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What changed in Nauticus Robotics, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Nauticus Robotics, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+363 added−296 removedSource: 10-K (2026-04-15) vs 10-K (2025-04-15)

Top changes in Nauticus Robotics, Inc.'s 2025 10-K

363 paragraphs added · 296 removed · 232 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+24 added−11 removed22 unchanged
Biggest changeOur flagship autonomous fully electric vehicle, Aquanaut, provides advantages over conventional tethered Remotely Operated Vehicles (ROVs) and untethered Autonomous Underwater Vehicles (AUVs), including: • Enhanced capability to operate in deep and complex environments without the limitations of tether management. • Fully electric seven degrees of freedom patent protected manipulators. • Reduction in operational costs and carbon footprint using smaller deployment vessels and elimination of onboard generators. lower greenhouse gas emissions, and quieter operations to minimize ecological impact. • Increased mission efficiency through autonomous execution versus manual control, reducing crew requirements and improving safety. • Enhanced data collection, with higher fidelity providing actionable insight. • Capable of collecting physical samples, providing valuable data for regulatory compliance, asset integrity, and damage assessments. • Stealth capabilities in defense scenarios by eliminating surface vessel presence. 1 Table of Contents Aquanaut represents the next generation of subsea robotics integrating eight inde pendent thrusters to precisely propel and position a hull design to maximize efficiency and speed high-resolution data collection, and autonomous fully electric manipulation comparable to traditional ROV operations.
Biggest changeThe Company's flagship autonomous fully electric vehicle, Aquanaut ® , provides advantages over conventional tethered Remotely Operated Vehicles (ROVs) and untethered Autonomous Underwater Vehicles (AUVs), including: • Enhanced capability to operate in deep and complex environments without the limitations of tether management. • Reduction in operational costs and carbon footprint through the use of smaller deployment vessels and elimination of onboard generators, resulting in lower greenhouse gas emissions, and quieter operations to minimize ecological impact. • Increased mission efficiency through autonomous execution versus manual control, reducing crew requirements and improving safety. • Enhanced data collection, with higher fidelity providing actionable insight. • Capability under development of collecting physical samples, providing valuable data for regulatory compliance, asset integrity, and damage assessments. • Capability under development in defense scenarios by eliminating surface vessel presence.
This approach protects the Company’s vehicle configuration that enables it to transit long distances and then transform into a working robot once at the worksite. This capability is key to exploiting the vehicle architecture and its tetherless operational modes. Similarly, Nauticus also obtained patent protection for its all-electric, work class robotic manipulators.
This approach protects the Company’s vehicle configuration that enables it to transit long distances and then transform into a working robot once at the worksite. This capability is key to exploiting the vehicle architecture and its tetherless operational modes. Similarly, Nauticus also obtained patent protection for its all-electric, work class electric robotic manipulators.
Our team has experience executing successful projects within DIU’s commercial technology initiatives and DARPA’s high-risk, high-reward programs. Nauticus announced on January 30, 2025, a Strategic Subsea Alliance with Leidos Holdings, Inc (NYSE: LDOS). The alliance builds on a successful prior collaboration between the two organizations, which was praised by their mutual customer for its seamless execution and constructive collaboration.
The team has experience executing successful projects within DIU’s commercial technology initiatives and DARPA’s high-risk, high-reward programs. Nauticus announced on January 30, 2025, a Strategic Subsea Alliance with Leidos Holdings, Inc (NYSE: LDOS). The alliance builds on a successful prior collaboration between the two organizations, which was praised by their mutual customer for its seamless execution and constructive collaboration.
Consideration is also given, particularly with respect to software, as to the benefits of seeking a patent against the associated market risks of providing public exposure of the invention. In many cases with our software, Nauticus holds this code and algorithms as trade secrets. Nauticus has patented its re-configurable hull design for subsea vehicles.
Consideration is also given, particularly with respect to software, as to the benefits of seeking a patent against the associated market risks of providing public exposure of the invention. In many cases with its software, Nauticus holds this code and algorithms as trade secrets. Nauticus has patented its re-configurable hull design for subsea vehicles.
The Bureau of Safety and Environmental Enforcement (BSEE) reported that, as of November 2024, there were 371 manned production platforms in the Gulf. The Gulf is a significant hub for U.S. oil and gas production, with federal offshore areas accounting for approximately 14% of total U.S. crude oil production and 5% of total U.S. dry natural gas production.
The Bureau of Safety and Environmental Enforcement (BSEE) reported that, as of November 2024, there were 371 manned production platforms in the Gulf Coast. The Gulf Coast is a significant hub for U.S. oil and gas production, with federal offshore areas accounting for approximately 14% of total U.S. crude oil production and 5% of total U.S. dry natural gas production.
In addition, Nauticus requires employment agreements which stipulate IP protections for the company. For external relationships, non-disclosure agreements and other contractual restrictions are used to establish and protect our intellectual property. Nauticus will file for patent protection if the invention is believed to be patentable and the resulting patent will be beneficial in protecting the invention in the marketplaces.
In addition, Nauticus requires employment agreements which stipulate IP protections for the company. For external relationships, non-disclosure agreements and other contractual restrictions are used to establish and protect intellectual property. Nauticus will file for patent protection if the invention is believed to be patentable and the resulting patent will be beneficial in protecting the invention in the marketplaces.
Copies of this Annual Report, previous and subsequent copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments thereto, are or will be available free of charge at our website as soon as reasonably practicable after they are filed with, or furnished to, the SEC.
Copies of this Annual Report, previous and subsequent copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments thereto, are or will be available free of charge on the website as soon as reasonably practicable after they are filed with, or furnished to, the SEC.
The Loans will mature on the earliest of (a) the third anniversary of the date of the Term Loan Agreement of September 17, 2026, (b) 91 days prior to the maturity of the 5% Original Issue Discount Senior Secured Convertible Debentures, dated as of September 9, 2022.
The Loans will mature on the earliest of (a) the third anniversary of the date of the Term Loan Agreement of September 17, 2026, and (b) 91 days prior to the maturity of the 5% Original Issue Discount Senior Secured Convertible Debentures, dated as of September 9, 2022.
On the Closing Date, CleanTech was renamed “Nauticus Robotics, Inc.,” and Nauticus Robotics Holdings was renamed “Nauticus Robotics Holdings, Inc.” 5 Table of Contents As a result of the Closing, among other things, (a) each share of Nauticus Robotics Holdings preferred stock, par value $0.01 per share, that was issued and outstanding immediately prior to the Closing converted into Old Nauticus Common Stock, in accordance with the certificate of incorporation of Nauticus Robotics Holdings (the “Preferred Stock Conversion”); (b) each of the Old Nauticus Convertible Notes was converted into shares of Old Nauticus Common Stock in accordance with the terms of each such note (the “Convertible Note Conversion”); and (c) each share of Old Nauticus Common Stock (including shares of Old Nauticus Common Stock outstanding as a result of the Preferred Stock Conversion and Convertible Notes Conversion, but excluding shares of the holders who perfected rights of appraisal under Delaware law) was converted into the right to receive (i) the Per Share Merger Consideration and (ii) Earnout Shares.
On the Closing Date, CleanTech was renamed “Nauticus Robotics, Inc.,” and Nauticus Robotics Holdings was renamed “Nauticus Robotics Holdings, Inc.” As a result of the Closing, among other things, (a) each share of Nauticus Robotics Holdings preferred stock, par value $0.01 per share, that was issued and outstanding immediately prior to the Closing converted into Old Nauticus Common Stock, in accordance with the certificate of incorporation of Nauticus Robotics Holdings (the “Preferred Stock Conversion”); (b) each of the Old Nauticus Convertible Notes was converted into shares of Old Nauticus Common Stock in accordance with the terms of each such note (the “Convertible Note Conversion”); and (c) each share of Old Nauticus Common Stock (including shares of Old Nauticus Common Stock outstanding as a result of the Preferred Stock Conversion and Convertible Notes Conversion, but excluding shares of the holders who perfected rights of appraisal under Delaware law) was converted into the right to receive (i) the Per Share Merger Consideration and (ii) Earnout Shares.
The 2024 Loans (other than the ATW Extended Maturity Term Loan) will mature on the earliest of: (a) the third anniversary of the date of the Term Loan Agreement, (b) the maturity of the Indebtedness under that certain Term Loan Agreement among the Company, the lenders party thereto and Acquiom Agency Services LLC, as collateral agent, dated September 18, 2023, as amended on December 31, 2023, and as further amended on January 30, 2024 (the “Term Loan Agreement”), and (c) 91 days prior to the maturity of the 5% Original Issue Discount Senior Secured Convertible Debentures, dated as of September 9, 2022 (the “Original Debentures”), iss ued by the Company pursuant to that certain Securities Purchase Agreement, dated as of December 16, 2021, as amended on January 31, 2022, and as further amended on September 9, 2022, and as further amended on January 30, 2024 (the “SPA”).
The 2024 Loans (other than the ATW Extended Maturity Term Loan) will mature on the earliest of: (a) the third anniversary of the date of the Term Loan Agreement, (b) the maturity of the Indebtedness under that certain Term Loan Agreement among the Company, the lenders party thereto and Acquiom Agency Services LLC, as collateral agent, dated September 18, 2023, as amended on December 31, 2023, and as further amended on January 30, 2024 (the “Term Loan Agreement”), and (c) 91 days prior to the maturity of the 5% Original Issue Discount Senior Secured Convertible Debentures, dated as of September 9, 2022, iss ued by the Company pursuant to that certain Securities Purchase Agreement, dated as of December 16, 2021, as amended on January 31, 2022, and as further amended on September 9, 2022, and as further amended on January 30, 2024.
Manufacturing and Suppliers As part of the original development of engineering prototypes, Nauticus Robotics has established supplier relationships with key commercial-off-the-shelf (“COTS”) and custom part manufacturers. Consideration is given within our international supply chain for redundancy, where possible. In cases of limited supplier options, Nauticus Robotics initiates procurement early in the manufacturing schedule to mitigate risk of supply interruption.
Manufacturing and Suppliers As part of the original development of engineering prototypes, Nauticus Robotics has established supplier relationships with key commercial-off-the-shelf (“COTS”) and custom part manufacturers. Consideration is given within the Company's international supply chain for redundancy, where possible. In cases of limited supplier options, Nauticus Robotics initiates procurement early in the manufacturing schedule to mitigate risk of supply interruption.
This is an example of applicable regulations but does not include all. Intellectual Property The ability to obtain and maintain intellectual property protection through patent and trademark filings is important to our business. Nauticus utilizes a combination of the protections afforded to the owners of patents, copyright s, trade secrets, and trademarks to secure its intellectual property.
This is an example of applicable regulations but does not include all. Intellectual Property The ability to obtain and maintain intellectual property protection through patent and trademark filings is important to the Company's business. Nauticus utilizes a combination of the protections afforded to the owners of patents, copyright s, trade secrets, and trademarks to secure its intellectual property.
Company Securities Securities Purchase Agreement. On September 9, 2022, the Company entered into the Securities Purchase Agreement with certain investors purchasing up to an aggregate of $40.0 million in principal amount of Debentures and warrants (the “Securities Purchase Agreement”). ATW Special Situations I LLC (ATW I), Material Impact Fund II, L.P.
On September 9, 2022, the Company entered into the Securities Purchase Agreement with certain investors purchasing up to an aggregate of $40.0 million in principal amount of secured debentures (the "Debentures") and warrants (the "SPA Warrants") (the “Securities Purchase Agreement”). ATW Special Situations I LLC (ATW I), Material Impact Fund II, L.P.
The batteries are a long-lead-time item and are ordered well in advance of the time they are required to be integrated into the vehicle. Nauticus Robotics is committed to exploring the options that will lead to the most capital-efficient manufacturing process and support our sales-driven build schedule.
