Sidus Space A Stock

Good evening and welcome to the Sidus Space second quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Alan Khalili, Chief Financial Officer. Please go ahead.

Good evening, everyone, and thank you for joining us at Sidus Space's second quarter 2026 Earnings Conference Call. Joining us today from the company is Carol Craig, Chairman and Chief Executive Officer, and myself, Alan Khalili, Chief Financial Officer. During today's call, we may make certain forward-looking statements. Statements are based upon current expectations with respect to the future of our business, the economy, and other events as they result, and subject to risk and uncertainties. Many factors could cause the actual results to differ materially from the forward-looking statements made on this call.

These factors include our ability to fund operational expenses and liquidity needs, customer demand, supply chain delays, including launch providers, and extended sales cycles. We also expect to discuss certain financial measures and information that are non-GAAP measures as defined in the applicable SEC rules and regulations. Reconciliation to the company GAAP measures are included in the management discussion and analysis of the financial conditions and the results of operations within Sidus' quarterly report on Form 10-Q for the period ended June 30, 2026.

For more information about these risks, and uncertainties, please refer to the risk factors in the company filings with the Securities and Exchange Commission, each of which can be found on our website, www.sidusspace.com. The listeners are cautioned not to put any undue reliance on forward-looking statements, and the company specifically disclaims any obligations to update the forward-looking statements that may be discussed during the call. At this time, I would like to turn the call over to Carol. Carol, please go ahead. Thank you.

Good evening and thank you everyone for joining us. Before I turn to the quarter, I want to formally welcome Alan Khalili, who joined Sidus as Chief Financial Officer effective July 27, succeeding Interim Chief Financial Officer John Burke. Alan brings more than two decades of executive financial leadership across the space, satellite and technology sectors with experience spanning investment banking, public accounting, entrepreneurial leadership as a co-founder of a space-based global aviation surveillance data platform, and service as CFO of a publicly traded company. As we scale satellite manufacturing, advance commercialization of the [ Fortis DPX ] digital mission computing platform and our AI technologies, and work to build recurring revenue, his financial leadership will be central to our execution.

So now, turning to the quarter. The second quarter of 2026 was, in many respects, the quarter in which our balance sheet caught up to our technology. We entered this year with a set of proven capabilities and a clear commercialization plan. Over the past several months, we've raised the capital to fund that plan, gained meaningful institutional visibility, and moved our next satellite through the environmental qualification testing that clears the path to launch. Our focus today is shifting from proving our technology to scaling its commercial application, and that distinction is important. Success can no longer be measured simply by launching satellites or demonstrating technical capability. Instead, it will increasingly be measured by customer adoption, recurring revenue, operating leverage, and long-term shareholder value.

For those who may be new to our story, Sidus was founded as an agile and vertically integrated company to deliver high-quality, cost-effective, end-to-end space and defense solutions for multi-domain operations. Today, that foundation includes satellite design and manufacturing, mission operations, AI-enabling digital mission computing architectures, orbital edge computing, and a growing portfolio of intellectual property, all designed, built, and tested in-house at our 35,000-square-foot facility on Florida's Space Coast. We have intentionally built capabilities that work together rather than assembling disconnected businesses.

So, I want to continue by discussing capital because I know it is on the minds of many of our shareholders and because it shapes everything else we're able to do. In late May, we closed a best efforts registered direct offering of approximately 19.7 million shares of Class A common stock or pre-funded warrants in lieu thereof at an offering price of $5.08 per share, generating gross proceeds of approximately $100 million before placement agencies and offering expenses. ThinkEquity acted as sole placement agent. Together with the offering we closed in April, we raised $158.5 million in gross proceeds in Q2. Based on this, I think it's important to address dilution directly, as I did in the shareholder letter we published a few weeks ago. We recognize that equity financing creates dilution. That impact is real and should never be dismissed.

We view it in the context of what it enables. These raises were not intended to fund indefinite operating losses. They were designed to strengthen our balance sheet, improve financial flexibility, reduce financing friction, raise our competitive profile as we target large government programs, and provide the resources to accelerate commercialization from a position of strength rather than necessity. It's also worth noting how we got here. Unlike many companies that entered the public markets during the SPAC era with substantial capital already on their balance sheet, Sidus deliberately chose a different path. We pursued a traditional IPO and a staged capital formation strategy, raising capital as technical milestones were achieved rather than building infrastructure years ahead of commercialization.

Operating with significantly less capital than many of our peers demanded focus, prioritization, and operational efficiency. It occasionally limited the pace at which we could expand, but it also forced us to build a company grounded in engineering discipline and capital efficiency. We believe that long-term shareholder value is created not by the amount of capital raised, but by how effectively that capital is deployed. In June, Sidus joined the Russell 3000, Russell 2000, and Russell Microcap Indexes as part of the June 2026 Russell reconstitution, effective after the U.S. market closed on June 26. Memberships are determined by objective market capitalization-based criteria rather than any qualitative assessment of the company.

For shareholders, we believe the significance is one of access and visibility. The Russell Indexes are widely tracked by institutional investors, pension funds, mutual funds, and exchange-traded funds, and many institutions apply mandates or screening criteria that limit them to index constituents. Inclusion places Sidus within that eligible universe for the first time, broadens the base of investors who can consider our stock, and is generally associated with increased trading liquidity, though the degree and durability of any such effect will depend on market conditions and on our own performance. We view inclusion as an opening, not an outcome.

To convert visibility into sustained institutional interest, we are expanding our investor relations program, including participation in institutional conferences and non-deal roadshows during the second half of 2026, increasing the cadence and depth of our operational disclosure so investors can track execution against milestones, strengthening our governance and internal reporting infrastructure to meet institutional diligence standards, and directing targeted outreach towards small cap and space sector focused funds. We believe that greater institutional ownership carries higher expectations for communication, execution, transparency, and financial discipline. We welcome those expectations and we intend to earn the ownership rather than assume it follows automatically from index membership.

Turning to our satellite program, which was the operational centerpiece of the quarter, I want to share our progress as we continue to build our software-defined satellites powered by our own proprietary digital mission computing platform, [ Fortis VPX Maxima ]. In June, our next LizzieSat successfully completed vibration testing, a key environmental qualification milestone at Element U.S. Space & Defense's accredited facility in Orlando, Florida. Vibration testing simulates the intense mechanical loads a spacecraft experiences during launch and ascent, and completing it is designed to confirm that the satellite structure, components, and integrated payloads can withstand liftoff and remain fully operational on orbit. With qualification testing behind us, the remaining work is focused on preparing the satellite for launch readiness and on-orbit operations.

This mission is significant for a reason beyond the spacecraft itself. As I mentioned, this will be the first flight for [ Fortis VPX Maxima ], Sidus' multi-domain proprietary digital mission computing platform. [ Fortis Maxima ] pairs a quad-core ARM processor and reconfigurable FPGA, which is key, with an integrated NVIDIA Edge AI and machine learning engine, and an Assured Positioning, Navigation and Timing suite. This combination of technology enables the delivery of near real-time AI-driven processing at the edge for dual-use defense and commercial applications. Operating in the demanding environment of space is expected to advance the technology to Technology Readiness Level 9, which is the highest level of maturity and denotes the system proven through successful mission operations.

For our defense and commercial customers, that distinction is not academic. Flight heritage is frequently the gating requirement in procurement decisions, and maturing this technology on orbit is intended to position [ Fortis ] for adoption across our customer base, which includes all domains, sea, land, air, and space. Heritage like that is not accumulated by accident. It is built deliberately by producing spacecraft with repeatable design that can be rapidly customized to address multiple missions and customers. We believe that manufacturing strategy is what defines our place in the market. We occupy a distinct position in the space ecosystem, between the large primes that build exquisite one-off spacecraft on decade-long timelines and the smallsat vendors selling standardized buses off a catalog.

We are a custom satellite manufacturer with flight-proven hardware on orbit, delivering mission-specific spacecraft at production speed and cost. Our LizzieSat platform is not a fixed product, but a validated engineering baseline, one that we tailor to each customer's payload, mission profile, and orbit. Vertically integrated design, build, and integration under one roof lets us move from requirements to deliver spacecraft on timelines and at price points that traditional bespoke programs cannot match, while retaining the reliability that comes from a common, qualified technology foundation. That foundation is deliberately orbit agnostic.

The same core architecture supports commercial, civil, and national security missions across low Earth orbit and geostationary orbit, with a development path towards cislunar and lunar environments. Each successive LizzieSat mission feeds hardware and operational lessons back into the baseline, adding capability, autonomy, and mission flexibility. So every customer benefits from the flight heritage of the ones before them. I touched on [ Fortis DPX Maxima ] earlier. It warrants more detail because it is central to our commercialization strategy. You will notice that we now refer to this as the [ Fortis VPX ] Digital Mission Computing Platform. That change in language reflects a change in the product.

