Sidus Space, Inc. Class A Common Stock 2026 Q2 Earnings Call

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. These 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 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.

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's 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 filing with the Securities and Exchange Commission, each of which can be found on our website, www.sidusspace.com. Shareholders 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. 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 VPX digital mission computing platform and our AI technologies, and work to build recurring revenue, his financial leadership will be central to our execution. 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 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. 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 agent fees 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 sheets, 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 26th. Memberships 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 US 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 it 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 a 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.