The batteries are a long-lead-time item and are ordered well in advance of the time they are required to be integrated into the vehicle. Nauticus Robotics is committed to exploring the options that will lead to the most capital-efficient manufacturing process and support its sales-driven build schedule.
The Loans are convertible, in whole or in part, at the option of each Lender into shares of Common Stock until the date that the Loans are no longer outstanding, at a conversion rate equal to the outstanding principal amount of the Loans to be converted divided by a conversion price of $216 per share of Common Stock (the “Conversion Price”), subject to certain customary anti-dilution adjustments as described in the Term Loan Agreement.
The Loans are convertible, in whole or in part, at the option of each Lender into shares of Common Stock until the date that the Loans are no longer outstanding, at a conversion rate equal to the outstanding principal amount of the Loans to be converted divided by a conversion price of $1,944 per share of Common Stock (the “Conversion Price”), subject to certain customary anti-dilution adjustments as described in the Term Loan Agreement.
These manipulators are the first in their market class and utilize specialized actuation systems to achieve the strength performance necessary for work class systems. Nauticus has also filed for protection of our Company name and brand under trademark registration in the United States. Employees and Human Capital Resources Our workforce plays a critical role in driving our business forward.
These manipulators are the first in their market class and utilize specialized actuation systems to achieve the strength performance necessary for work class systems. Nauticus has also filed for protection of its Company name and brand under trademark registration in the United States. Employees and Human Capital Resources The Company's workforce plays a critical role in driving its business forward.
Its patented electric actuators replace traditional hydraulic systems, offering: • Greater precision and control for delicate operations. • An environmentally friendly design utilizing biodegradable oil. • Simplified deck-side repairs and extended operational reliability. • Engineered to work to a depth of 3000 meters. The next-generation Olympic Arm is currently in development with an emphasis on improving repair efficiency and durability.
Its patented electric actuators replace traditional hydraulic systems, offering: • Greater precision and control for delicate operations. • An environmentally friendly design utilizing biodegradable oil. • Simplified deck-side repairs and extended operational reliability. • Engineered to work to a depth of 3000 meters. The next-generation manipulator is currently in development in-house with an emphasis on improving repair efficiency and durability.
The 2024 Loans are convertible, in whole or in part, at the option of each Lender into shares of Common Stock until the date that the 2024 Loans are no longer outstanding, at a conversion rate equal to the outstanding principal amount of the Loans to be converted divided by a conversion price of $16.50 per share of Common Stock, subject to certain adjustments as described in the 2024 Term Loan Agreement.
The 2024 Loans are convertible, in whole or in part, at the option of each Lender into shares of Common Stock until the date that the 2024 Loans are no longer outstanding, at a conversion rate equal to the outstanding principal amount of the Loans to be converted divided by a conversion price of $148.46 per share of Common Stock, subject to certain adjustments as described in the 2024 Term Loan Agreement.
Each of our product lines is complementary to the others working together as a system, and also can be marketed independently. The ToolKITT software is platform agnostic, and can be installed on third party ROVs. Similarly, the Olympic Arm can be installed and operate on third party ROVs.
Each of its product lines is complementary to the others working together as a system, and also can be marketed independently. The Nauticus ToolKITT software is platform agnostic, and can be installed on third party ROVs. Similarly, the Olympic Arm can be installed and operate on third party ROVs.
First Amendment to Convertible Senior Secured Term Loan On December 31, 2023, the Company, entered into a First Amendment to Senior Secured Term Loan Agreement, dated as of December 31, 2023 (the “First Amendment”), by and among the Company, the subsidiary guarantors (as defined in the First Amendment) and ATW Special Situations II LLC (“ATW II”), a Delaware limited liability company, which amended that certain Senior Secured Term Loan agreement dated as of September 18, 2023 with ATW II, as collateral agent (as replaced by Acquiom Agency Services LLC, in such capacity, the “Collateral Agent”) and lender, and Transocean Finance Limited (“Transocean Finance”), ATW I, MIF, and RCB, as lenders (collectively, the “Initial Lenders”).
First Amendment to Convertible Senior Secured Term Loan 7 Table of Contents On December 31, 2023, the Company, entered into a First Amendment to Senior Secured Term Loan Agreement, dated as of December 31, 2023 (the “First Amendment”), by and among the Company, the subsidiary guarantors (as defined in the First Amendment) and ATW Special Situations II LLC (“ATW II”), a Delaware limited liability company, which amended that certain Senior Secured Term Loan agreement dated as of September 18, 2023 with ATW II, as collateral agent (as replaced by Acquiom Agency Services LLC, in such capacity, the “Collateral Agent”) and lender, and Transocean Finance Limited (“Transocean Finance”), ATW I, MIF, and RCB, as lenders.
Our website, the SEC’s website and the information contained therein or linked thereto are not a part of this Annual Report. 9 Table of Contents
Our website, the SEC’s website and the information contained therein or linked thereto are not a part of this Annual Report. 10 Table of Contents
Our addressable markets include upstream, midstream, and downstream oil and gas, defense, offshore renewables, seafloor telecommunications, aquaculture, port security, oceanographic research, and subsea mining. Currently, our primary focus is on oil and gas operations and defense applications.
Nauticus' addressable markets include upstream, midstream, and downstream oil and gas, defense, offshore renewables, seafloor telecommunications, aquaculture, port security, oceanographic research, and subsea mining. Currently, its primary focus is on oil and gas operations and defense applications.
The First Amendment provided the Company with an incremental loan in the aggregate principal amount of $695,000 (the “December 2023 Incremental Loan”), subject to the terms and conditions set forth in the Term Loan Agreement and the 7 Table of Contents First Amendment.
The First Amendment provided the Company with an incremental loan in the aggregate principal amount of $695,000 (the “December 2023 Incremental Loan”), subject to the terms and conditions set forth in the Term Loan Agreement and the First Amendment.
(MIF), and the SLS Family Trust (SLS) subscribed for Debentures in the aggregate principal amount of $36,530,320 (out of the aggregate $40.0 million) which is convertible into 2,922,425 shares of our Common Stock and associated warrants for an additional 2,922,425 shares. Our director, Adam Sharkawy, is the managing partner of Material Impact II, L.P.
(MIF), and the SLS Family Trust (SLS) subscribed for Debentures in the aggregate principal amount of $36,530,320 (out of the aggregate $40.0 million) which is convertible into 9,020 shares of our Common Stock and associated warrants for an additional 9,020 shares. Our director, Adam Sharkawy, is the managing partner of Material Impact II, L.P.
Compliance with these regulations is critical to our ability to compete for and perform contracts with the U.S. Government.
Compliance with these regulations is critical to its ability to compete for and perform contracts with the U.S. Government.
The ATW Extended Maturity Term Loan will mature on the earlier of the 30th anniversary of the date of the Term Loan Agreement or such earlier date as is required or permitted to be repaid under the Term Loan Agreement.
The ATW Extended Maturity Term Loan will mature on 8 Table of Contents the earlier of the 30th anniversary of the date of the Term Loan Agreement or such earlier date as is required or permitted to be repaid under the Term Loan Agreement.
As a consequence of our use of third party suppliers for a substantial portion of our product manufacturing process, the direct purchase of raw materials is not material to our operations.
As a consequence of Nauticus use of third party suppliers for a substantial portion of its product manufacturing process, the direct purchase of raw materials is not material to its operations.
Our principal executive offices are located at 17146 Feathercraft Lane, Suite 450, Webster, Texas 77598. Our phone number is (281) 942-9069. Our Common Stock trades on the Nasdaq Stock Market (“Nasdaq”) under the ticker symbol “KITT.” We maintain a website on the Internet with the address of https://ir.nauticusrobotics.com.
Nauticus' principal executive offices are located at 17146 Feathercraft Lane, Suite 450, Webster, Texas 77598. Our phone number is (281) 942-9069. Its Common Stock trades on the Nasdaq Stock Market (“Nasdaq”) under the ticker symbol “KITT.” Nauticus maintains a website on the Internet with the address of https://ir.nauticusrobotics.com.
Our core capabilities include: • Advanced R&D & Prototyping – Rapid development of next-generation technologies, from AI-driven analytics to autonomous systems. • Systems Integration – Adapting and integrating commercial technologies into existing defense infrastructure. • Unmanned Systems & Robotics – Developing and enhancing autonomous systems for defined mission applications. 2 Table of Contents • Agility & Innovation – As a small business, the Company operate with unmatched flexibility, rapidly pivoting to meet evolving defense needs and are unencumbered by legacy solutions.
The Company's core capabilities include: • Advanced R&D & Prototyping – Rapid development of next-generation technologies, from AI-driven analytics to autonomous systems. • Systems Integration – Adapting and integrating commercial technologies into existing defense infrastructure. 2 Table of Contents • Unmanned Systems & Robotics – Developing and enhancing autonomous systems for defined mission applications. • Agility & Innovation – As a nimble technology company, Nauticus operates with unmatched flexibility, rapidly pivoting to meet evolving defense needs and are unencumbered by legacy solutions.
We were formed in September 2022 as the result of a business combination between Nauticus Robotics, Inc.’s predecessor (CleanTech) and Nauticus Robotics Holdings Inc. (formerly known as Houston Mechatronics, Inc.). We completed our first successful survey utilizing our autonomous subsea vehicle, Aquanaut, in the fourth quarter of 2024.
The Company was formed in September 2022 as the result of a business combination between Nauticus Robotics, Inc.’s predecessor (CleanTech) and Nauticus Robotics Holdings Inc. (formerly known as Houston Mechatronics, Inc.). The Company completed its first successful survey utilizing its autonomous subsea vehicle, Aquanaut ® , in the fourth quarter of 2024.
In addition, the “Governance Documents” section of our website contains copies of our Code of Business Ethics and Conduct Policy and other corporate policies and board committee charters. We make our website content available for informational purposes only. Information contained on our website is not part of this Annual Report and should not be relied upon for investment purposes.
In addition, the “Governance Documents” section of the website contains copies of the Company's Code of Business Ethics and Conduct Policy and other corporate policies and board committee charters. Nauticus makes its website content available for informational purposes only. Information contained on the website is not part of this Annual Report and should not be relied upon for investment purposes.
The Company elected to fair value these Debentures. Where You Can Find More Information The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act are filed with the SEC.
Where You Can Find More Information The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act are filed with the SEC.
We have successfully navigated a workforce transformation, aligning our organization to prioritize the support and advancement of existing products while balancing ongoing innovation efforts beyond early-stage research and prototyping. Seasonality Offshore ROV and AUS operations are subject to seasonal variation, and in the Gulf operations are generally more active from April through October each year.
It has successfully navigated a workforce transformation, aligning our organization to prioritize the support and advancement of existing products while balancing ongoing innovation efforts beyond early-stage research and prototyping. Seasonality Offshore ROV and AUV operations are subject to seasonal variation, and Gulf Coast operations are generally more active from April through October each year.
Customers Offshore Energy Producers Offshore activity in the energy sector drives a material amount of the demand for ROV services, which are critical for the inspection, maintenance, and development of subsea infrastructure in the Gulf of America, also know as the Gulf of Mexico (the "Gulf").
Customers Offshore Energy Producers Offshore activity in the energy sector drives a material amount of the demand for ROV services, which are critical for the inspection, maintenance, and development of subsea infrastructure in the Gulf of America (the "Gulf Coast").
Nauticus Robotics is posit ioned to capitalize on this expanding market by offering disruptive technology solutions that improve data quality, safety, emissions reduction, and cost efficiency. Our autonomous systems and AI-driven analytics provide a competitive advantage as industries shift toward automation and sustainability in subsea operations.