What began as a rugged, modular command and data handling system for space applications has evolved into a multi-domain, software-defined digital mission computing architecture that we believe will serve as the intelligent backbone for the next generation space and defense system. Over the past 12 months, we have seen an increasing number of customers who are looking beyond raw computing performance to mission execution. [ Fortis VPX ] is designed to eliminate many of the computing bottlenecks that traditionally limit autonomous operations in space and other contested environments. It enables spacecraft to, 1, execute complex autonomous rendezvous and docking maneuvers in real time without relying on delayed ground intervention. 2, process high bandwidth payload data directly at the edge to reduce latency and communications bandwidth. And 3, simultaneously perform advanced cybersecurity functions, including secure boot and cryptographic processing, without impacting primary flight software.

Built on a modular, SOSA-aligned architecture, [ Fortis ] provides the processing foundation for artificial intelligence, autonomy, sensor fusion, A-PNT, precision timing through atomic clock integration, electronic warfare, cyber resilient processing, and multi-domain operations across space, air, maritime, and terrestrial platforms. What differentiates [ Fortis CPX ] is the option for full integration. Rather than delivering standalone computing, positioning, or AI solutions, it combines high-performance processing, AI-enabling edge computing, autonomous mission execution, A-PNT, resilient timing, advanced cybersecurity, extensive mission input and output, and software defined flexibility within a single architecture.

That reduces system complexity, it lowers integration risk, accelerates deployment, and it minimizes non-recurring engineering costs. And unlike many competing VPX products built from commercial or automotive grade components, [ Fortis ] is engineered with space rated components to provide the reliability required for operations in low Earth orbit and other demanding environments. Customers can deploy the fully integrated system for individual 3U OpenVPX modules, which allows them to tailor solutions to mission-specific size, weight, power, performance, and cost requirements while preserving the flexibility for future upgrades.

This work is supported by a strategic collaboration with Microchip Technology, announced in April, whose space-grade flight-proven semiconductor technologies, including PolarFire FPGAs, space and defense-grade processors, precision timing modules, and high-reliability networking components, reduce the integration complexity and shorten the time frame, the path from design to mission-ready hardware. [ COORDIS ] also incorporates flight-proven insights from 3 Sidus designed and operated LizzieSat missions, which inform system performance, data throughput requirements, and multi-sensor integration. That feedback loop between what we fly and what we build is a direct benefit of our vertically integrated model.

On timing, and I want to remind listeners of the forward-looking statements we discussed at the beginning of the call. While qualification timelines vary by customer and mission, we currently anticipate initial full commercial availability of the [ Fortis VPX ] platform in early 2027, subject to final integration activities and customer qualifications, which are underway now. Customer engagement continues to expand as hardware availability increases. Defense prime contractors, satellite manufacturers, and commercial aerospace organizations are actively evaluating our [ Fortis VTX ] across a growing number of mission applications. Aerospace and defense procurement cycles require patience, but these engagements represent important milestones for production programs and recurring revenue.

On the government defense side, the current geopolitical environment reinforces the technology priorities that have guided our development roadmap for years. Governments increasingly require resilient space architectures, autonomous operations, AI-enabled decision-making, and distributed computing capable of operating in contested environments. Those requirements align directly with our LizzieSat satellite platform, our [ Fortis BPX ], and our FeatherEdge processing architecture. Our participation in strategic contracting vehicles, including the Missile Defense Agency's SHIELD program, together with ongoing discussions with Department of Defense agencies, defense-based intelligence organizations, and major defense prime contractors, has strengthened and broadened our opportunity pipeline.

We've also invested further in our security infrastructure, operational compliance, and mission assurance capabilities, which positions us to pursue more sensitive opportunities across defense and intelligence communities. Our Mission Control Center maintains 24/7 coverage, supporting satellite operations, collection management, and data distribution for our own satellites, with capacity to support additional customers' constellations as well. Subsequent to quarter end, we published a letter to shareholders on July 21 that addresses candidly where we are today, decisions we have made and where we are headed, including our capital strategy and the evolution of our business model. I would encourage anyone who has not read it to do so. It's available on our investor relations website as well. And finally, as I mentioned at the outset, we announced Alan's appointment as Chief Financial Officer on July 24. And with that, I'll turn the call over to Alan for our financial review.

Thank you, Carol. Before I turn to the numbers, I want to say briefly why I joined. Sidus has built a differentiated, vertically integrated position in the space and defense technology market, spanning dual-use satellite manufacturing, space-based data solutions, AI products, and mission-critical hardware. That breadth creates a clear runway to grow the top line. My focus will be on the financial discipline needed to convert that portfolio into durable recurring revenue, strengthening financial operations, supporting strategic execution, and delivering long-term value for shareholders. I look forward to meeting many of you in the months ahead.

Let's turn to the results, starting with the 6 months ended June 30, 2026. Total revenue for the first half was approximately $942,000 compared to $1.5 million in the same period 2025, a decrease of $557,000 or 37%. Most of that decline was in revenues from related parties, which fell from approximately $648,000 to approximately $161,000. Third-party revenue was approximately $781,000 compared to $852,000, a decrease of 8%. Cost of revenues for the first half was $2.6 million, compared to $4.2 million, a decrease of $1.5 million. Roughly $832,000 of that decrease was lower satellite and related software depreciation following the impairment recorded in the fourth quarter of 2025.

The balance reflects lower contract material and labor costs on reduced activity. Gross loss for the first half was $1.7 million compared to $2.7 million, an improvement of approximately $976,000. The cost of revenues declined by more than revenues did. Selling, general and administrative expenses were $9.5 million compared to $8.7 million, an increase of approximately $774,000 or 9%. Professional fees accounted for approximately $498,000 of that increase. Payroll expense was essentially unchanged, rising with $7.7 million, less than 1%. Loss from operations was $11.2 million compared to $11.4 million, an improvement of approximately $201,000.

Net loss for the first half was $10 million compared to $12 million, an improvement of $2 million or 17%. Substantially, all of that improvement came from other income and expense, which swung by approximately $1.8 million, reflecting the elimination of asset-based loan costs following the repayment of the loan in January and higher interest income on our cash balance. We also reported adjusted EBITDA, a non-GAAP measure we use internally to guide strategic decision making. Adjusted EBITDA loss for the first half was $9.7 million, compared to a loss of $8.6 million. Because adjusted EBITDA excludes interest and depreciation, it isolates operating costs, and the change reflects the increase in operational expense I described, partially offset by the improvement in gross margin before depreciation. A full reconciliation to net loss is included in our quarterly report on Form 10-Q.

For the 3 months ended June 30, 2026, total revenue was approximately $583,000 compared to $1.3 million in the second quarter of 2025, a decrease of 54%. Cost of revenue was $1.2 million compared to $2.3 million, a decrease of 47%, driven by lower satellite and related software depreciation and reduced contractual material and labor costs. Gross loss was approximately $630,000 compared to $1 million, an improvement of 39%. Lower depreciation contributed approximately $514,000, and lower material and labor costs approximately $561,000, partially offset by the decline in revenue.

Selling, general and administrative expenses were $5.1 million compared to $4.3 million, an increase of approximately $799,000 or 19%. Professional fees increased approximately $405,000 for various services, including the Chief Financial Officer transition. Payroll expenses increased approximately $226,000 with the remainder spread across other operating categories. Loss for the quarter was $4.8 million compared to $5.6 million, an improvement of approximately $844,000, or 15%. Improvement reflects other income and expense of approximately $911,000 this quarter compared to net expense of approximately $335,000 a year ago, driven by the elimination of asset-based loan expense and higher interest income.

Adjusted EBITDA loss for the quarter was $5.1 million compared to a loss of $3.9 million. Adjusted EBITDA and net loss moved in opposite directions this quarter because adjusted EBITDA excludes the interest income and depreciation that drove the net loss improvement. What remains is operating performance. Gross profit before depreciation declined by approximately $117,000, and cash operating expenses increased by approximately $1 million. Now turning to the balance sheet, we entered 2026 with $43.2 million in cash. As of June 30, 2026, we had $166.5 million in cash and working capital of $167.6 million.

Following full repayment of our asset-backed line of credit in January, we had no outstanding borrowings, which eliminated the associated interest expense and simplified our capital structure. During the first 6 months, we used $9.1 million of cash in operating activities and invested $7.3 million in property and equipment, principally, satellites under construction. During the quarter, we completed two best effort registered direct offerings. On April 21, we closed an offering with gross proceeds of $58.5 million. And on May 29, an offering with gross proceeds of $100 million.

Net proceeds from the two offerings were approximately $146.2 million, and we intend to use them for working capital and general corporate purposes. These offerings materially strengthen our liquidity position and give us the flexibility to deploy capital towards growth, protecting critical milestones, and driving operational efficiencies as we scale. Class A shares outstanding were 101,106,203 as of June 30, 2026, compared to 65,324,055 as of December 31, 2025. Taken together, the capital we have raised materially strengthens our balance sheet and reduces near-term financing risk.

That gives us the financial flexibility to execute our growth strategy and continue investing in the platforms and the product lines we expect to drive recurring revenue in the periods ahead. Our capital allocation priorities are straightforward. Continued investment in the commercialization of [ Fortis VPX ] in our AI hardware and software portfolio, expanding manufacturing capacity, strengthening business development and government capture efforts, accelerating next-generation satellite production, and building the operational infrastructure required to support large customer programs. We remain focused on improving gross margins, increasing recurring revenues, expanding operating leverage, and progressing towards sustainable positive cash flow. With that, I'll hand the call back to Carol for closing remarks.

