our increased near-term focus on defense and government work is intended to accelerate our progress through markets that are actively interested in development and deployment of autonomous subsystems. Importantly, the resulting technology remains not only applicable for defense, but also across the commercial markets that we serve. I'll now hand the call back to John.

Well, thank you, team, for the updates. And before we open the lineup for questions, I'd like to step back from the individual updates you've heard today and try to put them into perspective. There's no question that 2026 has been a challenging year. The offshore markets developed more slowly than we anticipated. Customer projects have shifted to the right and our financial results reflect that reality. Rather than waiting for the market to improve, we've taken decisive action. We've reduced our cost structure. We've strengthened our balance sheet. We've broadened our addressable markets and sharpened our focus on the opportunities where we believe Nauticus can create the greatest long-term value. Just as importantly, our technology has continued to advance. Nauticus Toolkit has now been successfully deployed in customer operations, and we are formally taking that product to market. Apanok continues to mature around specific commercial and defense missions, and our next-generation electric manipulator has entered functional testing. Increasingly, these technologies are coming together as an integrated autonomous platform capable of addressing larger opportunities in subsea autonomy, critical infrastructure protection, and persistent ocean sensing. We're also evolving how we go to market. As Brian discussed, our objective is to build a business with more predictable, higher margin revenue by expanding software sales, pursuing fixed price projects where we capture the economic benefits of autonomy, and ultimately growing recurring product and service revenue. That transition is fundamental to creating a more scalable and valuable company over time. Defense and government markets are becoming an increasingly important part of our strategy. Around the world, governments are investing in autonomous maritime capability, subsea infrastructure security, and persistent maritime domain awareness. We believe Nauticus has developed technologies that are well aligned with those priorities and position us to compete in markets that we expect to grow for many years. Internationally, we're progressing in the United Arab Emirates. We have secured a facility. We are expanding our business entity and are planning for future operations and manufacturing. More importantly, we have developed an outstanding relationship with our partners there, and I remain very optimistic that the UAE can become an important regional hub for Nauticus as we expand internationally. So while the first half of the year presented challenges, I believe Nauticus enters the second half of 2026 stronger, a more focused company. with a clear commercial strategy and expanding product portfolio and opportunities across commercial defense and international markets. Our priorities are straightforward, execute, deliver for our customers, convert our pipeline into contracts, and continue building long-term shareholder value. Now, before we conclude, I'd like to briefly address a topic that many shareholders have asked about. We've seen discussion regarding the possibility of another reverse stock split, We have no desire to undertake another reverse split, and we're pleased that our recent share price recovery has improved our position. Based on where we stand today, a reverse split is not required to maintain our NASDAQ listing. At the same time, we continue to monitor and prepare for any changes to NASDAQ's listing standards to ensure we remain in compliance and well positioned for the future. Finally, I want to thank our employees for their dedication Our customers for their trust, our partners for their collaboration, and our shareholders for their continued confidence and support. We appreciate your commitment to Nauticus. We look forward to updating you on our continued progress in the quarters ahead. And with that, I'm happy to open up the line for questions, operator.

Thank you. We will now begin the question and answer session. If you would like to ask a question please press star 1 to raise your hand. To withdraw your question press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally please remember to unmute your device. Your first question comes from the line of Peter Gastreich with Water Tower Research. Peter, your line is open. Please go ahead.

Thank you very much. Good morning and thanks for taking my questions. With the Nauticos team, I really always appreciate hearing from the expanded team on these calls, so thanks for the detail there. Yeah, just a few questions for me. Starting out, it feels like you've been, you know, building toward this in the previous calls, but I believe it's the first time that you've kind of stated primary contractor explicitly in terms of a Now, if I understand it correctly, serving as a primary contractor internationally means that you would be taking on maybe vessel commitments and more execution risk. But could you talk about the trade-offs in that primary contractor strategy and what they mean for your margins and capital intensity?

Yes. Brian, why don't you take that question from Peter? It's good to hear from you, Peter. Go ahead, Brian.

Yeah, so this was one of the things which the team brought in as a strategy change relatively recently. Now, with regard to the risk element to it, yes, if you look at primary contracting status where you're actually running your own vessel, it's a lot riskier, but we're not looking to do that. So we're not looking at taking long-term charter commitments. Essentially, we can operate in the sort of a, yeah, sort of a and many others. We can bring a boat in for a particular project, move it on to other projects for the summer and demobilise it for the winter, thereby minimising risk with shorter-term contracts. The reason why we get that flexibility is because the more we use our own software systems in our projects, the greater the margin we have to play with. and we are starting to work on focusing on two particular types of contract types so we can actually specialize on things which are fitting to toolkit. So again, that further reduces risk because we are limiting our contract types essentially as well as limiting the use of external vessels.

Okay, great. Thank you. So regarding the broader multi-phase defense opportunity mentioned with the potential revenue in 2026 and 2027 if awarded, can you frame the decision timeline and what needs to happen from here to convert that opportunity?