Nauticus Robotics™ is positioned to capitalize on this expanding market by offering disruptive technology solutions that improve data quality, safety, emissions reduction, and cost efficiency. The Company's autonomous systems and data analytics provide a competitive advantage as industries shift toward automation and sustainability in subsea operations.
We endeavor to recruit the most qualified individuals for each position regardless of gender, ethnicity or other protected characteristics. It is our policy to fully comply with all laws applicable to discrimination in the workplace.
The Company endeavors to recruit the most qualified individuals for each position regardless of gender, ethnicity or other protected characteristics. It is Nauticus policy to fully comply with all laws applicable to discrimination in the workplace.
Government Regulation Our business is heavily regulated and we are subject to numerous laws and regulations that govern our operations, including but not limited to the Federal Acquisition Regulation (FAR), the Defense Federal Acquisition Regulation Supplement (DFARS), the Truth in Negotiations Act (TINA), the Cost Accounting Standards (CAS), the International 4 Table of Contents Traffic in Arms Regulations (ITAR), and the Export Administration Regulations (EAR).
Government Regulation The Company's business is heavily regulated and is consequently subject to numerous laws and regulations that govern operations, including but not limited to the Federal Acquisition Regulation (FAR), the Defense Federal Acquisition Regulation Supplement (DFARS), the Truth in Negotiations Act (TINA), the Cost Accounting Standards (CAS), the International Traffic in Arms Regulations (ITAR), and the Export Administration Regulations (EAR).
The Company intends to license the innovative design for external production. Defense Solutions Nauticus is a specialized technology and engineering services company focused on delivering innovative solutions to the defense sector including the Defense Innovation Unit (DIU) and Defense Advanced Research Agency (DARPA).
Defense Solutions Nauticus is a specialized technology and engineering services company focused on delivering innovative solutions to the defense sector including the Defense Innovation Unit (DIU) and Defense Advanced Research Agency (DARPA).
These Debentures were elected to be recorded at is estimated fair value on the Company's books. During the year ended December 31, 2024, ATW I and SLS converted the New Convertible Debentures with a principal value of $12,869,231 and $1,836,720 and interest of $442,140 and $4,785 into 4,818,836 and 699,053 shares of Common Stock, respectively.
These Debentures were elected to be recorded at its estimated fair value on the Company's books. 6 Table of Contents During the year ended December 31, 2024, ATW I and SLS converted the New Convertible Debentures with a principal value of $12,869,231 and $1,836,720 and interest of $442,140 and $4,785 into 535,426 and 77,673 shares of Common Stock, respectively.
The Earnout Shares will be released and delivered to the Stockholder Earnout Group upon occurrence of the following (each, a “Triggering Event”): i. one-half of the Earnout Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of our Common Stock equals or exceeds $15.00 per share (on a pre Reverse Stock Split Basis) over any 20 trading days within a 30-day trading period; ii. one-quarter of the Earnout Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of our Common Stock equals or exceeds $17.50 (on a pre Reverse Stock Split Basis) per share over any 20 trading days within a 30-day trading period; and iii. one-quarter of the Earnout Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of our Common Stock equals or exceeds $20.00 (on a pre Reverse Stock Split Basis) per share over any 20 trading days within a 30-day trading period.
The Earnout Shares will be released and delivered to the Stockholder Earnout Group upon occurrence of the following (each, a “Triggering Event”): i. one-half of the Earnout Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of our Common Stock equals or exceeds $4,860 per share over any 20 trading days within a 30-day trading period; ii. one-quarter of the Earnout Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of our Common Stock equals or exceeds $5,670 per share over any 20 trading days within a 30-day trading period; and iii. one-quarter of the Earnout Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of our Common Stock equals or exceeds $6,480 per share over any 20 trading days within a 30-day trading period.
We had 47 employees as of December 31, 2024. None of our employees are covered by collective bargaining agreements, and we have not experienced any strikes or work stoppages related to labor relations issues. Our human capital strategies focus on identifying, recruiting, retaining, rewarding, and integrating both our existing and new employees.
We had 51 employees as of December 31, 2025. None of its employees are covered by collective bargaining agreements, and the Company has not experienced any strikes or work stoppages related to labor relations issues. Nauticus' human capital strategies focus on identifying, recruiting, retaining, rewarding, and integrating both its existing and new employees.
Our portfolio includes fully autonomous underwater vehicles (AUVs), robotic manipulators, an open robotic operating system, and related consulting and prototype services with a strong alignment to offshore energy and national security interests. Our technology solutions enable autonomous operations for both the commercial and defense sectors.
The Company's portfolio includes autonomous, untethered underwater vehicles (AUVs), tethered robotic remotely operated vehicles (ROVs), electric robotic manipulators, a platform-agnostic robotic operating system, and related consulting and prototype services with a strong alignment to offshore energy and national security interests. The technology solutions enable autonomous operations for both the commercial and defense sectors.
International Operations The potential addressable market for Nauticus Robotics products and services is global. While current operations are concentrated in the United States, Nauticus Robotics is also actively pursuing business opportunities outside the United States, including opportunities in Brazil. Competition: All of the products and services provided by Nauticus Robotics operate in a highly competitive environment.
International Operations The potential addressable market for Nauticus Robotics products and services is global. While current operations are concentrated in the United States, Nauticus Robotics is also actively pursuing business opportunities outside the United States, including opportunities in Brazil and the United Arab Emirates.
On September 18, 2023, the RCB promissory note was rolled into the convertible senior secured term loan discussed below bearing interest at 12.5% per annum including the $125,000 exit fee.
Further, the promissory note provided for an automatic rollover into the structure of certain future debt-financing transactions. On September 18, 2023, the RCB promissory note was rolled into the convertible senior secured term loan discussed below bearing interest at 12.5% per annum including the $125,000 exit fee.
As a nimble and highly adaptive firm, the Company can bridge the gap between emerging commercial technologies and mission-critical ocean centric defense applications, ensuring that the U.S. military and government agencies stay ahead of global threats.
As a nimble and highly adaptive firm, the Company can bridge the gap between emerging commercial technologies and mission-critical ocean centric defense applications, supporting U.S. military and government agencies in addressing evolving operational requirements.
This new alliance aims to combine the companies’ complementary expertise to develop next-generation autonomous underwater systems capable of tackling increasingly complex missions. SeaTrepid ROV Services On March 5, 2025, we entered into an Asset Purchase Agreement to acquire substantially all of the assets and business of SeaTrepid International LLC and its affiliates ("Seatrepid").
This new alliance aims to combine the companies’ complementary expertise to develop next-generation autonomous underwater systems capable of tackling increasingly complex missions. SeaTrepid ROV Services On March 20, 2025, Nauticus acquired substantially all of the assets and business of SeaTrepid International LLC and its affiliates ("SeaTrepid"). SeaTrepid provides subsea robotic services to customers with ROVs.
Subsea Autonomy Software Competitors Competitors to ToolKITT include both ROV manufacturers supplying proprietary software operating systems for their ROVs, as well as independent software suppliers providing software solutions to enhance the capabilities of ROVs and other robotic systems. Competitors also include companies that offer data processing capabilities for data gathered in ROV operations.
These companies include large multinational product manufacturers and service providers, as well as smaller local ROV service providers. Subsea Autonomy Software Competitors Competitors to Nauticus ToolKITT include both ROV manufacturers supplying proprietary software operating systems for their ROVs, as well as independent software suppliers providing software solutions to enhance the capabilities of ROVs and other robotic systems.
SeaTrepid provides subsea robotic services to customers with ROVs. The ability of SeaTrepid’s ROVs and our Aquanaut to seamlessly communicate at depth unlocks new service opportunities, enabling two autonomous systems to collaborate in delivering cutting edge underwater solutions. The SeaTrepid acquisition closed on March 20, 2025.
The ability of SeaTrepid’s ROVs and Nauticus' Aquanaut to seamlessly communicate at depth unlocks new service opportunities, enabling two autonomous systems to collaborate in delivering cutting edge underwater solutions.
The 2024 Term Loan Agreement provides the Company with an aggregate $9,551,856 of secured term loans (the “2024 Loans”). The 2024 Loans bear interest at the rate of 15% per annum, payable quarterly in arrears on the first day of each calendar quarter commencing April 1, 2024.
The 2024 Loans bear interest at the rate of 15% per annum, payable quarterly in arrears on the first day of each calendar quarter commencing April 1, 2024.
These Debentures were elected to be recorded at its fair value. On December 27, 2024, the Company and ATW I closed the exchange transaction, and the Company issued 27,588 shares of Series A Preferred Stock to ATW I in exchange for a principal value of $16,672,369 and other amounts outstanding of $10,915,974.
On December 27, 2024, the Company and ATW I closed the exchange transaction, and the Company issued 27,588 shares of Series A Preferred Stock to ATW I in exchange for a principal value of $16,672,369 and interest payable and amounts owed on difference between floor price and conversion price of $10,915,974.
On November 4, 2024, the Company entered into a Securities Purchase Agreement with ATW, pursuant to which ATW purchased, in a private placement, $1,150,000 in principal amount of Debentures, with an option to purchase up to an additional aggregate of $20,000,000 in principal amount of Original Issue Discount Senior Secured Convertible Debentures (the “November 2024 Debentures”).
During the year ended December 31, 2025, ATW I and ATW II converted 2024 Term Loan notes with principal amount of $2,551,855 and interest payable of $318,718 into 200,600 shares of Common Stock November 2024 Debentures On November 4, 2024, the Company entered into a Securities Purchase Agreement with ATW, pursuant to which ATW purchased, in a private placement, $1,150,000 in principal amount of Debentures, with an option to purchase up to an additional aggregate of $20,000,000 in principal amount of Original Issue Discount Senior Secured Convertible Debentures (the “November 2024 Debentures”).
As a new market entrant, Nauticus Robotics generally faces competition from well-established competitors. Vehicle & Services Competitors Current ROV manufacturers and ROV services companies are the primary competitors to Nauticus inspection services conducted by Aquanaut. These companies include large multinational product manufacturers and service providers, as well as smaller local ROV service providers.
Competition: All of the products and services provided by Nauticus Robotics operate in a highly competitive environment. As a new market entrant, Nauticus Robotics generally faces competition from well-established competitors. Vehicle & Services Competitors Current ROV manufacturers and ROV services companies are the primary competitors to Nauticus inspection services conducted by Aquanaut.
Aquanaut is engineered to operate to a depth of 3000 meters. ToolKITT Software Suite ToolKITT is a sophisticated software platform that governs Nauticus’ suite of robotic products. It enables robots to perceive their environment, navigate in three dimensions, make autonomous decisions, and execute tasks with minimal human intervention.
Nauticus ToolKITT ™ Software Suite Nauticus ToolKITT is a sophisticated software platform that governs Nauticus’ suite of robotic products. It enables robots to perceive their environment, navigate in three dimensions, make autonomous decisions, and execute tasks with minimal human intervention. Nauticus ToolKITT relies on the Robot Operating System (ROS), leveraging an open-source framework to accelerate development and deployment.
On December 31, 2024, the Company issued 2,504 and 5,342 shares of Series A Preferred Stock to SLS and 6 Table of Contents MIF in exchange for principal values of $0 and $5,102,000 and other amounts outstanding of $2,504,440 and $240,219, respectively. This Preferred Stock was recorded at its fair value as of the date of the exchange.
On December 31, 2024, the Company issued 2,504 and 5,342 shares of Series A Preferred Stock to SLS and MIF in exchange for principal values of $0 and $5,102,000 and interest payable and amounts owed on difference between floor price and conversion price of $2,504,440 and $240,219, respectively.
Earnout Shares Following the closing of the Merger, former holders of shares of Old Nauticus Common Stock (including shares received as a result of the Preferred Stock Conversion and the Convertible Notes Conversion, the “Stockholder Earnout Group”) shall be entitled to receive their pro rata share of up to 208,333 additional shares of Common Stock (the “Earnout Shares”).
