Hello and welcome to the Nauticus Robotics Earnings Conference Call, for the Third Quarter Ended September 30 2022. My name is Paul and I will be your operator today. Today's press release, including the financial tables are available via an Investor Relations section of the Company's website at www.nauticusrobotics.com. The company also plans to file its Form 10-Q with the SEC later today. Joining us on today's call are, Nauticus’s Founder and CEO Nicolaus Radford, and a CFO, Rangan Padmanabhan. Following their remarks, we will open the call for questions. Before we begin, Jeff Grampp from the Gateway Group will make a brief introductory statement. Mr. Grampp?

Thank you. Hello everyone, and welcome to the Nauticus Robotics third quarter 2022 earnings conference call. Before management begins their formal remarks, we would like to remind everyone that some statements we're making today may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements. For more detail the risks uncertainties and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We'll also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. We refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business, as well as uncertainties and other variable circumstances including but not limited to risks and uncertainties identified under the caption of risk factors in our filings, you may get Nauticus’s Securities and Exchange Commission filings for free by visiting the SEC website @sec.gov. I would also like to remind everyone that this call is being recorded and will be made available for replay via link available in the Investor Relations section and Nauticus’s website. Now I will turn the call over to Nauticus Founder and CEO, Nick Radford, Nick?

Thanks, Jeff. And welcome everyone to our inaugural earnings conference call as a public company, and we sincerely appreciate your interest in Nauticus. This is our first call, I thought it'd be appropriate to start with an overview of Nauticus history, our mission in our business strategy. I'll then cover some of our most recent important business milestones before passing it off to our CFO, Rangan Padmanabhan, to cover some of our financial highlights before my closing remarks, and we'll take some questions. First, a bit of background on myself. I'm the Founder, the President, and the CEO of Nauticus Robotics. I have over 25 years of robotics experience and I was a Principal at NASA where I led many of NASA's robotics efforts. Becoming inspired to bring spaceflight robotics technology to the ocean world, I retired from government service and I set out to build a world-class team and company. Our mission is to create the most impactful ocean robotics company using the latest advancements in autonomous systems. This will bring about a much-needed change for our world's precious oceans. They are the epicenter for our energy, communication, minerals and food resources. Specifically, our service offering not only results in meaningful cost and safety improvements, but also significant enhancements to the sustainability of the offshore services industry as we can eliminate nearly all of their carbon footprint by removing the large vessels that burn fuel and emit greenhouse gases into the atmosphere. Our mission and groundbreaking technology attracted world-class strategic investors, including Schlumberger and Transocean, as well as technology sponsors from the U.S. Government. And we have supplemented our initial high-caliber team from NASA, with other industry experts in the offshore and energy sectors. Our technology market opportunity and business progress over the last several years towards commercializing our robotic solutions culminated in the business combination with CleanTech Acquisition Corporation, which closed on September 9 of this year. This resulted in Nauticus listing on the NASDAQ trading under the symbol KITT, of course, as a homage to the 1980s TV show, Knight Rider, and somewhat of an inspiration to our own artificial intelligence and autonomy ambitions, which is to say, at our core, we are an artificial intelligence company. And our autonomy software platform is aptly named ToolKITT, and provides our entire ecosystem of surface and subsea robots. We believe this combination of transformative ocean robots and autonomous technologies can disrupt the current ocean services paradigm. Now let me take a moment to discuss the vast ocean economy we operate in. It is our view that while the global ocean economy is massive at an estimated $2.5 trillion of value, it is largely unsung and frankly has typically lagged in innovation over the decades. However, we are witnessing an acceleration in sustainability solutions, including the introduction of increased levels of robotics and autonomy that play right into what we are pioneering here at Nauticus. The market for our technology is immense, and covers numerous market segments including offshore renewables, oil and gas, telecom, aquaculture, mining, defense, ports and shipping, just to name a few. The near-term opportunities we plan to execute on are primarily in the offshore renewables, oil and gas and defense and government markets. These three foundational segments underpin our strategy. Offshore wind is a rapidly growing market, as the world looks to decarbonize its energy production, and the industry will see upwards of a trillion dollars of investment over the next 10 years. There are currently 120 active offshore wind farms around the world with 170 estimated to be under development over the next few years. 25 gigawatts are expected to be added to Europe by the end of the decade, and then the current administration's 30 gigawatts by 2030 will add to the U.S. offshore winds. Let me put some context behind some of the numbers using offshore wind in the UK as an example. It is estimated that each gigawatt of installed offshore wind capacity requires about $22 million of annual inspection repairs and maintenance within Nauticus service capabilities. The UK currently has about 12.7 gigawatts of installed capacity and is adding about 2.5 gigawatts per year. So the annual UK offshore wind service market alone is estimated to be about $280 million and growing, which equates to a demand of about 35 Aquanauts. By the end of the decade, that is estimated to nearly double again just for offshore in the UK. Globally, there are about 56 gigawatts of installed offshore wind capacity today, that imply a worldwide market opportunity of about 150 Aquanauts, a number that will only grow with the ambitious offshore wind installations planned around the world. Additionally, our growing tandem robotics fleet is generating strong interest in the offshore oil and gas market where there are thousands of offshore oil and gas trees and tens of thousands of kilometers of flow lines and pipes around the world. All of these assets require inspection, maintenance and repair throughout their usable life. With thousands of ROVs and AUVs in the industry today supporting this infrastructure, there is a significant market available for Nauticus to disrupt. The defense and government markets are incorporating autonomous ocean robots rapidly and many of Nauticus Robotics platforms are dual-use, serving in this growing domain. The U.S. continues to invest billions in autonomous naval capabilities and the current geopolitical tensions are accelerating that investment. Nauticus is front and center building autonomous platforms for national security. Our core offering is the Nauticus fleet, which is comprised of a tandem combination of autonomous robots, an 18 meter optionally crewed vessel called Hydronaut and Aquanaut, its undersea robotic counterpart. The primary objective of Hydronaut is to support the launch and recovery of real-time ops of Aquanaut. Hydronaut ferries Aquanaut to and from the worksite and supports battery recharges, as well as the communication link from the local remote ops center for supervised autonomous operations. Aquanaut is an autonomous underwater robot that utilizes machine intelligence and