Thanks, Alan. I want to close by putting this quarter in context. For several years, our job was to prove we could design, build, and fly our own spacecraft on a fraction of the capital our sector has consumed. We have taken LizzieSats from our own factory floor to orbit, and each one has taught us things the next one carries. That feedback loop is the point of building in-house. This quarter, we cleared environmental qualification on the mission that will carry [ Fortis VPX Maxima ] to space for the first time. The question in front of us now is a different one and a better one. How quickly we convert what we have built into customers, contracts, and recurring revenue.

The capital we raised during the second quarter allows us to invest in product development, pursue larger contracts, and build our pipeline without being forced into decisions by near-term capital needs. It also gives us the flexibility to evaluate targeted investments in our technology and capabilities that could deepen our core competencies, expand our technology stack, and accelerate market access across key defense and commercial segments. Any such investment will be guided by a disciplined focus on economic merit and clear pathways to revenue growth and margin expansion, of course.

I want to be equally direct about the challenges. Commercializing new technologies is never easy. Space missions are complex, government procurement cycles require patience, and market conditions will keep changing. Those realities are part of our business. What has changed is our stage of growth. The coming years will be defined not by prototypes or announcements, but by customer adoption, production programs, recurring revenue growth, expanding margins, disciplined execution, and responsible capital allocation. Those are the outcomes we are committed to delivering and the standards by which management expects to be measured.

As I mentioned, you will also see us broaden our investor relations efforts with more frequent shareholder communications, enhanced earnings materials, increased participation in institutional investor conferences, and wider engagement with prospective investors. The goal is straightforward. Ensure that the investment community understands both the progress we are making today and the long-term opportunity we are pursuing. We appreciate your interest in Sidus Space and the time you've taken to hear our results and outlook. If you have any additional questions or would like to follow up on any of the topics we have discussed, please don't hesitate to contact our investor relations team by email at [email protected]. We welcome your questions and we look forward to continuing the dialogue. A replay of today's webcast will be available on our Investor Relations website. Thank you again, and we look forward to updating you on our progress as the year continues.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Good evening, and welcome to the Sidus Space First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Adarsh Parekh, Chief Financial Officer. Please go ahead.

Good evening, everyone, and thank you for joining us for Sidus Space's First Quarter 2026 Earnings Conference Call. Joining us today from the company is Carol Craig, Chairwoman and Chief Executive Officer; and myself, Adarsh Parekh, Chief Financial Officer. During today's call, we may make certain forward-looking statements. These statements are based on our current expectations with respect to the future of our business, the economy and other events and as a result, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements made on this call. These factors include our ability to estimate operational expenses and liquidity needs, customer demand, supply chain delays, including launch providers and extended sales cycles.

We also expect to discuss certain financial measures and information that are non-GAAP measures as defined in the applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the Management's Discussion and Analysis of Financial Conditions and Results of Operations within Sidus' quarterly report on Form 10-Q for the period ended March 31, 2026. 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 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. At this time, I would like to turn the call over to Carol. Carol, please go ahead.

Good evening, and thank you for joining us. I want to start by saying that the first quarter of 2026 reflects continued progress as we translate several years of development into operational capabilities supporting both space and defense missions across multiple domains. Our team has remained focused on disciplined execution, advancing our next-generation satellite builds, expanding our technology platforms and delivering on customer commitments. For those who may be new to our story, Sidus was founded as an agile and vertically integrated company to deliver high-quality, cost-effective end-to-end space and defense solutions for multi-domain operations, integrating satellite design, manufacturing and on-orbit operations with advanced computing and data capabilities.

Over the past several years, we have made disciplined investments in our technology stack, operating infrastructure and workforce to support our mission and strengthen our position as a provider of scaled space and defense technology capabilities and data-driven solutions. We are now seeing those efforts materialize into tangible mission-ready capabilities.

Today, Sidus is a proven U.S.-based vertically integrated space and defense technology company, delivering end-to-end satellite infrastructure, space and defense-grade hardware and AI-enabled data platforms. From quarter-to-quarter, our progress has been supported by continued momentum and expanding activity across the commercial space sector.

Most recently, the successful Artemis II mission was splashed down in April marks the first crewed flight beyond low earth orbit in more than 50 years and reinforce the viability of the cislunar economy where Sidus is well positioned. More broadly, there is sustained investment across commercial space, expanding national security priorities and a growing demand for space-based data and resilient compute architectures, which all align with the capabilities we have built.

The market is seeing meaningful investor attention return to the commercial space sector, including a much anticipated public listing of a major peer, which could be the largest IPO in history. As a nimble small cap player, we benefit from this rising tide while focusing on specialized opportunities that complement larger players. The first quarter of 2026 saw record investment in the commercial space industry. This strategy is not theoretical. The strongest validation of our technology is not what we say, but what our systems are doing operationally. With multiple satellites on orbit, Sidus is progressing into a new phase, where our focus shifts from proving technical capabilities to executing and operating mission-ready platforms for our customers.

We successfully launched 3 LizzieSat satellites between March 2024 and March 2025, each one building upon the last and demonstrating increased capability across design, operations and mission performance. Together, these missions validate our platform, strengthen our credibility and support our transition to commercialization and most importantly, revenue. Turning to our on-orbit fleet. LizzieSat-2, operating in equatorial inclination, remained in commissioning during the quarter with continued system checks and communication passes supporting readiness activities. LizzieSat-3 successfully completed full bus level commissioning and progressed through payload level commissioning activities during the quarter.

The satellite continued to collect AIS data and advanced on-orbit testing of customer payloads, including HEO USA's non-earth imaging camera. In March, we achieved a meaningful technical milestone with the receipt of initial imagery from the HEO camera aboard LS3, demonstrating sub-5-meter resolution. This represented an important step in the commissioning process and along the path toward initiating subscription-based data service delivery following completion of commissioning. Our mission control center now in its third year of full 24/7 operations continues to support satellite operations, collection management and data distribution for our own fleet with capacity to support additional customer satellite constellations.

Throughout the first quarter, we continued to advance Sidus' Fortis VPX platform, our modular computing system for challenging and constrained environments. Fortis includes a SOSA aligned single-board computer and a precision navigation and timing module designed for GPS-denied environments. We're currently engaged with multiple commercial customers and defense prime contractors who are evaluating Fortis VPX for satellite payload processing, unmanned systems and ground-based computing. Converting these evaluations into commercial revenue is a near-term priority for our business development team.

These capabilities position us across both commercial and defense markets. Our award under the Missile Defense Agency 10-year SHIELD IDIQ contract remains an important pathway for our satellite onboard processing and modular compute capabilities. SHIELD is part of the broader Golden dome missile defense strategy designed to deliver capabilities faster through digital engineering, open systems architectures and AI where appropriate. National security is a growing priority with substantial funding with an increased DoD investment in space defense. We are preparing to pursue task orders on this contract and our strengthened balance sheet positions us competitively for these high-value national security programs. We also expanded our existing agreement with Lonestar Data Holdings to build and deliver an additional StarVault Orbital data storage payload.

This expansion reflects Lonestar's continued progress towards scaling its Orbital data storage architecture. Sidus is currently building the first StarVault payload, which is scheduled to launch no earlier than spring 2027 aboard LS4. Looking at the year ahead, our strategic priorities in the near term are focused on 2 of our core areas, compute hardware and satellites. Our operational execution remains focused on continuous improvement, disciplined resource alignment and scaling capabilities with a structured and intentional go-to-market approach to drive customer adoption and revenue generation.

While we have been intentional and disciplined in how we deploy capital, we have built a full technology stack spanning hardware, software and data, primarily through internal development, complemented by a small, highly targeted acquisition of Exo-Space in 2023, which formed the foundation of our Orlaith AI Ecosystem. Unlike some competitors that pursue multi-domain capability through large debt finance acquisitions, we built these capabilities with a disciplined approach, leveraging a decade and a half of heritage experience while maintaining a clean balance sheet and retaining full control over our intellectual property.

With regard to our satellite platform, one of the key advantages of our LizzieSat architecture is that it is software-defined, meaning capabilities are not fixed at launch. Over the past year, we've demonstrated this advantage by deploying autonomous navigation software and commissioning FeatherEdge 100i entirely on orbit, delivering capability upgrades to an operational asset without additional hardware or launch costs. This model allows us to extend mission utility and adapt to changing requirements over time while maintaining a more efficient approach to capability upgrades.

In parallel, we continue to advance our next-generation satellite builds, including LS4 and LS5, which are being developed as software-defined platforms, incorporating enhanced capabilities such as laser communications and software-defined hyperspectral imaging. This architecture is designed to provide customers, including international partners such as the Netherlands Organization, or TNO, with the ability to adapt mission requirements on orbit. During the fourth quarter, we achieved an integration milestone with Maris-Tech, whose advanced edge computing and video processing payload is scheduled to fly on LS4.