Earnout Shares Following the closing of the Merger, former holders of shares of Old Nauticus Common Stock (including shares received as a result of the Preferred Stock Conversion and the Convertible Notes Conversion, the “Stockholder Earnout Group”) shall be entitled to receive their pro rata share of up to 23,149 additional shares of Common Stock (after giving effect to the 1-for-36 reverse stock split and the 1-for-9 reverse stock split the Company effected in 2024 and 2025, respectively, which are collectively referred to as “Reverse Stock Split” hereafter) (the “Earnout Shares”).
Merger Agreement On the Closing Date, Nauticus consummated its previously announced Business Combination pursuant to the Merger Agreement, as amended, by and among Nauticus’ predecessor CleanTech, Merger Sub and Nauticus Robotics Holdings.
To address the seasonality of the business, Nauticus may pursue a strategy of rotating operating assets between the Gulf Coast and other international locations. 5 Table of Contents Merger Agreement On the Closing Date, Nauticus consummated its previously announced Business Combination pursuant to the Merger Agreement, as amended, by and among Nauticus’ predecessor CleanTech, Merger Sub and Nauticus Robotics Holdings.
In Brazil, operations are generally more active from November through March. Nauticus operations are currently concentrated in the US offshore market. To address the seasonality of the business, Nauticus may pursue a strategy of rotating operating assets between the Gulf and offshore Brazil.
In Brazil, operations are generally more active from November through March. Nauticus operations are currently concentrated in the US offshore market.
Product Portfolio Aquanaut Autonomous Vehicles Nauticus Robotics has three autonomous vehicles. One vehicle is currently operational, a second vehicle is undergoing certification for operations and the third vehicle is still to be assembled. Aquanaut has demonstrated superior capabilities in safety assurance, operational efficiency, asset integrity, and regulatory compliance through its ability to collect high-resolution subsea data.
Two vehicles are currently operational and the third vehicle remains under assembly. The Aquanaut ® vehicle has demonstrated superior capabilities in safety assurance, operational efficiency, asset integrity, and regulatory compliance through its ability to collect high-resolution subsea data. The Aquanaut ® vehicle is engineered to operate to a depth of 3000 meters.
We are currently engaged with four offshore producers to manage the introduction of our modern technology, Aquanaut. Oil and gas customers can at their convenience extend or terminate a contract. The offshore energy sector is a global market.
The Company is currently engaged with several offshore producers to manage the introduction of our modern technology, Aquanaut. Oil and gas customers can at their convenience extend or terminate a contract. Defense Related Customers On January 30, 2025, Nauticus announced a strategic alliance with Leidos, its strategic partner for defense related pursuits.
On December 11, 2024, ATW purchased, in a private placement, $1,000,000 in principal amount of debentures. During the year ended December 31, 2024, ATW I and SLS exercised on a post reverse split basis 615,589 and 38,230 SPA Warrants, respectively, in exchange for Common Stock. The Company did not receive cash in respect of these transactions.
During the year ended December 31, 2024, ATW I and SLS exercised 68,399 and 4,248 SPA Warrants, respectively, in exchange for Common Stock. The Company did not receive cash in respect of these transactions. RCB Equities #1, LLC On July 14, 2023, the Company issued a secured promissory note to RCB Equities #1, LLC, for $5,000,000.
The promissory note provides for an exit fee of $125,000 if paid off in full between October 12, 2023, and the maturity date, with no other considerations triggered for premiums or penalties. Further, the promissory note provides for an automatic rollover into the structure of certain future debt-financing transactions.
The promissory note included a 2.5% original issue discount or $125,000, interest at 15% per annum, and was scheduled to mature on September 9, 2026. The promissory note provides for an exit fee of $125,000 if paid off in full between October 12, 2023, and the maturity date, with no other considerations triggered for premiums or penalties.
ToolKITT relies on the Robot Operating System (ROS), leveraging an open-source framework to accelerate development and deployment. The software is hardware-agnostic, enabling adaptation across various robotic platforms. ToolKITT has been deployed on third party commercial ROVs and competing robotic platform s, enhancing Nauticus’ ability to offer advanced inspection and intervention services.
The software is hardware-agnostic, enabling deployment across various robotic platforms. Nauticus ToolKITT has been deployed on third party commercial ROVs and competing robotic platform s, enhancing Nauticus’ ability to offer advanced inspection and intervention services. This software also plays a critical role in next-generation inspection services, a key industry need for ensuring the integrity of subsea pipelines and offshore infrastructure.
Electric Manipulators Competitors 3 Table of Contents Several companies specialize in the design and manufacture of subsea manipulators and robotic arms for ROVs and other underwater applications. These competitive products include both traditional hydraulic manipulators, as well as electric manipulators like the Olympic Arm. Maritime Defense Project Competitors Several companies specialize in subsea technology consulting for the defense industry.
These competitive products include both traditional hydraulic manipulators, as well as electric manipulators like the Olympic Arm and our next generation manipulator. Maritime Defense Project Competitors Several companies specialize in subsea technology consulting for the defense industry. In addition, Nauticus' alliance collaborator, Leidos, operates in a highly competitive environment with many large and well established defense contractors.
This software also plays a critical role in next-generation inspection services, a key industry need for ensuring the integrity of subsea pipelines and offshore infrastructure. Olympic Arm Electric Manipulator The Olympic Arm is a fully electric subsea manipulator designed for complex intervention tasks on both work-class ROVs and Aquanaut.
Nauticus ToolKITT is currently installed and operational on Nauticus' ROV fleet. Olympic Arm ™ Electric Manipulator The Olympic Arm is a fully electric subsea manipulator designed for complex intervention tasks on both work-class ROVs and Aquanaut.
On December 27, 2024, the Company and one institutional investor closed the exchange transaction, and the Company issued 27,588 shares of Series A Preferred Stock to such investor. On December 31, 2024, the Company issued 2,504 and 5,342 shares of Series A Preferred Stock to two other investors, respectively.
On December 3, 2025, the Company filed a Certificate of Designations with respect to the Series C Preferred Stock with the Secretary of State of the State of Delaware, and three (3) institutional investors closed the Exchange. The Company issued 3,814 shares of Series C Preferred Stock to ATW.
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In addition, our alliance collaborator, Leidos, operates in a highly competitive environment with many large and well established defense contractors.
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The Aquanaut ® autonomous vehicle represents the next generation of subsea robotics integrating eight inde pendent thrusters to precisely propel and position a hull to maximize efficiency and enable high-resolution data collection, and autonomous fully electric manipulation comparable to traditional ROV operations. 1 Table of Contents Product Portfolio Aquanaut ® Autonomous Vehicles Nauticus Robotics has three autonomous vehicles.
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We have engaged with a customer in Brazil to develop and test our autonomous robotic systems, and expect to continue to engage with international customers in Brazil and elsewhere as our business develops. Defense Related Customers On January 30, 2025, we announced a strategic alliance with Leidos, our strategic partner for defense related pursuits.
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On the further productization of the Olympic Arm, the Company has licensed the innovative design for external production with Forum Energy Technologies. During the fourth quarter of 2025, collaboration has commenced with Forum Energy Technologies ("FET") in preparation for commercial distribution.
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RCB Equities #1, LLC On July 14, 2023, the Company issued a secured promissory note to RCB Equities #1, LLC ("RCB") for $5,000,000. The promissory note included a 2.5% original issue discount or $125,000, bears interest at 15% per annum, and matures on September 9, 2026.
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Competitors also include companies that offer data processing capabilities for data gathered in ROV operations. 3 Table of Contents Electric Manipulators Competitors Several companies specialize in the design and manufacture of subsea manipulators and robotic arms for ROVs and other underwater applications.
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Second Amendment and Exchange Agreement On November 4, 2024, the Company entered into a Second Amendment and Exchange Agreement (the “Exchange Agreement”), by and among the Company and a certain institutional investor, pursuant to which such investor would 8 Table of Contents exchange (the “Exchange”) the remaining portion of the amount outstanding under the Ne w Original Issue Discount Exchanged Senior Secured Convertible Debenture (the “New Convertible Debenture”) and certain other amounts outstanding with respect thereto, into Series A preferred convertible stock (the “Series A Preferred Stock”), subject to certain adjustments.
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In the fourth quarter of 2025, Nauticus entered into a Manufacturing and Sales Agreement with Forum Energy Technologies ("FET") for the Olympic Arm all electric manipulators.
Removed
The Exchange Agreement further amended the Securities Purchase Agreement dated as of December 16, 2021, as amended, and contained certain covenants of the Company to, among other items, hold one or more stockholder meetings in respect of the shares of the Company’s Common Stock issuable underlying the Series A Preferred Stock upon conversion.
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Under the agreement, FET will lead the commercialization, manufacturing, and distribution of the Olympic Arm electric manipulator system, while Nauticus continues to advance on the next generation manipulator as well as the robotics, autonomy, and intelligent control technologies.
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The Company elected to measure these Debentures at the fair value on the Company's book.
Added
In the first quarter of 2026 Master Investment Group agreed to provide an initial $3 million investment tranche for Nauticus' UAE business unit startup activities, with additional capital up to $47 million for Nauticus to form a dedicated manufacturing, sales, and offshore services business unit in the UAE.
Removed
In addition, on November 4, 2024, the Company entered into Exchange Agreements with two other institutional investors on substantially the same terms, pursuant to which such investors will transfer their New Convertible Debentures to the Company in exchange for a number of shares of Series A Preferred Stock.
Added
Initial facility sites are already under evaluation. 4 Table of Contents Master Investment Group is expected to fund facility development, workforce localization, and initial manufacturing capability, positioning the operation as a regional center for advanced subsea robotics.
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The Preferred Stock was recorded at its fair value on the Company's book upon the exchange.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

129 edited+76 added−19 removed352 unchanged
Biggest changeIf these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results. • We may be unable to raise sufficient affordable capital needed to fund and grow our business. • If we are successful in commercializing our products and services, our revenue will be concentrated in a limited number of models and a limited number of operating units for the foreseeable future. • Defects, glitches, or malfunctions in our products or the software that operates them, failure of our products to perform as expected, connectivity issues or operator errors could result in product recalls, lower than expected return on investment for customers, and could cause harm to operators and significant safety concerns, each of which could adversely affect our results of operations, financial condition and our reputation. • Our ability to manufacture products of sufficient quality on schedule is unproven, and delays in the design, production and launch of our products and services could harm our business, financial condition, results of operations, cash flows, reputation and prospects. 10 Table of Contents • We are or may be subject to risks associated with strategic alliances or acquisitions and may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future. • We are highly dependent on the services of our senior management and other key employees and if we are unable to attract and retain a sufficient number of qualified employees, our ability to design, manufacture and launch our products, provide services, operate our business and compete could be harmed. • We incur significant expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition, result of operations, cash flows, reputation and prospects. • We are dependent on our suppliers, some of which are currently single or limited source suppliers, and the inability or other failure of these suppliers to deliver necessary components of our products at prices and volume and with specifications and performance characteristics acceptable to us, could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.