a suite of autonomous behaviors for interaction with the subsea world around it. Our key operational technologies collectively allow us to substantially improve the efficiency, safety and carbon footprint of operations that have significantly reduced costs over legacy methods. As I mentioned earlier, the Nauticus fleet is powered by a proprietary software suite, ToolKITT, which operates the Aquanaut, other Nauticus robotics vehicles and other third-party vehicles. ToolKITT unifies all of Nauticus’s products into a single control architecture, allowing for robotic controls, user interfaces, sensor integrations, simulation, data analytics, and communication frameworks purpose-built to enable subsea work. Aquanaut also utilizes our Olympic arm, an all-electric work-class manipulator. Being all-electric allows for more delicate perception-driven decision-making for autonomous tasking. The advanced sensing and control techniques offer improvements to reliability and operating efficiency. While the lack of hydraulics compared to legacy solutions eliminates the risks of oil spills, which are costly, they cause delays and harm the environment. While ToolKITT and the Olympic Arm are core components of our overall offering, we are also actively executing on plans for these to generate revenue individually. In terms of what we're competing against, the most common legacy solution that Nauticus is probably disrupting involves the usage of large vessels, which can be the size of a football field, deploying hydraulic, remotely operated vehicles with costly and constraining umbilicals. This solution has remained largely unchanged since its inception 50 years ago, it has little to no advanced technology and hydraulic fluid leaks get into the water, creating a recordable environmental incident. The cost of utilizing these vessels is significant at upwards of $100,000 a day. Since we have adapted acoustic methods of communicating with our underwater robots, we eliminate the need for an umbilical and therefore drastically transform the cost structure, the safety profile and the environmental footprint in the industry. When we combined the lack of an umbilical with the latest machine learning and artificial intelligence for inspection data collection and intervention related activities, we can offer truly a game-changing solution. At Nauticus, we employ more software engineers than any other category of personnel. We are deeply committed to being a technology forward-leaning company, and will lead the way with compelling software-enabled solutions. Now shifting to our business models, we're implementing a Robotics-as-a-Service or RaaS model. We believe maintaining ownership of all robots will provide a better customer experience and generate superior long-term value for our shareholders. We estimate the ROI under the RaaS model could be up to four times what it could be in the sales case. Also, most of our targeted customers are already accustomed to a service-based rental model, where they pay a day rate for the use of service company assets. Capital cost per system for us range between $4 million and $7 million, depending on the configuration with annual revenue potential between $5 million and $8 million per system, assuming an industry standard utilization rate. It's worth noting, however, that our solutions may be able to beat the industry standard utilization, since we lack the service footprint and do not need the same scale of human resources that are often negatively impacted by weather. Based on our expected cost structure, we can generate strong returns while offering our service at a meaningful discount to current market rates, creating significant financial incentive for customers to adopt our service. In addition to providing our service at a competitive price, we also reduce our customer's carbon footprint and improve their safety by reducing the requirements for surface infrastructure and related personnel. Now that I've discussed our disruptive solution and massive market opportunity, I'd like to update you on the building of Nauticus fleet. When we first announced our business combination and provided our initial outlook almost 12 months ago, we were in quite a different market environment as it related to supply chain, raw materials, the geopolitical landscape and the overall global economy. Since that time, we have seen a tragic war breakout in Ukraine, interest rates and stated policy dramatically shift along the overall capital markets environment, and the supply chain that has remained challenged and in some cases worsened. While we have contingency plans in place and the team has executed very well, in the context of these challenges, supply chain delays have generally been worse than anticipated, which has delayed the build out of our fleet. We originally expected 2022 to be a year where we could commission our initial Aquanauts ahead of a significant ramp in 2023. However, these world events and near-universal disruptions in the supply chain have pushed out the acceleration in growth to later in 2023 and then 2024. Now to be clear, these delays are not at all a reflection of the lack of interest or traction we are getting with potential customers. In fact, our conviction in our disruptive technology only continues to grow. Let me take a few moments to highlight some of the positive progress we've made this year. In August, we announced the contract with Shell, one of the largest energy companies in the world to conduct a field trial, after successfully completing an initial feasibility study. The trial advanced more efficient means of acquiring subsea integrity data using Aquanaut. In partnership with Shell, we will test remote operations using supervised autonomy and tool control that will leverage our acoustic communications technology. This trial incorporates multiple differentiated capabilities of Nauticus that give us our competitive advantage, including our autonomy, acoustic communications technology and the Olympic Arm for gathering integrity data. That has made a natural fit for this test. In May, we announced an agreement with Wood PLC, a British multinational engineering and consulting company with over $6 billion in revenue last year. This formalized the relationship between Wood and Nauticus to develop integrated service offerings that can provide more cost-efficient, environmentally friendly maintenance of subsea infrastructure. We've also had multiple announcements in the defense industry, as we have partnered with the government to help commercialize our technology as well as being an early adopter. We are currently working with Leidos, a significant defense contractor to jointly develop an unmanned underwater vehicle, a derivative of Aquanaut, that serves numerous use cases that are either dangerous or impossible for humans to accomplish, including ocean floor mapping, studying sea life and monitoring water pollution. We were awarded the contract in 2021, with the initial phase milestone running through the end of this year, and Phase 2 is expected to begin in the first half of 2023. As I mentioned earlier, there are also opportunities to generate revenue from some of our solutions that support our flagship Aquanaut, including ToolKITT and the Olympic Arm. In 2022, we were awarded two contracts with the U.S. Defense Innovation Unit, or DIU. The most recent of which was a multimillion-dollar award that we announced in October. The contract is for the development of an amphibious unmanned system called TerraNova, utilizing ToolKITT for autonomous command and control which will be capable of helping the military clear shallow waters of mines, supporting their focus to get the man out of the minefield. On the successful completion of this contract, we will have the opportunity to license ToolKITT to the U.S. Department of Defense for use on their existing fleet of Defender ROVs, which is an opportunity for hundreds of ToolKITT licenses. Now I'll turn the call over to our CFO, Rangan Padmanabhan, to discuss our financials. Rangan?