We also formalized our strategic collaboration with Simera Sense during the quarter through a memorandum of understanding to advance AI-enabled hyperspectral imaging focused on enabling near real-time intelligence-driven earth observation capabilities. During the quarter, we also strengthened our governance with the appointment of Kelle Wendling to our Board of Directors. Kelle brings more than 3 decades of executive leadership and government contracting experience across space systems, ISR and FAA markets. Her perspective will be valuable as we scale our space and defense offerings. Building on the capital raises completed during 2025, we continue to invest in key technology development, especially related to compute hardware, including our dual-use Fortis VPX product line while maintaining a disciplined approach to operating expenses as we scale.

Subsequent to quarter end, we announced continued advancements to our Fortis Command and data handling platform through a strategic collaboration with Microchip Technology. Microchip's space-grade flight-proven semiconductor technologies allow us to develop systems faster. They reduce integration complexity and shorten the path from design to mission-ready hardware. As we move forward, this operational transition informs how we think about scalability, margin durability and capital efficiency. And with that, I'll turn the call over to Adarsh for our financial review.

Thank you, Carol. At Sidus, we continue to build a scalable, vertically integrated company across space, technology and artificial intelligence. Our focus remains on operational excellence, rapid innovation and delivering cost-effective, high-impact solutions for our customers. Our investments to date have centered on expanding our satellite fleet, advancing innovation and implementing a robust ERP system to support scale and profitability.

Momentum from full year 2025 carried into the first quarter of 2026, which continues to reflect both our transition to commercialization of dual-use multi-domain products and the near-term financial impacts of scaling a deep tech space-based enterprise. Our rich space and defense heritage positions us to take advantage of opportunities across multiple sectors with a combined focus on commercial space innovations and national defense priorities. Let's review our results for the 3 months ended March 31, 2026. Total revenue for the first quarter of 2026 was approximately $359,000 compared to $238,000 in the first quarter of 2025.

This reflects an increase of 51% and was primarily driven by the addition of new customer contracts, including Lonestar Data Holdings and Teledyne Marine. The impact of milestone-based revenue recognitions also influenced year-over-year performance and comparison. Cost of revenue for the first quarter of 2026 was $1.4 million, a decrease of 25% from $1.9 million in the first quarter of 2025. The decrease was primarily driven by lower satellite and related software depreciation expense and improved cost discipline in the manufacturing side of our business. Gross loss for the first quarter of 2026 was $1.1 million compared to a gross loss of $1.6 million in the first quarter of 2025, an improvement of 36%.

The improvement was driven primarily by higher revenue and lower satellite and related software depreciation costs. When adding back depreciation included in cost of revenue, gross loss for the quarter was $531,000 compared to $792,000 in the first quarter of 2025. Selling, general and administrative expenses for the first quarter of 2026 were $4.4 million, essentially flat compared to $4.4 million in the first quarter of 2025. We view this as a meaningful indicator of cost discipline. We have held operating expense effectively constant while continuing to support a broader scope of programs, mature on-orbit operations and an expanded sales and business development effort.

To provide a broader view of our performance, we also report adjusted EBITDA, a non-GAAP measure we use internally to guide strategic decision-making. Adjusted EBITDA loss for the first quarter of 2026 was $4.6 million compared to $4.7 million in the first quarter of 2025, essentially flat period-over-period. The reconciliation, including interest, depreciation and amortization, fundraising costs, severance and equity-based compensation is included in our quarterly report on Form 10-Q. Net loss for the first quarter of 2026 was $5.2 million compared to net loss of $6.4 million in the first quarter of 2025, an improvement of $1.2 million or 19%.

The improvement also reflects the swing in other income and expense to net income this quarter, primarily driven by the elimination of asset-based loan expense following the payoff of the loan in January and by increased interest income from cash holdings. Turning to the balance sheet. We entered 2026 with $43.2 million in cash and no outstanding term debt, a meaningful distinction in an industry where many peers continue to carry substantial debt obligations and the associated interest burden. As of March 31, 2026, we had $27.3 million in cash.

During the first quarter, we used cash to support operations, ongoing satellite production and the full repayment of our asset-backed line of credit in January, which has eliminated the associated interest expense going forward and further simplified our capital structure. Subsequent to quarter end, on April 21, 2026, we closed a best efforts registered direct offering, generating gross proceeds of $58.5 million. The company intends to use the net proceeds for working capital and general corporate purposes. This offering materially strengthens our liquidity position and gives us the financial flexibility to deploy capital toward optimizing growth, mitigating risk to critical milestones and driving operating efficiencies as we scale.

Taken together, we believe the capital we have raised, combined with the operating discipline reflected in this quarter's results, materially strengthens our balance sheet and reduces our near-term financing risk. This gives us the financial flexibility to execute on our growth strategy and continue investing in platforms and product lines we expect to drive recurring revenue in the periods ahead. As we move forward, we continue to manage cash conservatively while making strategic investments in our next-generation satellite builds and high-growth product lines. We have implemented meaningful cost reduction activities and operating efficiencies to support long-term profitability, and we remain focused on driving sustainable growth in the periods ahead. With that, I'll hand the call back to Carol for closing remarks.

Thank you, Adarsh. Each capital raise we've undertaken has been guided by a clear purpose to strengthen the balance sheet, fund the technology development required to support our growth and position the company to compete for the larger commercial and defense programs that we believe represent the most meaningful long-term opportunities. Sidus has raised materially less capital than many public peers while achieving milestones that include satellite launches, on-orbit operations, vertically integrated manufacturing, proprietary computing and AI architectures and a growing patent portfolio.

Importantly, we achieved these milestones through organic development alone, building, proving and retaining ownership of every capability in our portfolio. Following the recent successful raise of significant capital, we are now positioned to evaluate and potentially pursue strategic investments that could strengthen our core capabilities, expand our technology stack and accelerate market access across key defense and commercial segments. Any such effort will be guided by a disciplined focus on economic merits and clear pathways to revenue growth and margin expansion.

The capital we've raised also enables accelerated product development and expanded customer pipeline and the pursuit of larger contracts aligned with our growth strategy. As Sidus continues to strengthen its balance sheet, expand its operational footprint and execute against a growing number of strategic opportunities across the space and defense sectors, the financial and operational complexity of the business has increased significantly. The company is entering its next phase of growth with greater emphasis on scalable financial operations, capital market strategy, long-term planning, government contracting infrastructure and support for a multifaceted commercial and defense business model.

Looking ahead, our focus is on translating the platforms and capabilities we have built into recurring revenue and durable margins. We remain committed to disciplined capital allocation, cost discipline and execution. I want to personally thank our team, our partners and our investors for your continued support and confidence. Thank you again for joining us on the call today. We look forward to updating you on our progress as the year continues. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good evening, and welcome to the Sidus Space Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Adarsh Parekh, Chief Financial Officer. Please go ahead.

Good evening, everyone, and thank you for joining us for Sidus Space's Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining us today from the company is Carol Craig, Chairwoman and Chief Executive Officer; and myself, Adarsh Parekh, Chief Financial Officer.

During today's call, we may make certain forward-looking statements. These statements are based on our current expectations with respect to the future of our business, the economy and other events and as a result, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements made on this call. These factors include our ability to estimate operational expenses and liquidity needs, customer demand, supply chain delays, including launch providers and extended sales cycles.

We also expect to discuss certain financial measures and information that are non-GAAP measures as defined in the applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the MD&A of Financial Conditions and Results of Operations within Sidus' full year 2025 10-K.

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.

At this time, I would like to turn the call over to Carol. Carol, please go ahead.

Thank you, Adarsh. Good evening, everyone, and thank you for joining us. I want to start by saying that 2025 was a productive year for Sidus, and I am proud of the progress our team has made as we translate several years of development into operational capabilities supporting both space and defense missions across multiple domains.

For those who may be new to our story, Sidus was built with a clear mission to deliver end-to-end space and defense solutions, integrating satellite design, manufacturing and operations with advanced computing and data capabilities. Over the past several years, we've made deliberate investments in our technology, infrastructure and talent to support that mission, and we're now seeing those efforts materialize into tangible mission-ready capabilities.

As a result, today, Sidus is a proven U.S.-based vertically integrated space and defense technology company, delivering end-to-end satellite infrastructure, space and defense-grade hardware and AI-enabled data platforms. Over the past 4 years since we became a public company through a traditional IPO rather than a SPAC, the landscape has evolved considerably.

At that time, our objective was clear: to transition from a predominantly government-focused contract manufacturing business into a diversified space and defense technology company positioned to capitalize on the rapidly expanding commercial space ecosystem while developing capabilities that support both commercial and defense missions. Since then, the geopolitical environment has shifted meaningfully, underscoring the growing importance of space as a national security domain.

At the same time, as a smaller company operating with disciplined resources, we have remained focused on advancing differentiated high-performance technologies and integrated capabilities that few others are able to deliver. Our vision is to be a leading innovator and provider of space and defense technologies, infrastructure and actionable insights, and our mission is to deliver cost-effective solutions that enable multi-domain operations through agility and vertically integrated capabilities.