Biggest changeIf these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results. • We may be unable to raise sufficient affordable capital needed to fund and grow our business. • If we are successful in commercializing our products and services, our revenue will be concentrated in a limited number of models and a limited number of operating units for the foreseeable future. • We may not be able to enforce or protect our intellectual property rights, or third parties may claim we infringe their intellectual property rights. • Defects, glitches, or malfunctions in our products or the software that operates them, failure of our products to perform as expected, connectivity issues or operator errors could result in product recalls, lower than expected return on investment for customers, and could cause harm to operators and significant safety concerns, each of which could adversely affect our results of operations, financial condition and our reputation. 11 Table of Contents • Our ability to manufacture products of sufficient quality on schedule is unproven, and delays in the design, production and launch of our products and services could harm our business, financial condition, results of operations, cash flows, reputation and prospects. • We are or may be subject to risks associated with strategic alliances or acquisitions and may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future. • We are highly dependent on the services of our senior management and other key employees and if we are unable to attract and retain a sufficient number of qualified employees, our ability to design, manufacture and launch our products, provide services, operate our business and compete could be harmed. • We incur significant expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects. • We may be subject to various new or changing product regulations and environmental laws and regulations, which could cause significant fines and liability, or otherwise adversely affect our business, financial condition, results of operations, cash flows, reputation and prospects. • We are subject to cybersecurity risks to our operational systems, security systems, infrastructure, integrated software in our products and data processed by us or third-party vendors. • Issues in the development and use of artificial intelligence ("AI") may result in reputational harm or liability, and failure to introduce new and innovative products that have AI capabilities could put us at a competitive disadvantage. • We are subject to anti-corruption laws and anti-money laundering laws in countries in which we conduct activities, and any violations of such regimes may result in investigations, criminal liability and could adversely affect our business, financial condition, results of operations and prospects. • We are dependent on our suppliers, some of which are currently single or limited source suppliers, and the inability or other failure of these suppliers to deliver necessary components of our products at prices and volume and with specifications and performance characteristics acceptable to us, could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.
We rely on third-party manufacturers/suppliers and expect to continue to do so for the foreseeable future. This reliance on third parties increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. We rely on third-party manufacturers/suppliers.
We rely on third-party manufacturers/suppliers and expect to continue to do so for the foreseeable future. This reliance on third parties increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.
These changes could directly increase the cost of energy, which may have an effect on the way we manufacture products or utilize energy to produce our products. In addition, any new regulations or laws in the environmental area might increase the cost of raw materials or key components we use in our products.
These changes could directly increase the cost of energy, which may have an effect on the way we manufacture products or utilize energy to produce our products. In addition, any new regulations or laws in the environmental area might increase the cost of raw materials or key components we use in our products.
Further, climate change laws, environmental regulations, and other similar measures may have an effect on the operating activities of our customers, which may, in turn, reduce the demand for our products and services.
Further, climate change laws, environmental regulations, and other similar measures may have an effect on the operating activities of our customers, which may, in turn, reduce the demand for our products and services.
To the extent increasing concentrations of greenhouse gases in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climatic events, such events could have a material adverse effect on the Company and potentially subject the Company to further regulation.
To the extent increasing concentrations of greenhouse gases in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climatic events, such events could have a material adverse effect on the Company and potentially subject the Company to further regulation.
This reliance on third-party manufacturers/suppliers increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. Additionally, we may be unable to establish or continue any agreements with third-party manufacturers/suppliers, on acceptable terms or at all.
This reliance on third-party manufacturers/suppliers increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. Additionally, we may be unable to establish or continue any agreements with third-party manufacturers/suppliers, on acceptable terms or at all.
If our current or future third-party manufacturers/suppliers cannot perform as agreed, we may be required to replace such manufacturers/suppliers and we may be unable to replace them on a timely basis or at all.
If our current or future third-party manufacturers/suppliers cannot perform as agreed, we may be required to replace such manufacturers/suppliers and we may be unable to replace them on a timely basis or at all.
We expect to incur research and development, sales and marketing, and general and administrative expenses and make capital expenditures in our efforts to increase sales, engage in development work and ramp up operations. Our business also will at times require significant amounts of working capital to build inventory and support the growth of additional products.
We expect to incur research and development, sales and marketing, and general and administrative expenses and make capital expenditures in our efforts to increase sales, engage in development work and ramp up operations. Our business also will at times require significant amounts of working capital to build inventory and support the growth of additional products.
An inability to generate positive cash flow for the near term may adversely affect our ability to raise needed capital for our business on reasonable terms, diminish supplier or customer willingness to enter into transactions with us, and have other adverse effects that may decrease our long-term viability.
An inability to generate positive cash flow for the near term may adversely affect our ability to raise needed capital for our business on reasonable terms, diminish supplier or customer willingness to enter into transactions with us, and have other adverse effects that may decrease our long-term viability.
In the event that we are successful in being awarded further government contracts, such awards may be subject to appeals, disputes, or litigation, including, but not limited to, bid protests by unsuccessful bidders.
In the event that we are successful in being awarded further government contracts, such awards may be subject to appeals, disputes, or litigation, including, but not limited to, bid protests by unsuccessful bidders.
Government demand and payment for our solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. Government entities may have statutory, contractual, or other legal rights to terminate our contracts for convenience or default.
Government demand and payment for our solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. Government entities may have statutory, contractual, or other legal rights to terminate our contracts for convenience or default.
For purchases by the U.S. federal government, the government may require certain products to be manufactured in the United States and other high-cost manufacturing locations, and we or any third-party manufacturers may not manufacture all products in locations that meet government requirements, and as a result, our business and results of operations may suffer.
For purchases by the U.S. federal government, the government may require certain products to be manufactured in the United States and other high-cost manufacturing locations, and we or any third-party manufacturers may not manufacture all products in locations that meet government requirements, and as a result, our business and results of operations may suffer.
As a government contractor or subcontractor, we must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts and inclusion on government contract vehicles, which affect how we and our partners do business with government agencies.
As a government contractor or subcontractor, we must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts and inclusion on government contract vehicles, which affect how we and our partners do business with government agencies.
These laws and regulations may impose other added costs on our business, and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for damages, downward contract price adjustments or refund obligations, civil or criminal penalties, and termination of contracts and suspension or debarment from government contracting or subcontracting for a period of time or indefinitely.
These laws and regulations may impose other added costs on our business, and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for damages, downward contract price adjustments or refund obligations, civil or criminal penalties, and termination of contracts and suspension or debarment from government contracting or subcontracting for a period of time or indefinitely.
Any such damages, penalties, disruption, or limitation in our ability to do business with a government would adversely impact, and could have a material adverse effect on, our business, financial condition, results of operations, cash flows, reputation and prospects.
Any such damages, penalties, disruption, or limitation in our ability to do business with a government would adversely impact, and could have a material adverse effect on, our business, financial condition, results of operations, cash flows, reputation and prospects.
Our continued development and manufacturing of our commercially available robotic system, Aquanaut, and of future models of our products, are and will be subject to risks, including with respect to: • costs to be incurred by us and/or any third-party manufacturing partners in meeting our specifications and design tolerances; • hiring and retaining a sufficient number of qualified employees, which are challenges that have contributed to us being historically understaffed • long- and short-term durability of our ocean robotic systems to withstand day-to-day wear and tear; • delays in delivery of final systems and components by our suppliers; • manufacturing of robotic systems units in excess of demand due to contractual requirements or unexpected changes in demand; • shifts in demand for future models; • quality controls, particularly as we plan to expand our production capabilities; 21 Table of Contents • delays or disruptions in our supply chain, or the need to order supplies in excess of demand due to batch number requirements or price thresholds; • work stoppages, labor strikes and other labor disputes or shortages affecting us or our suppliers, third-party manufacturers and other partners; and • other delays and cost overruns.
Our continued development and manufacturing of our commercially available robotic system, Aquanaut, and of future models of our products, are and will be subject to risks, including with respect to: • costs to be incurred by us and/or any third-party manufacturing partners in meeting our specifications and design tolerances; • hiring and retaining a sufficient number of qualified employees, which are challenges that have contributed to us being historically understaffed • long- and short-term durability of our ocean robotic systems to withstand day-to-day wear and tear; • delays in delivery of final systems and components by our suppliers; • manufacturing of robotic systems units in excess of demand due to contractual requirements or unexpected changes in demand; • shifts in demand for future models; 23 Table of Contents • quality controls, particularly as we plan to expand our production capabilities; • delays or disruptions in our supply chain, or the need to order supplies in excess of demand due to batch number requirements or price thresholds; • work stoppages, labor strikes and other labor disputes or shortages affecting us or our suppliers, third-party manufacturers and other partners; and • other delays and cost overruns.
Moreover, despite our efforts, we may not be successful in achieving compliance, including if our employees, contractors, service providers or vendors fail to comply with our policies and other requirements. Such failures can subject us to potential action by governmental or regulatory authorities if they are found to be deceptive, unfair, or misrepresentation of our actual practices.
Moreover, despite our efforts, we may not be successful in achieving compliance, including if our employees, contractors, service providers or vendors fail to comply with our policies and other requirements. Such failures can subject us to potential action by governmental or regulatory authorities if they are found to be deceptive, unfair, or a misrepresentation of our actual practices.
However, there can be no assurance that we will be able to identify all such issues or that, if identified, efforts to address them will be effective in all cases. In addition, if the manufacturing of our products is outsourced, we may not be aware of manufacturing defects that could occur.
However, there can be no assurance that we will be able to identify all such issues or that, if identified, efforts to address them will be effective in all cases. In addition, in cases where the manufacturing of our products is outsourced, we may not be aware of manufacturing defects that could occur.
The projected financial and operating information appearing elsewhere in this Annual Report on Form 10-K reflect estimates of future performance and is based on multiple financial, technical, and operational assumptions, including hiring of additional skilled personnel in a timely manner to support continued development and commercialization of the core products; the level of demand for our ocean robotic systems; the performance of our ocean robotic systems; the utilization of the ocean robot fleet; the useable life of the ocean robotic systems; the cost of manufacturing; the cost and availability of adequate supply of components; the nature and length of the sales cycle; and the costs of, maintenance and servicing and refurbishing of our ocean robotic systems.
The projected financial and operating information appearing elsewhere in this Annual Report on Form 10-K reflect estimates of future performance and is based on multiple financial, technical, and operational assumptions, including hiring of additional skilled personnel in a timely manner to support continued development and commercialization of the core products; the level of demand for our ocean robotic systems; the performance of our ocean robotic systems; the utilization of the ocean robot fleet; the usable life of the ocean robotic systems; the cost of manufacturing; the cost and availability of adequate supply of components; the nature and length of the sales cycle; and the costs of, maintenance and servicing and refurbishing of our ocean robotic systems.
We expect we will continue to incur operating and net losses in future periods as we: • continue to design, develop, manufacture and commercialize our ocean robotic systems; • continue to explore new relationships with third-party partners for supply, design-to-manufacturing and manufacturing; • build up inventories of parts and components for ocean robotic systems; • mature maintenance and servicing capacity, capabilities, and replacement parts inventory; • manufacture an inventory of ocean robotic systems; • increase sales and marketing activities and enhance sales and distribution infrastructure; • further develop remote monitoring, updating, and other cloud-based services; • refine safety measures for the ocean robotic systems; • expand technology infrastructure and cybersecurity measures, policies, and controls; and • increase general and administrative functions to support growing operations as a public company.
We expect we will continue to incur operating and net losses in future periods as we: • continue to design, develop, manufacture and commercialize our ocean robotic systems; 13 Table of Contents • continue to explore new relationships with third-party partners for supply, design-to-manufacturing and manufacturing; • build up inventories of parts and components for ocean robotic systems; • mature maintenance and servicing capacity, capabilities, and replacement parts inventory; • manufacture an inventory of ocean robotic systems; • increase sales and marketing activities and enhance sales and distribution infrastructure; • further develop remote monitoring, updating, and other cloud-based services; • refine safety measures for the ocean robotic systems; • expand technology infrastructure and cybersecurity measures, policies, and controls; and • increase general and administrative functions to support growing operations as a public company.
A breakdown of the competitive landscape by Nauticus product area is as follows: • Our untethered electric ocean robots and software platform compete with other tethered hydraulic and electric ROVs and AUVs for performing inspection, maintenance, repair, and physical interventions of ocean assets for sectors including offshore wind, oil & gas, aquaculture, port management, and defense and intel markets. • Our underlining autonomy software platform includes modern robotics and automation technologies for autonomous navigation, manipulation, data orchestration and compression, behavior and mission execution and could face additional competition from the automotive and aerospace sectors working to solve similar challenges in different markets.