Thank you, Nick, and hello, everyone. It's been a busy quarter for the company as we close the merger and prepare for life as a public company. While I'd expect my commentary in future calls to focus on quarterly results, since this is our initial earnings call, I thought it would also help to discuss some year-to-date results. For the nine months ended September 30 2022, we generated revenue of $8.2 million representing year-over-year growth of 153%. The increase in revenue is primarily attributable to the addition of new service contracts, and increased performance under an existing service contract, some of which Nick mentioned. For the third quarter of 2022, we generated revenue of $3.0 million representing year-over-year growth of 51%. For the nine months ended September 30th 2022, we reported total operating costs of $19.5 million. And for the third quarter of 2022, we’ve reported total operating costs of $9 million, both of which were higher than the prior year comparable periods. Both figures include $0.8 million in one-time transaction costs related to our business combination with CleanTech Acquisition Corp, which closed in the third quarter of 2022. Additionally, there were over $1.2 million in one-time deal-related expenses in cost of revenue and over $1.5 million in G&A, all of which occurred in the third quarter. Other drivers of the year-over-year increase primarily relate to higher general and administrative costs, as we increase company headcount, sales and marketing expenses and professional fees that are required to handle the additional responsibilities of a public company, as well as to position the company to scale with our significant growth opportunities. Our net loss for the quarter was $11 million, or $0.67 per share, compared to a net loss of $1.3 million, or $0.13 per share in the prior year period. Excluding the non-recurring items that impacted the quarter, our adjusted net loss for Q3 was $3.7 million, or $0.22 per share. Now moving on to our balance sheet and capitalization. As of September 30 2022, we had $35.9 million of cash and equivalents, and a net working capital position of $43.6 million. Our total principal amount of debt outstanding at quarter end was approximately $36.5 million, which is entirely attributable to the convertible notes we issued as part of our business combination. The accounting treatment of the convertible notes requires a portion of the amount to be treated as equity. As a result, only $20.4 million of the principal amount is recorded as debt on our books at quarter end. As of September 30 2022, we had approximately 47.3 million shares outstanding. This includes 7.5 million shares in an escrow account that will be released upon certain share price thresholds. These escrow shares are attributable to our business combination with CleanTech Acquisition Corp. Looking forward, we expect fourth quarter 2022 revenues to be a little more than $3 million. This is lower than what was implied by our previous commentary as supply chain issues have delayed the delivery of commercial units. While we expect these revenues to be realized in future periods, they are no longer expected to begin in 2022. That completes my financial summary. Now I'll turn the call back over to Nick.