This strategy is not theoretical. The strongest validation of our technology is not what we say, but what our systems are doing operationally. With multiple satellites on orbit, Sidus is moving into a new phase where the focus shifts from proving technical capability to executing and operating mission-ready platforms for customers. We launched 3 LizzieSat satellites between March 2024 and March 2025, each building upon the last and demonstrating increasing capability across design, operations and mission performance.

Together, these missions validate our platform, strengthen our credibility and support our transition into the next phase of commercialization. An important part of our strategy is that our satellites are company-owned and company-funded with multiple customers contributing revenue before and after launch. Unlike others that may depend primarily on government contracts to finance and build their satellites, we made a deliberate decision to create a Sidus-owned platform, including the underlying intellectual property that can support commercial, civil space and defense customers on a single satellite.

This dual-use multi-mission model creates diversified revenue streams, broadens customer opportunities and supports a more resilient business model in an increasingly dynamic geopolitical environment. Another important differentiator is that we intentionally designed our satellites to serve as both development and production platforms. From the beginning, our goal was to build a robust, redundant satellite architecture capable of testing and maturing technologies while simultaneously supporting customer missions, beginning with the very first spacecraft.

LizzieSat-1 successfully launched and established communications, enabling us to test our bus structure, radios and other internal payloads. We also successfully executed the requirements for a NASA mission, which led to a follow-on contract for additional support on LizzieSat-1. And equally important, LizzieSat-1 enabled full commissioning of our mission control center, marking a shift from development infrastructure to active mission operations.

LizzieSat-1 completed its mission, and we are, therefore, beginning the process of dispositioning. However, we will continue to track our location for situational awareness and orbital monitoring. LizzieSat-2 was launched in equatorial inclination and remains in the commissioning phase. We continue to receive signals from the satellite while working toward establishing consistent and regular communication passes as part of the normal commissioning process.

The equatorial inclination was intentional with the goal to test and strengthen our ability to operate satellites across very different orbital environments. Equatorial satellite commissioning is more challenging than polar due to the limited ground station access, resulting in fewer communication windows and longer time lines. The reason we chose an equatorial orbit was for its long-term advantages, enabling repeated coverage of high-value regions near the equator with fewer satellites.

Lastly, LizzieSat-3 has completed full bus level commissioning, including successful validation of a new autonomous guidance navigation and control software, achieving pointing accuracy of less than 30 arc seconds. With commissioning complete, LizzieSat-3 is now supporting recurring customer payload operations, including near real-time maritime data through its AIS sensor and on-orbit imaging through HEO USA's non-earth imaging camera payload.

Taken together, these capabilities reflect a deliberate evolution in Sidus' role. We are increasingly expanding from discrete mission delivery toward operating integrated platforms that support sustained multi-domain operations for customers. Building on this operational foundation, we continue to advance our onboard computing and AI capabilities through our Fortis VPX platform, including a SOSO-Aligned single-board computer and a PNT card designed for GPS-denied environments.

Fortis is a ruggedized modular computing system developed to perform data processing in challenging and constrained environments from seafloor to space. By integrating Fortis with our software-defined satellite architecture and flight-proven AI capabilities, Sidus is enabling more data to be processed closer to where it's collected. This reduces reliance on centralized ground infrastructure, improves responsiveness and supports mission execution in environments where bandwidth, latency and connectivity may be limited.

This effort reflects our broader focus on developing practical deployable technologies that align with both defense and commercial needs. In parallel, we're working with commercial customers and defense prime contractors, along with systems integrators to evaluate Fortis VPX for operational use cases, including satellite payload processing, unmanned systems and ground-based computing deployed at operational sites.

Our focus is converting these evaluations into long-term programs and support agreements that can drive scalable and predictable revenue as mission needs expand. The continued growth in government spending across defense and space supports demand for our capabilities and a key focus area for us is our recent award under the MDA's 10-year SHIELD IDIQ contract.

Our work over the past several years has positioned us to participate in programs of this scale and complexity. The SHIELD program is part of the broader Golden Dome missile defense strategy, which is focused on developing more resilient layer protection across air, missile, space, cyber and other operational domains. The contract vehicle is designed to enable faster delivery of capabilities by incorporating approaches such as digital engineering, open systems architectures and where appropriate, AI and machine learning.

For Sidus, this award provides access to a flexible procurement pathway aligned with evolving defense requirements, and it reflects the increasing emphasis on collaboration across primes, emerging companies and research institutions. Our defense strategy is aligned with these types of large-scale programs. We're focused on areas where our capabilities in satellite platforms, onboard processing and modular compute systems can contribute to applications such as persistent sensing and real-time data processing.

Our vertically integrated model allows us to move from design through deployment in a more streamlined manner, which is increasingly important as time lines continue to compress. Another strategic area of focus for us is Lunar. We view the lunar economy as an emerging ecosystem rather than a single program, requiring scalable technologies and partners capable of moving quickly. Our approach is to align our capabilities with that direction, supporting both government and commercial missions as activity beyond Low Earth Orbit continues to expand.

Expanding beyond LEO, we made progress across our Lunar and GEO initiatives. We signed an agreement to integrate the Lonestar's Commercial Pathfinder mission onto LizzieSat-5, completed the systems requirement review of mission kickoff with an initial milestone payment received, introduced LunarLizzie, our next-generation Lunar spacecraft concept and executed an MOU with a partner to support development of a GEO platform.

Our Lunar strategy is aligned with broader national space priorities that emphasize speed, commercial partnership and operational capability beyond LEO. Recent leadership perspectives, including those advanced by NASA administrator, Jared Isaacman, reflect a shift toward a more commercially enabled and execution-focused approach to Lunar and deep space missions. This direction closely aligns with our approach to building scalable, commercially driven space and defense capabilities.

Our focus on vertically integrated satellite platforms, onboard computing and adaptable software-defined systems positions us to support elements of the broader cislunar architecture, including communications, data relay and mission-enabling infrastructure. This approach prioritizes leveraging commercial innovation, shortening development time lines and building sustainable infrastructure through public-private partnerships while maintaining a focus on operational readiness, repeatability and cost efficiency over time.

As we move into 2026, our strategy and focus are on accelerating commercialization and expanding in defense markets through our technology platforms while reducing reliance on lower-margin contract manufacturing and prioritizing scalable, higher-margin products. Diversification remains central to our approach, and our company remains agile in a rapidly evolving industry. While we have been intentional and disciplined in how we deploy capital, we have built a full technology stack spanning hardware, software and data entirely through organic development, not acquisition.

Unlike others that pursued multi-domain capability through large debt finance acquisitions, we built these capabilities from the ground up, leveraging a 1.5 decades of heritage experience while maintaining a clean balance sheet and retaining full control over our intellectual property. As defense priorities continue to shift toward integrated multi-domain operations, we intend to aggressively pursue programs aligned with these needs, including missile defense, space-based sensing and resilient communications architectures.

By combining our satellite platforms, onboard AI and modular compute capabilities, Sidus is well positioned to support next-generation defense missions and capture a larger share of this evolving market. One of the key advantages of the LizzieSat architecture is that it is software-defined, meaning capabilities are not fixed at launch. This allows the satellite to be updated, reconfigured and enhanced through software while on orbit.

Over the past year, we've demonstrated this by deploying autonomous navigation software and commissioning FatherEdge100i entirely on orbit, delivering capability upgrades to an operational asset without additional hardware or launch costs. This model allows us to extend mission utility and adapt to changing requirements over time while maintaining a more efficient approach to capability upgrades.

As we look toward the next evolution of AI infrastructure, including orbital and distributed data architectures, we see a logical extension of capabilities that we've already demonstrated. Our on-orbit experience with software-defined satellites, combined with proven onboard AI processing and edge computing hardware provides a foundation for supporting data processing closer to where it's generated. Recent announcements from NVIDIA and others point to a broader shift toward deploying high-performance compute beyond traditional data centers, including in space.

This direction is consistent with how we've designed our systems, integrating software-defined platforms, reconfigurable payloads and onboard processing to enable real-time data handling. This reduces reliance on ground infrastructure and increases operational flexibility. Our VPX-based computing systems, along with our flight proven AI hardware and software position us to support elements of this distributed model across both space and terrestrial environments.

These systems are designed to operate in constrained and contested environments, which is increasingly relevant as data processing moves closer to the edge. From a broader perspective, our vertically integrated approach spanning satellite platforms, onboard compute and mission operations allows us to participate in multiple layers of this emerging ecosystem. As investment in the next-generation AI infrastructure continues to grow, particularly in defense and national security applications, we are aligning our technology road map with areas where that resilience, autonomy and real-time decision-making are required.

We've strengthened and refocused our sales organization to prioritize high-value opportunities across both commercial and defense markets with an emphasis on programs that align with our core technology platforms and offer the potential for longer-term repeatable revenue. As a result, we're actively engaged with both commercial and Department of Defense customers to address growing demand for cost-efficient, rapidly deployable satellite platforms supporting communications, imagery and intelligence missions.