A breakdown of the competitive landscape by Nauticus product area is as follows: • Our untethered electric ocean robots and software platform compete with other tethered hydraulic and electric ROVs and AUVs for performing inspection, maintenance, repair, and physical interventions of ocean assets for sectors including offshore wind, oil & gas, aquaculture, port management, and defense and intel markets. • Our underlining autonomy software platform includes modern robotics and automation technologies for autonomous navigation, manipulation, data orchestration and compression, behavior and mission execution and could face additional competition from the automotive and aerospace sectors working to solve similar challenges 32 Table of Contents in different markets.
Any actual or perceived security breach or security incident, or any systems outages or other disruption to systems used in our business, could interrupt our operations, result in loss or improper access to, or acquisition or disclosure of, data or a 25 Table of Contents loss of intellectual property protection, harm our reputation and competitive position, reduce demand for our products, damage our relationships with customers, partners, collaborators, or others, or result in claims, regulatory investigations, and proceedings and significant legal, regulatory, and financial exposure, and any such incidents or any perception that our security measures are inadequate could lead to loss of confidence in us and harm to our reputation, any of which could adversely affect our business, financial condition, and results of operations.
Any actual or perceived security breach or security incident, or any systems outages or other disruption to systems used in our business, could interrupt our operations, result in loss or improper access to, or acquisition or disclosure of, data or a loss of intellectual property protection, harm our reputation and competitive position, reduce demand for our products, damage our relationships with customers, partners, collaborators, or others, or result in claims, regulatory investigations, and proceedings and significant legal, regulatory, and financial exposure, and any such incidents or any perception that our security measures are inadequate could lead to loss of confidence in us and harm to our reputation, any of which could adversely affect our business, financial condition, and results of operations.
These risk factors may be important to understanding other statements in this Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements and related notes in Part I, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part I, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
These risk factors may be important to understanding other statements in this Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements and related notes in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Product defects or recalls could also result in negative publicity, damage to our reputation or, in the event of regulatory developments, delays in new product acceptance. 20 Table of Contents Our products incorporate sophisticated computer software. Complex software frequently contains errors, especially when first introduced. Our software may experience errors or performance problems in the future.
Product defects or recalls 22 Table of Contents could also result in negative publicity, damage to our reputation or, in the event of regulatory developments, delays in new product acceptance. Our products incorporate sophisticated computer software. Complex software frequently contains errors, especially when first introduced. Our software may experience errors or performance problems in the future.
We have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties. We expect to derive a substantial portion of our revenue from contracts with U.S. Department of Defense agencies and may enter into additional contracts with the U.S. or foreign governments in the future.
In the future we may have government contracts, which subjects us to risks including early termination, audits, investigations, sanctions and penalties. We expect to derive a portion of our revenue from contracts with U.S. Department of Defense agencies and may enter into additional contracts with the U.S. or foreign governments in the future.
Even if we are able to establish agreements with third-party manufacturers/suppliers, reliance on third-party manufacturers/suppliers entails additional risks, including: • failure of third-party manufacturers/suppliers to comply with regulatory requirements and maintain quality assurance; • breach of the manufacturing/supply agreement by the third party; 27 Table of Contents • failure to manufacture/supply our product according to our specifications; • failure to manufacture/supply our product according to our schedule or at all; • misappropriation of our proprietary information, including our trade secrets and know-how; and • termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.
Even if we are able to establish agreements with third-party manufacturers/suppliers, reliance on third-party manufacturers/suppliers entails additional risks, including: • failure of third-party manufacturers/suppliers to comply with regulatory requirements and maintain quality assurance; • breach of the manufacturing/supply agreement by the third party; • failure to manufacture/supply our product according to our specifications; • failure to manufacture/supply our product according to our schedule or at all; • misappropriation of our proprietary information, including our trade secrets and know-how; and • termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.
We have only recently added personnel with the necessary skills to oversee these risks and the ability is concentrated in few individuals. Our financial results may vary significantly from period to period due to fluctuations in our operating costs, demand for our products and services, seasonal variation and other factors.
We have added personnel with the necessary skills to oversee these risks and the ability is concentrated in few individuals. Our financial results may vary significantly from period to period due to fluctuations in our operating costs, demand for our products and services, seasonal variation and other factors.
On August 14, 2024, the Company received a determination letter from Nasdaq notifying the Company that it had not regained compliance with the minimum $35 million market value of listed securities requirement for continued listing on The Nasdaq Capital Market as set forth in Listing Rule 5550(b)(2) (the “MVLS Requirement”) or any of the alternative requirements in Listing Rule 5550(b), and that the additional delinquency may serve as a separate basis for the delisting of the Company’s securities from Nasdaq.
On August 14, 2024, the Company received a determination letter from Nasdaq notifying the Company that it had not regained compliance with the minimum $35 million market value of listed securities requirement for continued listing on The Nasdaq Capital Market as set forth in 44 Table of Contents Listing Rule 5550(b)(2) (the “MVLS Requirement”) or any of the alternative requirements in Listing Rule 5550(b), and that the additional delinquency may serve as a separate basis for the delisting of the Company’s securities from Nasdaq.
GAAP”) assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. • We identified material weaknesses in our internal control over financial reporting which we are working to remediate.
GAAP”) assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. • We identified a material weakness in our internal control over financial reporting which we are working to remediate.
Further, we have only a very limited number of robotic systems in operation, and significant time and capital resources will be required to manufacture additional systems. We launched commercial services utilizing the Aquanaut robotic system in 2024, and expect to launch a commercial version of ToolKITT software in 2025.
Further, we have only a very limited number of robotic systems in operation, and significant time and capital resources will be required to manufacture additional systems. We launched commercial services utilizing the Aquanaut robotic system in 2024, and launched a commercial version of ToolKITT software in 2025.
Any future exercise of such warrants or conversion of the Series A Preferred Shares or the November 2024 Debentures would increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our stockholders.
Any future exercise of such warrants or conversion of the Series A, Series B and Series C Preferred Stock or the November 2024 Debentures would increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our stockholders.
We are dependent on our suppliers, some of which are currently single or limited source suppliers, and the inability or other failure of these suppliers to deliver necessary components of our products at prices and volume and with specifications and performance characteristics acceptable to us, could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.
We are dependent on our suppliers, some of which are currently single or limited source suppliers, and the inability or other failure of these suppliers to deliver necessary components of our products at prices and volume and with specifications and performance characteristics acceptable to us, could have a material adverse effect on our business, 29 Table of Contents financial condition, results of operations, cash flows, reputation and prospects.
We evaluate the contract value and cost estimates for performance obligations at least quarterly, and more 34 Table of Contents frequently when circumstances change significantly. Changes in estimates and assumptions related to the status of certain long-term contracts could have a material adverse effect on our operating results, financial condition, and/or cash flows.
We evaluate the contract value and cost estimates for performance obligations at least quarterly, and more frequently when circumstances change significantly. Changes in estimates and assumptions related to the status of certain long-term contracts could have a material adverse effect on our operating results, financial condition, and/or cash flows.
See “— Risks Related to Our Securities—If securities or industry analysts do not publish research or reports about us, or publish negative reports, our stock price and trading volume could decline.” If certain holders of Common Stock sell a significant portion of their securities, it may negatively impact the market price of the shares of our Common Stock and such holders still may receive significant proceeds.
See “— Risks Related to Our Securities—If securities or industry analysts do not publish research or reports about us, or publish negative reports, our stock price and trading volume could decline.” 43 Table of Contents If certain holders of Common Stock sell a significant portion of their securities, it may negatively impact the market price of the shares of our Common Stock and such holders still may receive significant proceeds.
Any actual or perceived 24 Table of Contents inability of the Company to adequately address privacy and security concerns or comply with applicable laws, rules and regulations relating to privacy, data protection or data security, or applicable privacy notices, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities.
Any actual or perceived inability of the Company to adequately address privacy and security concerns or comply with applicable laws, rules and regulations relating to privacy, data protection or data security, or applicable privacy notices, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities.
For the reasons discussed above, the nature of future contracts with the U.S. government will limit our ability to disclose sensitive terms such as contract scope, schedules, and budgets, and, in some cases, the specific end user. We are committed to complying with our disclosure obligations under federal securities laws.
For the reasons discussed above, the nature of future contracts with the U.S. government will limit our ability to disclose sensitive terms such as contract scope, schedules, and budgets, and, in some cases, the specific end user. 40 Table of Contents We are committed to complying with our disclosure obligations under federal securities laws.
Environmental regulations may require us to reduce product energy usage, monitor and exclude an expanding list of restricted substances and participate in recovery and recycling of our products or components. We are unable to predict how any future changes will impact us and if such impacts will be material to our business.
Environmental regulations may require us to reduce product energy 25 Table of Contents usage, monitor and exclude an expanding list of restricted substances and participate in recovery and recycling of our products or components. We are unable to predict how any future changes will impact us and if such impacts will be material to our business.
The consolidated financial statements included in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) assuming the Company will continue as a 12 Table of Contents going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
The consolidated financial statements included in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
As a result of actual or perceived noncompliance with government contracting laws, regulations, or contractual provisions, we may be subject to non-ordinary course audits and internal investigations which may prove costly to our business financially, divert management time, or limit our ability to continue selling our products to our government customers.
As a result of actual or perceived noncompliance with government contracting laws, regulations, or contractual provisions, we may be subject to non-ordinary course audits and internal investigations which may prove costly to our business financially, divert management 41 Table of Contents time, or limit our ability to continue selling our products to our government customers.
We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price (or the closing bid price of our Common Stock in the event the shares of our Common Stock are not traded on any specific trading day) of the Common Stock equals or exceeds $16.50 per share (as adjusted for stock splits, stock dividends, reorganizations and the like) on each of 20 trading days within the 30 trading-day period ending on the third business day prior to the date on which we send proper notice of such redemption, provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under the Securities Act covering Common Stock issuable upon exercise of the warrants and a current prospectus relating to them is available.
We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price (or the closing bid price of our Common Stock in the event the shares of our Common Stock are not traded on any specific trading day) of the Common Stock equals or exceeds $5,346 per share (as adjusted for stock splits, stock dividends, reorganizations and the like) on each of 20 trading days within the 30 trading-day period ending on the third business day prior to the date on which we send proper notice of 46 Table of Contents such redemption, provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under the Securities Act covering Common Stock issuable upon exercise of the warrants and a current prospectus relating to them is available.
Further, weaknesses in our internal controls have been identified in connection with the preparation of financial statements for the years ended December 31, 2024 and 2023 and may be discovered in the future.
Further, weaknesses in our internal controls have been identified in connection with the preparation of financial statements for the years ended December 31, 2025 and 2024 and may be discovered in the future.
In addition, responding to any investigation or other proceeding would likely involve a significant diversion of management’s attention and resources and significant defense costs and other professional fees. We are subject to governmental export and import controls and other laws and regulations that could subject us to liability in the event of noncompliance.
In addition, responding to any investigation or other proceeding would likely involve a significant diversion of management’s attention and resources and significant defense costs and other professional fees. 28 Table of Contents We are subject to governmental export and import controls and other laws and regulations that could subject us to liability in the event of noncompliance.
Item 1A. Risk Factors Our business, financial condition, results of operations, cashflows, reputation and prospects are affected by a number of factors, whether currently known or unknown, including risks specific to us or the robotics industry, as well as risks that affect businesses in general.