Thanks, Rangan. Looking ahead. We have an active deployment scheduled for the Nauticus fleet that we are anxious to launch, as it more concretely demonstrates our capabilities. Thus far we've produced two Aquanauts, one developmental unit and one unit under contract and in service with U.S. DoD customers. We currently have three Aquanauts in production. One is expected to be delivered just in January, and the remaining two are to be delivered by mid-year and commissioned shortly thereafter. Key growth markets we expect to focus on in the near term include the North Sea, Offshore Brazil, and the Asia PAC region. In addition to, of course, the Gulf of Mexico right in our backyard here in Houston. All these regions are strategically significant hubs of traditional and renewable energy assets, and future deployments. While the commercial market reception to our Aquanauts has remained strong, we have been impacted by the supply chain constraints as I mentioned earlier. This has resulted in longer construction times than anticipated for our Aquanaut units. Unfortunately, these delays have pushed back our entire program. And we currently expect to deliver material commercial service revenue in 2024 versus the anticipated second half of 2023 previously. We also continue to expand and leverage our defense community relationships to find new and innovative ways to deploy our software and assets to address known and emerging applications on the forefront of defense technology. Although our business model is based on a robotics-as-a-service concept, we had previously agreed to sell four Aquanaut-Hydronaut pairs to an innovative early-stage CleanTech Maritime Service Provider. For the amended sales contract, the first two pairs are scheduled for delivery in Q4 of 2023. Future contract amendments to accommodate the customer's delivery needs, supply chain constraints or market conditions may result in further adjustments to the timing or the ability of Nauticus to recognize revenue from this contract. While this dynamic may impact 2023 revenue, we still expect to deliver year-over-year revenue growth in 2023, with a significant ramp expected in 2024. So we are disappointed by this, we'd like to stress that the market opportunity is just as bright as ever. And we currently expect to exit 2023 with multiple Aquanauts in our fleet, each of which are capable of generating between $5 million and $8 million of high-margin revenue per year. When we couple this with sales of products like our Olympic Arm and continued strong results from our defense segment, we think the outlook for the company's growth remains very strong. It's clearer than ever that our differentiated offerings and the impact we can have on efficiency, safety, emissions, and the cost of customers' operations makes us a highly attractive partner. We're excited about what's to come in 2023 and we look forward to providing you updates as we execute upon our goals. Before we wrap up, I'd also like to make sure everyone is aware of the potential opportunities to meet and hear from us. We will be in New York City on Wednesday, November 16 at the 11th annual ROTH Technology event. Water Tower Research will be hosting us for an open virtual fireside chat on Monday, November 21 at 11 am Eastern Time, and we will be in Palm Beach, Florida on Wednesday, November 30 at the 10th Annual Credit Suisse global Industrials conference. And lastly, I want to extend my sincere gratitude to the employees of Nauticus for their commitment and their passion towards our mission and their relentless work ethic. I would also like to thank our capital partners and shareholders for their support before, during and after our business combination. We take your investment seriously and are highly aligned and motivated to see Nauticus succeed. This completes our prepared remarks and we're now ready to take our questions. Operator?