In parallel, we continue to advance our next-generation satellite builds, including LizzieSat-4 and LizzieSat-5. LizzieSat-4 and LizzieSat-5 are being developed as a software-defined platform, incorporating capabilities such as laser comm and software-defined hyperspectral imaging. This architecture is designed to provide customers, including international partners such as the Netherlands Organization or TNO, with the ability to adapt mission requirements on orbit.

This flexibility allows for adjustments to sensing, data collection and processing priorities over time, supporting both commercial and defense use cases as needs evolve. LizzieSat-4 also includes integration of the Lonestar payload, further expanding its mission profile. Our mission control center now in its third year of full 24/7 operations continues to support satellite operations, collection management and data distribution for both our own fleet and third-party customers, reinforcing our ability to deliver end-to-end mission support.

We also entered into a strategic collaboration with Simera Sense to advance AI-enabled hyperspectral imaging focused on enabling near real-time intelligence-driven earth observation and situational awareness capabilities. To support these initiatives, we executed capital raises to fund key technology development, including our dual-use Fortis VPX product line, while also identifying operational efficiencies to reduce SG&A and maintain cost discipline as we scale.

As we move forward, this operational transition informs how we think about scalability, margin durability and capital efficiency. Now Adarsh will walk through how this shift toward owned and operated platforms is reflected in our financial results and outlook.

Thank you, Carol. At Sidus, we continue to build a scalable, vertically integrated company across space, technology and artificial intelligence. Our focus remains on operational excellence, rapid innovation and delivering cost-effective, high-impact solutions for our customers. Our investments to date have centered on expanding our satellite fleet, advancing innovation and implementing a robust ERP system to support scale and profitability.

Momentum from 2024 carried through full year 2025, which reflects both our transition to commercialization of dual-use multi-domain products and the near-term financial impacts of scaling a deep tech space-based enterprise. During 2025, we continued our progress in establishing Sidus Space as an innovative space and defense technology company. Our rich space and defense heritage positions us to take advantage of opportunities across multiple sectors with a combined focus on commercial space innovation and national defense priorities.

Let's review our results for the year ended December 31, 2025. Total revenue for the full year 2025 was approximately $3.4 million compared to $4.7 million in full year 2024. While this reflects a decrease of about $1.3 million or 28%, the change aligns with our strategic shift away from legacy contract work toward higher-value commercial space-based and AI-driven solutions. This repositioning is intentional and expected to generate more sustainable recurring revenue in future periods.

The impact of milestone-based revenue recognition also influenced year-over-year performance and comparison. Cost of revenue was approximately $9.1 million, a 48% increase from $6.1 million in full year 2024. Key contributors included a $2.1 million increase in depreciation tied to satellite and software investments, reflecting the first full year of LizzieSat operations, a changing contract mix requiring greater material and labor inputs, ongoing global supply chain pressures impacting manufacturing operations.

Gross loss for the year was approximately $5.7 million compared to a loss of about $1.5 million in full year 2024. This increased gross loss reflects increased depreciation, which is noncash and directly tied to recent investments that position us for future revenue generation, the transition away from legacy high-margin contracts as we focus on long-term value-added offerings, a shift in contract structure, which is expected to yield greater returns in future periods.

When adding back depreciation, including in cost of revenue, gross loss for the year was approximately $1.7 million compared to a profit of approximately $453,000 in full year 2024. Selling, general and administrative expenses totaled $22.3 million compared to $14.2 million in the prior year.

This $8.1 million increase supported key growth initiatives, including strategic headcount additions to support scale and expanded employee benefits to remain competitive, equity-based compensation and performance-based bonuses initiated during 2025, increased mission operations expenses to support our growing satellite fleet, infrastructure investments in software tools, and it was also -- it also included a $4.5 million impairment of LS-1 and related assets as well as depreciation expenses and severance costs as described further in the notes to the consolidated financial statements.

To provide a broader view of our performance, we also report adjusted EBITDA, a non-GAAP measure we use internally to guide strategic decision-making. Adjusted EBITDA loss for the full year 2025 was $17.3 million compared to $12.9 million in full year 2024, reflecting ongoing investment in scaling our platform. The reconciliation table, including interest, depreciation, fundraising, severance, equity-related expenses and impairments is included in our annual report on Form 10-K. Net loss for the year was $29.5 million compared to $17.5 million in full year 2024.

This increase is primarily tied to strategic investments in infrastructure, personnel and operational capacity, the $4.5 million LS-1 impairment charge and noncash depreciation related to our expanding satellite fleet.

Turning to the balance sheet. As of December 31, 2025, Sidus had $43.2 million in cash compared to $15.7 million as of December 31, 2024. During 2025, we completed multiple capital raises totaling approximately $53.3 million in net proceeds from the issuance of approximately 47.1 million shares of Class A common stock. Notably, we entered 2026 with no outstanding term debt, a meaningful distinction in an industry where many peers continue to carry substantial debt obligations and the associated interest burden.

As we move forward, we continue to manage cash conservatively while making strategic investments in our next-generation satellite builds and high-growth product lines. During 2025, we implemented meaningful cost reduction activities and operating efficiencies to support long-term profitability, and we remain focused on driving sustainable growth in the year ahead.

With that financial context, I'll hand the call back to Carol for closing remarks.

Thank you, Adarsh. Before I close, I want to address a couple of questions we've received from investors and analysts, particularly related to our stock performance. We recognize the concern, and we view recent movement as the result of broader market conditions, volatility across small cap and space technology sectors and the timing of revenue as we transition the business.

We've seen similar patterns across our peer group, particularly among companies moving from development into commercialization. From our perspective, the priority remains execution. We are focused on advancing a more scalable product and platform-driven model anchored by our LizzieSat satellite fleet, software-defined capabilities and Fortis VPX command and data handling systems.

At the same time, we have strengthened our sales organization and are prioritizing opportunities that align with larger programs, including defense initiatives like MDA SHIELD as well as commercial applications. We're also maintaining a disciplined approach to capital allocation and cost structure as we move through this transition. Ultimately, our objective is to build a more durable business with higher-margin repeatable revenue streams.

As we continue to execute, demonstrate capability in orbit and convert pipeline into contracted programs, we believe that progress will be reflected over time. As we move forward, we remain focused on execution, cost discipline, and innovation, and we are advancing with greater confidence than at any point in our history. Revenue in the period was impacted by the timing of legacy program completions and our transition toward product and platform-driven revenue streams while maintaining a disciplined focus on the programs that offer the greatest long-term value.

Operating in a highly competitive industry while using significantly less capital than many peer companies presents both constraints and advantages. Remaining lean requires disciplined prioritization and difficult trade-offs, but it also drives technical focus, speed of execution and operational accountability. Sidus has intentionally avoided the excesses that characterize many space SPAC era entrants choosing instead a staged capital approach tied to milestone completion rather than speculative scaling.

At the end of 2025, to ensure uninterrupted execution and reduce structural risk, we took proactive steps to strengthen our balance sheet. The approximately $41 million raised at the end of December was not intended to fund indefinite operating losses, but to improve liquidity, reduce financing friction, evaluate more favorable debt structures and lower our overall cost of capital as we enter the commercialization phase.

This capital provides runway stability and optionality, allowing management to focus on execution rather than survival. We fully acknowledge that equity financing creates dilution. That impact is real, and it is not dismissed. However, dilution must be evaluated relative to what it enables. Our objective is not continued reliance on equity markets, but the conversion of validated technology into repeatable revenue streams, margin expansion and operating leverage.

Per share value is ultimately restored through execution, not commentary. Sidus has raised material less capital than many public peers while achieving milestones that include satellite launches, on-orbit operations, vertically integrated manufacturing, proprietary computing and AI architectures and a growing patent portfolio. Importantly, we achieved these milestones through organic development alone, building, proving and retaining ownership of every capability in our portfolio.

Looking ahead, management is focused on improving capital efficiency with each successive deployment and product cycle, reducing incremental capital required per platform and accelerating the transition from build to revenue as commercialization scales. These capabilities are now moving from demonstration into deployable products and services.

So here are our key areas to watch over the next 12 to 18 months. LS-4 and LS-5 are in production as software-defined satellites with advanced onboard AI processing and Fortis VPX, enabling on-orbit data processing, autonomy and mission adaptability. The Fortis VPX platform is beginning customer deployment, marking a key step in commercializing ruggedized multi-domain compute solutions.

We're increasing our focus on defense opportunities as demand grows and the convergence between commercial space and national security accelerates. And our collaboration with Simera Sense and other international agencies and partners is advancing AI-enabled software-defined hyperspectral imaging to support more responsive and intelligence-driven earth observation.

Together, all these efforts reflect our continued focus on scaling advanced adaptable technologies across both commercial and defense markets. I want to personally thank our team, our partners and our investors for your continued support and confidence. We appreciate you taking the time to join us today. We remain laser-focused on execution, cost discipline and innovation and look forward to the next phase of growth for both Sidus and the broader space industry. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Greetings, and welcome to Sidus Space's 2025 Third Quarter Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded as of today, November 14, 2025.

I will now turn the conference over to Adarsh Parekh, Chief Financial Officer. Thank you. You may begin.

Good evening, everyone, and thank you for joining us for Sidus Space's 2025 Third Quarter Earnings Conference Call. Joining us today from the company is Carol Craig, Chairwoman and Chief Executive Officer; and myself, Adarsh Parekh, Chief Financial Officer.