Let's see what I can do, Peter. Steve's here with them. I'll get Steve to chime in. A couple of things have happened, and that is we do have a limited amount of assets. We're really focused on deploying those assets to larger, longer-term opportunities. We did forego some short transactional work because it would have required us taking a loan contract for a boat. We didn't want to do that unless we had worked for that boat because I'd be taking on business for negative margin at the outset. We focused instead on really getting everything outfitted for some of the larger defense opportunities that we see, particularly with the aquanaut. And we're working towards those and have active proposals in place for the aquanaut and the defense sector. And we're excited about those. We think those are longer-term commitments, typically two, three years and longer. We also had some opportunities with the ROVs for longer-term contracts, none of which we're prepared to announce on the call today, but we're out looking at proposals that give us sustained revenue. And so we're trying to be disciplined and not just being the shotgun approach, whereas you get so urgent you go out and take short-term jobs that don't produce margin. And so we're unfortunately, it means that we have some depressed revenue. Now, here's the other good part, though. is that, and I applaud the team on this, both ROV and Aquanaut team, we have lost no revenue to a competitor. Things have been pushed. We're not in a competitive situation where we have any quality control or performance issues with the company. Everything about the operational aspects of the company are excellent at this time, and we want to maintain that reputation, too, because we think that's what gets you into long-term sustainable revenue. But look for us to pursue things where the ROVs are used for long periods with excellent customers. And those are the proposals we have in place. We will take profitable short-term contracts, but it takes a pretty good-sized contract for us to move and de-move and put the equipment out in the offshore. Go ahead, Steve.

Well, I would also point out that we're seeing more opportunities where the end clients are requesting us by name for projects that they have coming up. So performing excellent work is always critical, is what we will do. The addition of toolkit and the performance of toolkit with the ROV in particular has proven to be very successful, and that will only get better We're really excited about the future and where we're going and the opportunities that we're currently pursuing.

I really like what's happening with Toolkit because we're not out selling a product we haven't used. We are, as they say in South Georgia, eating our own dog food. It's exciting to see that the pilots, the most important aspect of this software is Does the operator that's operating the ROV, do they think that it makes them more efficient, more effective? And the answer to that is yes. And when you get the guy holding the controller to give you the thumbs up, I think that's really going to be what drives this market for us on Toolkit.

Okay, thank you. And there was some news last month that the autonomous underwater systems are being used now, you know, operationally in the Middle East, so including on mine clearance in the Strait of Hormuz. Just curious, you know, where do you see Nauticus fitting into that picture, and has it changed the nature of the defense conversations that you've been having?

Well, Peter, I mean, it is interesting. We are actually refurbishing the aquanauts now. We've taken this down period to get them refurbished and ready to go so that we've got good opportunity long-term with them. Immediately upon getting them completed, they go back to testing in Stewart, Florida, specifically on mine countermeasures. And one of the more difficult things to do right now is to get a dummy for you to actually go out and image. And so we have been working and secured those. Recently, with a little bit of ingenuity, and so we will be producing results and hope to have the end customer from the Department of War come down and see what we're doing in the near future. I think we've got some work to do on toolkit and a bit of work to do to just prove it, but this is the specific task that the Aquanaut is best suited for. There is no question that our imaging hovering is excellent.

Okay, great. Thank you. Just one final question before I get in the queue. You know, you did describe that the Gulf of America oil and gas activity is challenging, and of course, you know, previously there was an expectation that we'd see some improvement, and that was in line with what the larger operators were signaling. Does this sort of change or signal any change in terms of your strategy and appetite just kind of structurally for oil and gas? And can this be something that's kind of nudging you further in that direction of the other customer types you've been talking about in terms of how you allocate the resources and how you kind of envision your business building in the coming years?

It's a great question. I think the oil and gas market is going to be strong for the foreseeable future. I think we have no idea as to how much damage has been done during the activity in the Middle East over the last year. And so I think prices will be strong and I think that they will get enthusiastic about developing their resources. However, I think the margin could be much better for us on the port security side and the defense side. And so we're seeking margin and not just work. And so while I think it's going to be a strong market in oil and gas, I think that it's going to be a strong margin in the defense side of the work. I also didn't cover another part of the question you asked earlier. I apologize. But UAE, I could not be happier with the discussions that are going on with our partners in UAE, the master investment group. highly collaborative, long-term focused, excited about the new manufacturing facility which we're leasing and the entity we're putting in place, and strong support. It's a tremendous relationship there, and I think that's an area where our solutions are going to be practical and provide value to that region over the long term as well. So I'm excited to be opening up in Russell-Kyma. and our manipulators, which is absolutely critical. There are no AUVs, autonomous underwater drones, in the class of an aquanaut that have manipulators. And the ability to interact with the environment is differentiating. You cannot go and find that on an untethered robot at the moment. And I think that's where we excel and there's tremendous opportunity for us.

Okay, great. Well, thanks, John and team, and congratulations on executing your strategies so far this year, and I'll get back in the queue.

Thank you, Peter.

If you would like to ask a question, please press star 1 to raise your hand. Please stand by while we compile the Q&A roster. There are no further questions at this time. I will now turn the call back to John Gibson, CEO, for closing remarks.

Well, we've come to the end of another quarter, and I am incredibly grateful to our employees, their dedication, their commitment to our shareholders for sticking the course with us. I mean, this company has phenomenal potential, and we intend to deliver it. and I thank you to the lenders and it's just, it's been a phenomenal effort here and it feels close and so we're all in here focused on returning value to everyone that's put their trust in us. I appreciate it and we're going to go and do our absolute best for you and I hope we're having another call before the next quarterly call to talk about how our business is progressing. In fact, we may just I'll go ahead and commit now that we'll schedule an interim one as opposed to waiting for to the end of the quarter. So that puts work on Kristin and Jimena, but look forward to speaking to you again. Take care.

This concludes today's call. Thank you for attending. You may now disconnect.