Thank you. Our first question is from Craig Irwin with ROTH Capital. Please go ahead with your question. Greg, can you confirm your line is not muted? You are free to ask your question.

Thank you. Thanks for taking my questions. The first one is really a clarification. If I could ask you Rangan, the negative $3.7 million in adjusted net income that you mentioned. Just need to confirm that this does not exclude the $1.1 million in warrant adjustment expenses in the quarter. Is that correct?

It does also include that. It was a gain from the value of the warrants going down.

Okay. So can maybe share with us the other details other than the 3.5 in merger expenses. So there are any other components in there?

There is the valuation of the earnout shares that was close to $5 million. And then there was $1.2 million from cost of goods, cost of revenue. And one point, which is all part of the 3.5 and 1.5 from G&A.

Okay, okay, understand perfect. The revenue generation, because it is a key thing that I think all investors that are looking at your company are most interested in right now is sort of the splash of the Aquanauts, as you have them scheduled over the next number of months. First quarter, would you expect the units that are going to be splashing to be revenue productive? Or is it likely to take a little bit of a shakedown period before we see these units actually start generating revenue for the P&L?

Yes, hi, Craig, this is Nick, I'll take that. You're exactly right, the initial stages of splashdown will be a blend of commissioning and qualification. And so Q1 is going to be a lot of commissioning and will transition into qualification through Q2. Now, the good part about qualification is sometimes and oftentimes it is customer supported. So like the opportunity that we have with Shell for our pilot with them, we are that is a stage-gated outlook. And so we're progressing through that pretty nicely. And so, Shell is a good and large customer and so the demand from them could be quite handsome from that.

Understand, and actually, Shell was going to be my next question. Can you maybe give us a little more color on precisely what you're doing with Shell these days? Whether or not you have, you've been down to the depths of the ocean with them, approximate number of sites you visited or any color to help us kind of sketch out the more complete picture of your commercial engagement with this important customer?

Absolutely. So Shell has identified a particular task that is rather cumbersome and uses makes use of this very specialized tool. It's a very forward-leaning tool. And it's rather difficult to use. So they're interested in our ability to use that in a much more supervised autonomous way. And so we've been able to apply our entire tech stack, all the behavior development that we've been doing for quite some time. And in a very rapid form, be utilizing this tool, it also requires some acoustic communication to actuate the tool, so they were very excited about that part of our tech. So, as I also mentioned earlier, there's a progressive nature to what we're doing. So the first part of this was to prove out the concepts behind how little data rate that you could actuate this tool with, and then that increases in difficulty toward the ocean. So that ocean pilot is scheduled for mid-next year. So there's a lot of gates required to progress through that we are doing quite well.