During today's call, we may make certain forward-looking statements. These statements are based on our current expectations with respect to the future of our business, the economy and other events, and as a result, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements made on this call. These factors include our ability to estimate operational expenses and liquidity needs, customer demand, supply chain delays, including launch providers and extended sales cycles. For more information about these risks and uncertainties, please refer to the risk factors in the company's filings with the Securities and Exchange Commission. each of which can be found on our website, www.sidusspace.com.

We also expect to discuss certain financial measures and information that are non-GAAP measures as defined in the applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the Management Discussion and Analysis of Financial Conditions and Results of Operations section within Sidus' third quarter 10-Q. For more information about these risks and uncertainties, please refer to the risk factors in the company's filings with the SEC, 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.

At this time, I would like to turn the call over to Carol. Carol, please go ahead.

Thank you, Adarsh. Good evening, and thank you all for joining us. On our second quarter earnings call, we shared that Sidus Space is evolving into a diversified space and defense innovator, not just a satellite manufacturer, but a company with capabilities to span the full mission life cycle from Low Earth Orbit to the lunar environment beyond. In the third quarter, we continued executing on this strategy by expanding our vertical integration, advancing our LizzieSat constellation and strengthening partnerships that support both commercial and defense customers.

Our goal remains clear: to deliver full-spectrum solutions from design and manufacturing to on-orbit operations and data services with the agility to meet evolving mission requirements. We're building a company designed for long-term sustainable growth driven by innovation, dual-use and software-defined satellites, all domain computing solutions and recurring data-as-a-service opportunities.

Over the past 18 months, we've proven our ability to design, build, launch and operate advanced multi-mission satellites with extended design life and complex functionality. These are not CubeSats. They're precision-engineered microsatellites built to deliver mission-critical performance. Our vertically integrated model enables scalability and efficiency, allowing us to adapt our manufacturing facility quickly to new priorities. Like our products, our operations are designed for adaptability and speed.

Sidus is already a trusted part of the space supply chain, and our offerings now extend across civil, defense and commercial markets. This diversification strengthens our ability to support national security programs, including Golden Dome, FDA's proliferated architecture and NASA's Artemis initiatives. Our multi-mission, all-domain approach represents a new model for how space companies operate, combining agility, integration and strategic focus to meet diverse customer requirements.

For those who are new to our story, Sidus has consistently executed on milestones while adapting to a very dynamic environment. During the third quarter, we navigated uncertainty around government funding and shifting federal budgets However, our diversified revenue model, which spans commercial, defense and civil sectors, provides a built-in hedge against external risk. Having led through volatile environment such as this for over 25 years, I'm confident that Sidus is built to remain resilient and adaptable regardless of the external landscape.

Over the last couple of years, we strategically invested in our infrastructure, technology and team to build capabilities comparable to larger competitors but with far less capital. The result is a lean, efficient company with a competitive cost structure. An example of that are software-defined LizzieSat with their 5-year design life and redundant systems, delivering high performance at $5 million or less per 100-kilogram satellite, including multiple sensors and offering strong value for government and commercial customers.

During this quarter, we made significant advancements towards completion of the mobile launch 2 contract. This program was originally approximately a $4 million contract that expanded to over $8 million over the last few years due to changing requirements of supply chain dynamics. Over nearly 4 years, we've built and will have delivered 57 complex electronic cabinets for installation at the Kennedy Space Center. With this program now nearing completion, we expect improved gross margins and stronger revenue visibility as well as a reconfigured facility ready for expanded satellite and defense manufacturing.

At Sidus, we believe our vertically integrated model sets us apart from our competition. A few U.S. companies can design, manufacture, test and operate their space hardware entirely in-house while maintaining lean operations. This vertical integration gives us unetched speed, control and flexibility, enabling rapid entry into new markets, development of recurring revenue streams, and leadership in the emerging multi-domain space economy as well as the all-domain defense industry.

Our recent on-orbit progress continues to validate our approach. We completed commissioning of the AIS sensor on LizzieSat-3 and established direct communications with the customer site. We continued upgrading our flight software, integrating new algorithms and activating additional payloads aboard LizzieSat-3. These advances strengthen our constellation architecture and accelerate technology maturation across all past and future LizzieSat-driven satellites. And we successfully demonstrated that our satellites can support multiple sensors on a single versatile platform with the expectation of delivering fuse data products that will increase mission value for maritime, environmental, defense and commercial customers.

Our LizzieSat platform is increasingly software-defined, enabling rapid in-orbit reconfiguration and performance optimization. The next-generation hyperspectral and multispectral cameras that we've selected to deliver our data services can adjust spectral bands and imaging modes dynamically, allowing a single satellite to serve multiple missions from maritime awareness to environmental monitoring and defense intelligence. Combined with our onboard AI and our FeatherEdge edge processing suite, LizzieSat is designed to learn and adapt in orbit, improving data quality and operational efficiency over time.

As global demand rises for resilient, secure and cost-effective space capabilities, we believe Sidus is well positioned to meet that need. Our modular multi-use solutions standing satellite onboard AI and VPX SOSA-Aligned electronics enable customers to rapidly deploy and reconfigure systems for maritime, environmental, defense and commercial missions. This flexibility shortens development cycles, reduces costs and increases mission readiness. A key differentiator of the United States and allied governments prioritize distributed software-defined architectures.

This quarter, we completed 2 successful capital raises with funds to be invested in commercializing all-domain product lines, expanding the LizzieSat constellation with LizzieSat-4 and LizzieSat-5, and advancing our Orlaith AI ecosystem. We also progressed our Fortis VPX computing suite designed for aerospace, defense, energy robotics and autonomous systems. The first 3 products, including the Sidus single-board computer, FeatherEdge 248Vi edge computer and precision navigation and timing module are on track for year-end validation. The Sidus single-board computer offers on-orbit and terrestrial edge computing.

The FeatherEdge 248Vi features artificial intelligence and machine learning processors designed for extreme environments and size-constrained applications. And the precision navigation and timing module integrates atomic clocks, MCO GNSS and IMUs for GPS-denied operations. This modular Fortis platform establishes a scalable, all-domain command and control architecture complementing our space platforms and is expected to contribute meaningfully to revenue starting in 2026.

From a program execution standpoint, we remain focused on expanding our technology portfolio and delivering solutions aligned with our long-term vision and mission. A key element of reaching our upcoming milestones is completing the mobile launcher 2 contract, which will allow us to shift additional resources toward higher-margin satellite and data programs.

As noted earlier, we currently have 2 additional LizzieSat spacecrafts in production for a planned late 2026 launch. These satellites will feature advanced software-defined imagers and increased onboard processing capability. Additionally, we're hosting multiple customer technologies. Customers for these missions and related prelaunch revenue include the Netherlands organization, Lonestar Holdings and additional data customers that we have not yet announced.

Achieving this initial fast launch cadence was critical to our ability to learn, adapt and advance our technology in real time. In just over a year, we launched 3 Sidus-designed, Sidus-built hybrid 3D-printed satellites with onboard AI and multiple sensors at a pace that allowed us to rapidly integrate lessons learned into each successive mission. Every launch informs the next, enabling continuous improvement, faster integration and greater scalability across our architecture.

This rapid cadence of innovation is not limited to Low Earth Orbit. It's foundational to how we are expanding capability across all domains and all orbital classes. Looking beyond LEO, we're developing a lunar-capable LizzieSat platform featuring higher power, advanced radios and enhanced propulsion. A few U.S. companies can offer this level of multi-domain, multi-orbit versatility, and we believe it positions Sidus as a truly differentiated supplier for the emerging lunar -- assist lunar mission landscape.

In summary, Sidus Space continues to execute on its plan to deliver next-generation technologies from dual-use multi-mission satellites and all-domain computing systems to AI-driven data architectures. Our progress this quarter reinforces the foundation for long-term growth, recurring revenue and sustained leadership across the expanding space and defense ecosystem.

I'll now turn the call over to Adarsh for the financial update.

Thank you, Carol. At Sidus, we continue to build a scalable, vertically integrated company across space, technology and artificial intelligence. Our focus remains on operational excellence, rapid innovation and delivering cost-effective, high-impact solutions for our customers. Our investments to date have centered on expanding our satellite constellation, advancing innovation and implementing a robust ERP system to support scale and profitability.

Momentum from 2024 in the first half of 2025 carried into the third quarter of 2025, which reflects both our transition to commercialization of dual-use, multi-domain products and the near-term financial impacts of scaling a deep-tech, space-based enterprise.

During the third quarter of 2025, we continued our progress in establishing Sidus Space as a mission enabler. Our rich space and defense heritage positions us to take advantage of opportunities across multiple sectors with a combined focus on commercial space innovations and national defense priorities.

Let's review our results starting with the 9 months ended September 30, 2025. Total revenue for the first 9 months of 2025 was approximately $2.8 million compared to the $3.8 million in the same period in 2024. While this reflects a decrease of about $1 million or 27%, the change aligns with our strategic shift away from legacy contract work toward higher-value commercial space and AI-driven solutions. This repositioning is intentional and expected to generate more sustainable recurring revenue in future periods.