Item 1A. Risk Factors Our business, financial condition, results of operations, cash flows, reputation and prospects are affected by a number of factors, whether currently known or unknown, including risks specific to us or the robotics industry, as well as risks that affect businesses in general.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. This assessment includes disclosure of any material weaknesses identified by our management in its assessment of 31 Table of Contents and report on our internal control over financial reporting.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. This assessment includes disclosure of any material weaknesses identified by our management in its assessment of and report on our internal control over financial reporting.
A number of factors will impact the useful lives of our products and systems, including, among other things, the quality of their design and construction, the durability of their component parts and availability of any replacement components, and the occurrence of any anomaly or series of anomalies or other risks associated with their planned use.
A number of factors will impact the useful lives of our products and systems, including, among other things, the quality of their design and 36 Table of Contents construction, the durability of their component parts and availability of any replacement components, and the occurrence of any anomaly or series of anomalies or other risks associated with their planned use.
Wide-ranging market and industry factors, as well as 39 Table of Contents general economic, political, regulatory and market conditions, may negatively affect the market price of our Common Stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our Common Stock is low.
Wide-ranging market and industry factors, as well as general economic, political, regulatory and market conditions, may negatively affect the market price of our Common Stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our Common Stock is low.
Our current and anticipated future dependence upon third-party manufacturers/suppliers may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis. 17 Table of Contents Our business plans require a significant amount of capital.
Our current and anticipated future dependence upon third-party manufacturers/suppliers may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis. Our business plans require a significant amount of capital.
Additionally, we maintain sensitive and proprietary information relating to our business, such as our own proprietary information and personal data relating to our employees. An increasing number of organizations have disclosed breaches of their information security systems and other information security incidents, some of which have involved sophisticated and highly targeted attacks.
Additionally, we maintain sensitive and proprietary information relating to our business, such as our own proprietary information and personal data relating to our employees. An increasing number of organizations have disclosed breaches of their information security systems and other information 26 Table of Contents security incidents, some of which have involved sophisticated and highly targeted attacks.
Moreover, our financial results may not meet expectations of equity research analysts, ratings agencies or investors, who may be focused only on quarterly financial results. If any of this occurs, the trading price of our securities could fall substantially, either suddenly or over time.
Moreover, our financial results may not meet expectations of equity research analysts, ratings agencies or 33 Table of Contents investors, who may be focused only on quarterly financial results. If any of this occurs, the trading price of our securities could fall substantially, either suddenly or over time.
These material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner. • If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected. • A significant amount of our revenues is derived from a limited number of customers.
This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner. • If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected. • A significant amount of our revenues is derived from a limited number of customers.
Moreover, international sales of certain of our products are subject to U.S. laws, regulations and policies like the International Traffic in Arms Regulations (“ITAR”) and other export laws and regulations and may be subject to first 26 Table of Contents obtaining licenses, clearances or authorizations from various regulatory entities.
Moreover, international sales of certain of our products are subject to U.S. laws, regulations and policies like the International Traffic in Arms Regulations (“ITAR”) and other export laws and regulations and may be subject to first obtaining licenses, clearances or authorizations from various regulatory entities.
In consultation with the Audit Committee and our auditors, we made the determination to restate such financial statements following the identification of an error associated with a failure to timely recognize an accrued liability and expense arising out of the RRA.
In consultation with the Audit Committee and our auditors, we made the determination to restate such financial statements following the identification of an error associated with a failure to timely recognize an accrued liability and expense arising out of the Registration Rights Agreement ("RRA").
Any failure to maintain such internal control could adversely impact our ability to report our financial position and results of operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations.
Any failure to maintain such internal control could adversely impact our ability to report our financial position and results of operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete 15 Table of Contents understanding of our operations.
We identified material weaknesses in our internal control over financial reporting which we are working to remediate. This material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
We previously identified material weaknesses in our internal control over financial reporting, which we are working to remediate. These material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
If one or more of the targeted markets experience a shift in customer or prospective customer demand, our 18 Table of Contents products may not compete as effectively, if at all, and they may not be fully developed into commercial products.
If one or more of the targeted markets experience a shift in customer or prospective customer demand, our products may not compete as effectively, if at all, and they may not be fully developed into commercial products.
Also, it may require us to change the anticipated pricing of our offerings, which would adversely affect our margins and cash flows. Any of the foregoing could adversely affect our business, financial condition, results of operations, cash flows, reputation and prospects.
Also, it may require us to change 31 Table of Contents the anticipated pricing of our offerings, which would adversely affect our margins and cash flows. Any of the foregoing could adversely affect our business, financial condition, results of operations, cash flows, reputation and prospects.
Failure to comply with applicable regulations and requirements could lead to fines, penalties, repayments, or compensatory or treble damages, or suspension or debarment from U.S. government contracting or subcontracting for a period of time or 35 Table of Contents indefinitely.
Failure to comply with applicable regulations and requirements could lead to fines, penalties, repayments, or compensatory or treble damages, or suspension or debarment from U.S. government contracting or subcontracting for a period of time or indefinitely.
In addition, our management, with the participation and under the supervision of our former Chief Executive Officer and former Chief Financial Officer, performed a re-evaluation of the effectiveness of our disclosure controls and procedures as of the end of the 2023 Restated Period.
In addition, our management, with the participation and under the supervision of our former Chief Executive Officer and former Chief Financial Officer, performed a re-evaluation of the 14 Table of Contents effectiveness of our disclosure controls and procedures as of the end of the 2023 Restated Period.
We may not be able to attract, assimilate, develop or retain qualified personnel in the future, and our failure to do so could adversely affect our business, including the execution of our business strategy.
We may not be able to attract, assimilate, develop or retain qualified personnel in the future, and our failure to do so could 24 Table of Contents adversely affect our business, including the execution of our business strategy.
Any failure by our management team and 22 Table of Contents our employees to perform as expected may have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.
Any failure by our management team and our employees to perform as expected may have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.
The available supply of some of these materials and components is currently and may continue to be unstable, depending on market conditions and global demand, and could adversely affect our business and operating results.
The available supply of some of these materials and components 30 Table of Contents is currently and may continue to be unstable, depending on market conditions and global demand, and could adversely affect our business and operating results.
The termination of funding for a U.S. government program would result in a loss of anticipated future revenue attributable to that program, which could have an adverse impact on our operations.
The termination of funding for a U.S. government program would result in a loss of anticipated future revenue attributable to that program, which could have an adverse 39 Table of Contents impact on our operations.
At any time the Company has the right to redeem in cash all, but not less than all, the shares of Series A Preferred Stock then outstanding at a 25% redemption premium to the greater of (i) the Conversion Amount being redeemed, and (ii) the product of (1) the Conversion Rate with respect to the Conversion Amount being redeemed, multiplied by (2) the equity value of the Common Stock underlying the Series A Preferred Stock.
At any time the Company has the right to redeem in cash all, but not less than all, the shares of Series A Preferred Stock then outstanding at a 25% redemption premium to the greater of (i) the Conversion Amount (as defined in the applicable Certificate of Designation) being redeemed, and (ii) the product of (1) the Conversion Rate (as defined in the applicable Certificate of Designation) with respect to the Conversion Amount being redeemed, multiplied by (2) the equity value of the Common Stock underlying the Series A Preferred Stock.
NOLs generated prior to December 31, 2017, however, have a 20-year carryforward period, but are not subject to the 80% limitation. In addition, the NOLs are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.
NOLs 34 Table of Contents generated prior to December 31, 2017, however, have a 20-year carryforward period, but are not subject to the 80% limitation. In addition, the NOLs are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.
If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the 41 Table of Contents underlying securities for sale under all applicable state securities laws.
If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Any future exercise of such warrants or conversion of the Debentures and the Series A Preferred Stock would increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our stockholders.
Any future exercise of such warrants or conversion of the Series A, the Series B and the Series C Preferred Stock or the November 2024 Debentures would increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our stockholders.
We believe that the Company’s cash and other current assets and forecasted operating cash flows currently expected to be generated from the ongoing activity will provide the Company with sufficient financial resources to fund operations and meet our capital and operating requirements and anticipated obligations as they become due in the next twelve month s.
We believe that the Company’s cash and other current assets, forecasted operating cash flows currently expected to be generated from the ongoing activity, borrowings from lenders and funds from At the Market offerings will provide the Company with sufficient financial resources to fund operations and meet our capital and operating requirements and anticipated obligations as they become due in the next twelve month s.
In addition, we may incur significant costs servicing, maintaining and refurbishing our robotic ocean 29 Table of Contents vehicles, and we expect that the cost to repair and service our robotic systems will increase over time as our vehicles age.
In addition, we may incur significant costs servicing, maintaining and refurbishing our robotic ocean vehicles, and we expect that the cost to repair and service our robotic systems will increase over time as our vehicles age.
See “ Risk Factors ,” “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and “ Cautionary Note Regarding Forward-Looking Statements .” Whether actual operating and financial results and business developments will be consistent with our expectations and assumptions as reflected in our forecast depends on a number of other factors, many of which are outside our control, including, but not limited to: • whether we can obtain sufficient capital to sustain and grow our business; 16 Table of Contents • our ability to manage our growth; • the contractual terms of one or more agreements with third-party manufacturers; • whether we can manage relationships with key suppliers and partners; • the timing and costs of the required marketing and promotional efforts; • whether customers and their employees will adopt the ocean robotic systems offered by us; • the timing required and success of customer testing of our technology; • competition, including from established and future competitors; • our ability to retain existing key management, to attract additional leaders, to integrate recent hires and to attract, retain, and motivate qualified personnel, including engineers, design and production personnel, and service technicians; • the overall strength and stability of domestic and international economies; • demand for currently available and future ocean robots; • regulatory, legislative, and political changes; and • customer requirements and preferences.
See “ Risk Factors ,” “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and “ Cautionary Note Regarding Forward-Looking Statements .” Whether actual operating and financial results and business developments will be consistent with our expectations and assumptions as reflected in our forecast depends on a number of other factors, many of which are outside our control, including, but not limited to: • whether we can obtain sufficient capital to sustain and grow our business; • our ability to manage our growth; • the contractual terms of one or more agreements with third-party manufacturers; • whether we can manage relationships with key suppliers and partners; • the timing and costs of the required marketing and promotional efforts; • whether customers and their employees will adopt the ocean robotic systems offered by us; • the timing required and success of customer testing of our technology; • competition, including from established and future competitors; • our ability to retain existing key management, to attract additional leaders, to integrate recent hires and to attract, retain, and motivate qualified personnel, including engineers, design and production personnel, and service technicians; • the overall strength and stability of domestic and international economies; • demand for currently available and future ocean robots; • regulatory, legislative, and political changes; and • customer requirements and preferences. 18 Table of Contents Unfavorable changes in any of these or other factors, most of which are beyond our control, could cause us to fail to meet our operating and financial projections and could materially and adversely affect our business, financial condition, results of operations, cash flows, reputation and prospects.
Risks relating to our supply chain include: • “Buy American” or other similar requirements that may be imposed on government contractors; • an increase in the cost, or decrease in the available supply, of semiconductor chips, electrical components, commodity materials and specialty alloys; • disruption in the supply of lithium-ion batteries due to quality issues or recalls; • the imposition of additional duties, tariffs and other charges or quotas on imports; and • fluctuations in the value of any foreign currencies in which manufactured parts, commercial components and related raw material purchases are or may be denominated against the U.S. dollar. 28 Table of Contents Our business is also dependent on the continued supply of lithium-ion battery cells.
Risks relating to our supply chain include: • “Buy American” or other similar requirements that may be imposed on government contractors; • an increase in the cost, or decrease in the available supply, of semiconductor chips, electrical components, commodity materials and specialty alloys; • disruption in the supply of lithium-ion batteries due to quality issues or recalls; • the imposition of additional duties, tariffs and other charges or quotas on imports; and • fluctuations in the value of any foreign currencies in which manufactured parts, commercial components and related raw material purchases are or may be denominated against the U.S. dollar.