Excellent. And another point of clarification, this is the first quarter that you've had a cash flow expense for inventory on the cash flow. Can you maybe discuss for us why this initiated this quarter? And is this really sort of units for future sale versus for robotics as a service? How should we look at this? And how should we model inventory going forward?

We're comfortable with our cash position. And the inventory that we were looking at earlier is about 1.6 million due to the Olympic Arm that we're manufacturing on site, and about $4 million of that inventory is in Aquanaut and Hydronaut production that we've done.

So then, as we look at growing the fleet over the next number of quarters, this inventory will both on and off the balance sheet and the cash flow. But, originally we were thinking this would be much more of a traditional CapEx line. Can you maybe explain for us what's going on here as far as inventory and whether or not this is something that balances and maybe just a little bit of the CapEx versus inventory expense and cash sort of used for unit construction?

In the future, the majority of units that we build that are going to go to the fleet, those will roll into CapEx, not inventory. If we had units for sale, they would eventually roll into inventory and eventually into the cost of goods sold to match up with the revenue in the appropriate period.

Understood, understood. Last question for me is on the service line. So, I'm going to assume that it's the vertical of the fleet that's under services that drives this. But is there a component you can maybe describe for us that that's not tightly linked to the number of vessels that are active with your customers? Would you expect there are materials service contribution that's not directly tied to already deployed vessels?

Yes, so Craig, this is Nick. You're exactly right. A lot of the business scales as the commercial fleet builds out, and we realize that commercial service revenue, there are other elements that the company is aligned with that don't have that commercial RaaS model. And a lot of our government interests, which are lumpy in nature, are a little bit more on the product sales side. And so you're seeing a blend of that right now. And as the fleet scales out, that will transition from that to much more of the RaaS model.

Understood. Well, hey, congratulations on a solid first quarter out, and I'll hop back in with you.

Thanks, Craig.

Our next question is from Troy Jensen, with Lake Street Capital. Please proceed with your question.

Hey, gentlemen, I also want to say congrats on your first quarter as a public company. Thanks. Maybe, Nick, starting with you. Can you just talk about how the SPAC or the public offering has increased awareness for the company or maybe comforted potential customers?

Yes, absolutely. Obviously, with a public-facing transaction, there's a lot of socialization and marketing that goes into it. So organically that has occurred, it's just part of the process. But it's also given us quite a platform to start really highlighting what we're doing. I mean, everyone at the company here is just fired up about what we're doing. Its mission-driven for us. Our mission is to create the most impactful Ocean Robotics company through the deployment of autonomous systems. And so this whole transaction has just been an incredible stepping stone to help bring awareness to what we're doing.

Yes, I can imagine. So I'd dropped off for like a minute or so where you were talking about ‘23 revenue guidance just now you gave like a number range that we should be thinking about?

Yes, so as far as ‘23 is concerned, as we mentioned in the remarks, supply chain has not been our friend. And previously, we were anticipating quite a ramp in ‘23, due to the commercialization of the fleet, which would have started literally now. And so things have been sliding to the right. These aren't lost opportunities, of course, I mean, we're actually seeing tremendous demand and interest. And in fact, it's kind of getting us to rethink about how many units we're going to be putting into the water. So I mean, it's a little too early to lay down strict guidance on ‘23. I mean, naturally, it is sliding, the commercialization is taking and has been pushed a little due to the supply chain. So, I mean, that's pretty much what I can guide currently.

Yes, understood, completely understood. So, here's one more question I put to. So the program of record deal with the Defense Innovation Unit. So you guys won the first date with a competitor. And you may have said on the call, but just development milestones, when's the next kind of bake off? Can you talk about the ultimate opportunity here with the DIU?

Sure, there's actually two of them associated with that. And they are both pipelined into programs of record that are looking for technology additions and a lot of the stuff that we're developing. So they're concurrently occurring, leveraging a lot of the same software and hardware, which is really great for us. But these are milestone-driven that are literally every 60 days or so. In fact, the team just got back from San Diego last week and had a very successful outing out there. So we work very closely with the DIU interests and their counterparts. And so it's been incredible because getting to work on something that is so aligned and a lot of our own thinking, but gets to make use of our tech, actually in a very quick manner. Yes, it's every 60 days, there's a new milestone associated with these programs.