The impact of milestone-based revenue recognition also influenced the year-over-year performance and comparison. Cost of revenue rose to approximately $0.8 million, a 48% increase from $4.6 million during the first 9 months of 2024. Key contributors to the cost of revenue included a $1.6 million increase in depreciation tied to satellite and software investments, a change in contract mix requiring greater material and labor inputs, ongoing global supply chain pressures impacting manufacturing operations.

Gross loss for the period was approximately $4 million compared to a loss of about $719,000 in the same period last year. This increased gross loss reflects increased depreciation, which is noncash and directly tied to recent investments that position us for future revenue generation, the transition away from legacy high-margin contracts as we focus on long-term value-added offerings, a shift in contract structure, which is expected to yield greater returns in future quarters. When adding back satellite-related depreciation, gross loss for the period was $1.2 million compared to a profit of $485,000 in the same period last year.

Selling, general and administrative expenses totaled $13 million compared to $9.9 million in the prior year. This $3.1 million increase supported key growth initiatives, including strategic head count additions to support scale and expanded employee benefits to remain competitive. Equity-based compensation and performance-based bonuses initiated during 2025, increased mission operations expenses to support our growing constellation, infrastructure investments in software tools, depreciation expense and launch rebooking fees as well as payoff of our Decathlon note payable as described further in the notes to the consolidated financial statements.

To provide a broader view of our performance, we also report adjusted EBITDA, a non-GAAP measure we use internally to guide strategic decision-making. Adjusted EBITDA loss for the first 9 months was $12.6 million compared to $8.3 million in the same period last year, reflecting ongoing investment in scaling our platform. The reconciliation table, including interest, depreciation, fundraising, severance and equity related expenses is included in our Q3 2025 earnings release.

For the 3 months ended September 30, 2025, total revenue reached $1.3 million, a 31% decrease compared to about $1.9 million in Q3 2024. This reduction was primarily due to the timing of fixed-price milestone contracts, including projects executed through our related party, Cred technology. Cost of revenue for the quarter rose to $2.6 million, up 42% from the prior year. This increase reflects the $501,000 increase in satellite and software-related depreciation, higher input costs from more complex contracts, ongoing global supply chain cost pressures.

Gross profit for Q3 2025 was a loss of $1.3 million compared to a profit of $38,000 in Q3 2024. Increase in gross loss was primarily due to higher depreciation from recently capitalized assets, which are essential to future revenue streams, contract mix evolution, reduced contribution from legacy services as we transition to higher margin recurring revenue models. When adding back satellite-related depreciation, gross loss for the period was $277,000 compared to a profit of $559,000 in the same period last year.

SG&A expenses for the quarter totaled $4.3 million, up from $3.2 million in Q3 2024. Key drivers included strategic head count growth aligned with our move to higher-value offerings, expanded mission operations for satellite support, increased software infrastructure investment, accrued equity compensation and employee bonuses and higher depreciation expense.

Adjusted EBITDA loss for Q3 2025 was $4.0 million, a 62% increase from Q3 2024. The change reflects continued scaling efforts and is supported by full reconciliation details in our Q3 2025 press release.

Net loss for the quarter was $6 million compared to $3.9 million in the same period of the prior year. As noted, this increase is primarily tied to strategic investments in infrastructure, personnel and operational capacity as well as noncash depreciation related to our expanding satellite constellation.

Turning to the balance sheet. As of September 30, 2025, Sidus had $12.7 million in cash compared to $15.7 million as of September 30, 2024. During the quarter, we completed 2 public offerings of 16.9 million total shares of Class A common stock from which Sidus received approximately $15.5 million of net proceeds.

As we move forward, we continue to manage cash conservatively while making strategic investments in our next-generation satellite builds and high-growth product lines. Additionally, by the end of Q4, we expect to implement meaningful cost reduction activity and operating efficiencies to support long-term profitability.

With that, I'll hand the call back to Carol for closing remarks.

Thank you, Adarsh. The milestones we achieved this quarter are more than operational wins. It creates pathways to future revenue across commercial, civil and defense markets. Each satellite launch, hardware delivery and AI demonstration strengthens our track record and reinforces Sidus as a trusted partner for critical missions. Sustaining that momentum requires constant innovation, which is why we continue to invest in internal R&D, advance new technologies and grow our patent portfolio to protect our IP and increase the value of our platform.

Our technologies, designs and capabilities now span the full spectrum of space from LEO to GEO to lunar missions, expanding our relevance and reach, whether hosting government payloads in orbit, enabling edge AI for real-time data delivery or contributing to long-term lunar infrastructure, we're building a presence that touches every layer of the evolving space economy. Sidus is not just building satellites, we're enabling the next generation of real-time intelligent data connectivity by linking sea, ground, air and space into one integrated domain. This from sea to space diversification strategy reduces reliance on any single market segment and essential to driving long-term sustainable growth.

Our mission remains the same, deliver reliable, scalable and intelligent solutions from initial design through deployment. Our vertically integrated model and culture of innovation give us a strategic advantage, allowing us to innovate faster, control quality across the life cycle and bring advanced technologies to market more efficiently than traditional aerospace providers.

And as you've heard today, Sidus continues to shift from R&D and infrastructure build-out to commercialization and revenue generation. We've launched and began commissioning our third satellite, established the foundation for a scalable micro constellation, and we introduced a new generation of rugged, dual-use technologies. Lean operations allow us to operate with lower fixed costs, offer competitive prices, and pursue strategically valuable contracts that may be overlooked by larger players.

As we continue to build meaningful momentum and a stronger foundation for the future, we've strengthened our balance sheet, launched high potential new platforms like Orlaith and Fortis VPX and are positioned to generate diversified revenue in 2026. The path forward is ambitious, but it's the right path for unlocking sustainable growth. Our all-domain multi-revenue model enables us to adapt quickly, serve diverse customers and scale with demand.

And now I'd like to address some of the questions we received. The first one is, how should we think about the commercialization time line for Fortis VPX?

While our first 3 VPX products remain on track for release to production in January 2026, we expect customer integrations and revenue contributions to begin shortly thereafter. Interest in the Fortis product line spans from defense, aerospace, robotics and autonomous systems.

Second question, can you update us on commissioning time line for LS-3? And how additional satellites change your revenue model?

The LS-3 commissioning is progressing well because there are multiple payloads and sensors along with our integration of updated and enhanced software, it isn't a quick process. But our satellites have a 5-year design life, and we're manufactured with that time line in mind. The additional satellites in production, currently LS-4 and LS-5 expand hosted payload capability, data availability and on-orbit AI throughout. We've improved the data rates and we've added software-defined subsystems as well. And because of the nature of the software-defined imagers, we expect increasing data contributions from more industries and customer missions from LS-4 and LS-5.

Next, are customers already evaluating Fortis VPX or FeatherEdge?

Yes. We have active early access programs with both government and commercial customers for our proven FeatherEdge platform. And several have already begun transitioning toward multiyear hardware agreements. And we've also received positive market feedback in response to our conceptual introduction of Fortis VPX.

What does your geographic revenue mix look like going forward?

Well, we see strong momentum internationally, especially among allies seeking sovereign U.S. origin multi-domain capabilities. Within the U.S., greater budget clarity is helping stabilize and improve program time lines, which we view as an upside.

Next question, how should we think about backlog composition?

Our backlog is increasingly being driven by VPX SOSA hardware, engineering services and LizzieSat integrations. These are multiyear high visibility contracts with strong alignment to defense modernization priorities.

How does the recent capital raise position the company?

The recent capital raise funds a significant portion of our near-term product commercialization, LizzieSat scaling and AI development. The capital is intended to accelerate innovation and then fund growth.

And a popular question is, can you expand on alignment with the DoD's Golden Dome vision?

So the DoD Golden Dome vision centers on creating a resilient distributed multilayered sensing and communications architecture that spans all domains: air, land, sea, space and cyber. We believe Sidus' technology road map aligns directly with that need. Our strength in autonomy, rapid deployment, ruggedized edge computing and multi-mission sensing allow us to deliver space-based nodes that are capable of operating as part of a larger adaptive defense network.

We also believe that our LizzieSat platform's ability to host multiple sensors process data at the edge and push actionable intelligence to users in real time, makes it ideally suited for Golden Dome style architectures that value speed, survivability and interoperability. As the department moves toward more proliferated and software-defined systems, we see increasing opportunity for Sidus across both unclassified demonstrations and classified programs that require adaptable, resilient and rapidly upgradable satellites.

And lastly, what is the potential market for your lunar-capable Lizzie lunar platform?

NASA, commercial lunar initiatives and allied nations are all expanding lunar exploration and infrastructure programs. There are very few U.S. companies that could provide smaller, cost-effective lunar buses, and we believe our early-mover position creates a strategic opportunity. And as we've already demonstrated, we have been selected to build lunar satellites for commercial customers.

And with that, I want to thank our employees, partners and shareholders for your continued trust and support. We look forward to delivering strong progress in the months ahead. Thank you.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.