Okay, well the last part of the question was just the ultimate opportunity. If you guys were to win this, can you kind of frame up the opportunity in front of you?

For sure. The first one, which is very software-driven, is around the licensing of ToolKITT into the fleet of existing ROVs and ROVs that are being modified. The initial outlook is in the hundreds and to the mid-hundreds, so there'd be an excellent recurring component. And one that's high-margin and software driven. The second one is, is around platforms that have both a significant market for not only the platform but also software licenses.

Awesome. Okay, so congrats and keep up the good work.

Thanks, Troy.

Thank you. Our next question is from Brian Dobson with Chardan Capital Markets, please proceed with your question.

Hi, thanks so much. So congratulations on the partnership with Shell, when do you think we could expect to hear about the outcome of those tasks? And I guess further, do you think that a marquee partnership like this could increase your forward sales momentum or ability to gain new contracts moving forward?

In fact, I mean, just as a follow on to the earlier question about our own awareness and socialization, due to the business combination, it has, we've received significant customer interest due to the high-profile nature of it. So the transaction has been accretive from our customer acquisition standpoint, as well. The agreement and the work that we're currently doing with Shell, it's one of the largest industries out there and pretty small at the same time. And so people talk and potential customers have become quite aware of what we're doing with Shell and what we've been accomplishing. So I expect that to bear fruit as well in the future. And we're very happy with this sort of transition and the outcome.

Great, thanks very much. And when do you expect to I guess, hear about the outcome of those testings with Shell?

Yes, so as I mentioned, we're talking, progressing into the pilot midyear next year. And there's contractual stage gates that I believe we will be able to make some announcements about. And so we have to do that co-marketing coordination with them. But I believe there'll be an opportunity to voice our success to the market here shortly.

Sounds very good. And then I guess, from a bigger picture point of view, do you think you could elaborate on how DoD tech-driven third Offset Strategy towards the development of inactive RFPs. And again, how do you see that relationship evolving longer term? And is the potential there to work with U.S. allies as well as the DoD?

So the DoD interest in partnership very early on in the company has been absolutely instrumental. We've had a pretty heavy technology lift over the years, and they were an incredible partner to help subsidize that. The IP generation with the government is also favorable for the performer. And so we've been also able to take advantage of that. So I see that partnership continuing. They have made quite an investment in us and I think have a vested interest in the successful outcome of that. And clearly, there are events in the world that might stress the portfolio of DoD. And so we've been on the front end of helping increase that. So I believe also, we've received considerable interest from allies, especially five eyes. And I believe that everything that we do through the proper channels and proper exports would be very accretive to allied portfolios.

Yes, excellent. And then finally, I guess looking into your forward-looking, there are some concerns about lower corporate spending moving forward. Momentum appears to be very strong at KITT. Would you speak to some of the key factors driving that and then as you look to growth in ‘23 and ’24, do you think that's going to be more corporate-driven or defense-driven in terms of opportunity?

Well, I mean, we're all just terribly fired up about getting the commercial fleet and scaling that out. It scales very handsomely. We're not at all pinched by a lack of demand. In fact, the demand is quite a handful to accommodate. But as I mentioned before, the government is an excellent place to develop new tech with and we are a vibrant technology company, and we create our asymmetric advantage through that technology portfolio. So we are going to continue to look to ways to help offset those R&D costs with government partners. As which revenue stream is going to dominate the other, clearly the commercial business scales and scales in a very nice way, while defense tends to be a little bit more lumpy. But as our revenue shifts, we're obviously closely biased into government defense at the moment as commercial comes online. And so that will become a lower proportion of our revenue over time, but still significant in my estimation.

Excellent. Congratulations on your first quarter out of the gate.

Thanks, Brian.

Thank you. This concludes our question and answer session. I'd now like to turn the call back over to Mr. Radford.

And thanks, everyone for joining our call today. And of course, you're interested in Nauticus. We look forward to executing on our mission of transforming the blue economy with our autonomous robotics portfolio and we will be sure to provide you updates along the way on our journey and please have a wonderful day. Thank you.

Thank you for joining us today for Nauticus Robotics conference call. You may now disconnect.