We expect some products currently in development to become commercially available in the next few years and present a competitive threat to our products. Our competitor base may change or expand as we continue to develop and commercialize our robotic systems in the future.
These companies have products that are commercially available and in development. We expect some products currently in development to become commercially available in the next few years and present a competitive threat to our products. Our competitor base may change or expand as we continue to develop and commercialize our robotic systems in the future.
Risks Related to Our Securities • We may issue a significant number of shares or equity-linked securities in the future in connection with investments or acquisitions or other efforts to raise capital. • If certain holders of Common Stock sell a significant portion of their securities, it may negatively impact the market price of the shares of our Common Stock and such holders still may receive significant proceeds. • If we are unable to maintain compliance with Nasdaq’s listing criteria, including their minimum bid price rule and minimum market value and stockholder equity requirement, Nasdaq may delist the Company’s stock. • We are an emerging growth company and smaller reporting company, and as such are subject to various risks unique only to emerging growth companies, including, but not limited to, risks associated with taking advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, which could, among other things, make our securities less attractive to investors and may make it more difficult to compare our performance with certain public companies. • We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to investors, thereby making Public Warrants worthl ess.
Risks Related to Our Securities • We may issue a significant number of shares or equity-linked securities in the future in connection with investments or acquisitions or other efforts to raise capital, which may cause dilution to, or otherwise adversely affect, our stockholders • Future offering of debt or equity securities may rank senior to our Common Stock. • If certain holders of Common Stock sell a significant portion of their securities, it may negatively impact the market price of the shares of our Common Stock and such holders still may receive significant proceeds. • The market price of our Common Stock is volatile, and you may lose some or all of your investment. • If we are unable to maintain compliance with Nasdaq’s listing criteria, including their minimum bid price rule and minimum market value and stockholder equity requirement, Nasdaq may delist the Company’s stock. • We are an emerging growth company and smaller reporting company, and as such are subject to various risks unique only to emerging growth companies, including, but not limited to, risks associated with taking advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, which could, among other things, make our securities less attractive to investors and may make it more difficult to compare our performance with certain public companies. • We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to investors, thereby making Public Warrants worthl ess.
We may redeem outstanding Series A Preferred Stock and the November 2024 Debentures.
We may redeem outstanding Series A, Series B and Series C Preferred Stock and the November 2024 Debentures.
Risks Relating to our Business and Industry We are an early-stage company with a history of losses, and we expect to incur significant expenses for the foreseeable future. We incurred a net loss of $134.9 million and $50.7 million for the years ended December 31, 2024 and 2023, respectively.
Risks Relating to our Business and Industry We are an early-stage company with a history of losses, and we expect to incur significant expenses for the foreseeable future. We incurred a net loss of $40.8 million and $134.9 million for the years ended December 31, 2025 and 2024, respectively.
As of December 31, 2024, we had federal net operating losses (“NOLs”) of approximately $121 million, of which about $646,000 begin to expire in 2035 an d the remainder have no expiration.
As of December 31, 2025, we had federal net operating losses (“NOLs”) of approximately $157 million, of which about $31,000 begin to expire in 2035 an d the remainder have no expiration.
We expect our expansion to include: 15 Table of Contents • expanding the management, engineering, and product teams; • identifying and recruiting individuals with the appropriate relevant experience; • hiring and training new personnel; • launching commercialization of new products and services; • forecasting production and revenue and ERP modifications; • entering into relationships with one or more third-party design-for-manufacturing partners and third-party manufacturers and/or expanding our internal manufacturing capabilities; • controlling expenses and investments in anticipation of expanded operations; • carrying out acquisitions and entering into collaborations, in-licensing arrangements, joint ventures, strategic alliances, or partnerships; • expanding and enhancing internal information technology, safety, and security systems; • establishing or expanding sales, customer service, and maintenance and servicing facilities; • conducting demonstrations of ocean robotic systems; • entering into agreements with suppliers and service providers; and • implementing and enhancing administrative infrastructure, systems, and processes.
We expect our expansion to include: • expanding the management, engineering, and product teams; • identifying and recruiting individuals with the appropriate relevant experience; • hiring and training new personnel; • launching commercialization of new products and services; • forecasting production and revenue and ERP modifications; • entering into relationships with one or more third-party design-for-manufacturing partners and third-party manufacturers and/or expanding our internal manufacturing capabilities; • controlling expenses and investments in anticipation of expanded operations; • carrying out acquisitions and entering into collaborations, in-licensing arrangements, joint ventures, strategic alliances, or partnerships; • expanding and enhancing internal information technology, safety, and security systems; • establishing or expanding sales, customer service, and maintenance and servicing facilities; • conducting demonstrations of ocean robotic systems; • entering into agreements with suppliers and service providers; and • implementing and enhancing administrative infrastructure, systems, and processes. 17 Table of Contents Should achieved market penetration warrant, we intend to continue to hire a significant number of additional personnel, including engineers, design and production personnel, and operators and service technicians for our ocean robotic systems and services.
We also face competition from bluetech software companies, and as we expand into different markets, we could face more boarder competition from autonomy software automotive companies if/as they diversify into the ocean markets. • Our robotic platforms also compete with other unmanned vehicles manufactured or otherwise offered by companies and traditional automation and robotics companies. • Other companies are working to develop untethered ROVs and AUVs which could directly compete with our products and services. 30 Table of Contents These companies have products that are commercially available and in development.
We also face competition from bluetech software companies, and as we expand into different markets, we could face more boarder competition from autonomy software automotive companies if/as they diversify into the ocean markets. • Our robotic platforms also compete with other unmanned vehicles manufactured or otherwise offered by companies and traditional automation and robotics companies. • Other companies are working to develop untethered ROVs and AUVs which could directly compete with our products and services.
We may redeem outstanding Series A Preferred Stock and the November 2024 Debentures. 11 Table of Contents • Currently outstanding Public Warrants, Private Warrants, SPA Warrants and New SPA Warrants are exercisable for shares of Common Stock. Additionally, the Series A Preferred Shares and the November 2024 Debentures are convertible.
We may redeem outstanding Series A, B and C Preferred Stock and the November 2024 Debentures. • Currently outstanding Public Warrants, Private Warrants, SPA Warrants and New SPA Warrants are exercisable for shares of Common Stock. Additionally, our Series A, Series B and Series C Preferred Stock and the November 2024 Debentures are convertible.
Sales to government entities are subject to a number of risks. Selling to government entities can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale.
Selling to government entities can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale.
The success of any proposed product and service offerings will depend on numerous factors, including our ability to: • attract, recruit and retain qualified personnel, including engineers, design and production personnel and service technicians; • identify the preferred product and service features in multiple industries, such as offshore wind energy, defense, and subsea oil and gas and successfully incorporate those features into our products; • develop and introduce in a timely manner proposed products and services of sufficient quality and in sufficient quantities; • adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third parties; and • demonstrate the cost savings and efficacy of our products and services.
The success of any proposed product and service offerings will depend on numerous factors, including our ability to: • attract, recruit and retain qualified personnel, including engineers, design and production personnel and service technicians; • identify the preferred product and service features in multiple industries, such as offshore wind energy, defense, and subsea oil and gas and successfully incorporate those features into our products; • develop and introduce in a timely manner proposed products and services of sufficient quality and in sufficient quantities; • adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third parties; and • demonstrate the cost savings and efficacy of our products and services. 21 Table of Contents We have managed and expect to continue to manage our product development efforts through the development of alpha units, beta units, and commercial units.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs of the date of this Annual Report on Form 10-K, we are not aware of any previous cybersecurity incidents that have materially affected our business, financial condition, results of operations, cash flows, reputation and prospects or that are reasonably likely to have such a material effect.
Biggest changeAs of the date of this Annual Report on Form 10-K, we are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents (as such terms are defined in Item 106(a) of Regulation S-K), that have 49 Table of Contents materially affected our business, financial condition, results of operations, cash flows, reputation and prospects or that are reasonably likely to have such a material effect.
As part of that risk management process, our management team identifies, assesses and evaluates risks impacting our operations, including those risks related to cybersecurity, and raise them for internal discussion, and where it is determined to be appropriate, issues are also raised to our board of directors for consideration.
As part of that risk management process, our management team identifies, assesses and evaluates risks impacting our operations, including those risks related to cybersecurity, and raises them for internal discussion, and where it is determined to be appropriate, issues are also raised to our board of directors for consideration.
On a regular basis, our Vice President of Corporate Development & Administration will report to o ur board of directors on cybersecurity matters, including key risks, the potential impact of those exposures on our business, financial condition, results of operations, cash flows, reputation and prospects, and the programs and steps implemented by our management team to monitor and mitigate risks.
On a regular basis, our Vice President of Corporate Development & Administration reports to o ur board of directors on cybersecurity matters, including key risks, the potential impact of those exposures on our business, financial condition, results of operations, cash flows, reputation and prospects, and the programs and steps implemented by our management team to monitor and mitigate risks.
Item 1C. Cybersecurity Cybersecurity Program We have implemented a cybersecurity program to support both the effectiveness of our systems and our preparedness for information security risks. This program includes a number of safeguards, such as: password protection; multi-factor authentication; monitoring and alerting systems for internal and external threats; and regular evaluations of our cybersecurity program.
Item 1C. Cybersecurity 48 Table of Contents Cybersecurity Program We have implemented a cybersecurity program to support both the effectiveness of our systems and our preparedness for information security risks. This program includes a number of safeguards, such as: password protection; multi-factor authentication; monitoring and alerting systems for internal and external threats; and regular evaluations of our cybersecurity program.
Governance Management Oversight 43 Table of Contents The controls and processes employed to assess, identify and manage material risks from cybersecurity threats are implemented and overseen by our IT Systems Administrator. Our IT Systems Administrator has 15 years in total network and system administration experiences, 8 of which are experience addressing cybersecurity risks.
Governance Management Oversight The controls and processes employed to assess, identify and manage material risks from cybersecurity threats are implemented and overseen by our IT Systems Administrator. Our IT Systems Administrator has 16 years in total network and system administration experiences, 8 of which are experience addressing cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed0 unchanged
Biggest changeWe believe our current office space and service facilities are adequate and suitable for our current operations. Should we need additional space, we believe we will be able to obtain additional space on commercially reasonable terms.
Biggest changeShould we need additional space, we believe we will be able to obtain additional space on commercially reasonable terms.
Item 2. Properties We operate in a corporate and manufacturing facility in Webster, Texas, USA. We currently occupy a facility that has approximately 30,000 square feet of office, development, and manufacturing space pursuant to a lease that we expect will expire in April 2027.
Item 2. Properties We operate in a corporate and manufacturing facility in Webster, Texas, USA. We currently occupy a facility that has approximately 30,000 square feet of office, development, and manufacturing space pursuant to a lease that we expect will expire in April 2027. We operate in a satellite repair, test, and services facility in Robert, Louisiana, USA.
Added
We own this facility that has approximately 17,800 square feet of office, warehouse, and equipment repair space. The property also includes a 16-foot-deep pool used for testing offshore robotics equipment. We believe our current office space and service facilities are adequate and suitable for our current operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. 44 Table of Contents PART II
Biggest changeMine Safety Disclosures Not applicable. 50 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed5 unchanged
Biggest changeWarrants At December 31, 2024, there were 545,519 warrants outstanding, including the SPA Warrants, for the purchase of Company Common Stock. Refer to Note 12 to the consolidated financial statements included in this annual report for additional information relating to outstanding warrants.
Biggest changeWarrants At December 31, 2025, there were 15,811,838 warrants outstanding, including the SPA Warrants, exercisable into 60,602 shares of the Company's Common Stock. Refer to Note 17 to the consolidated financial statements included in this annual report for additional information relating to outstanding warrants.
Recent Sales of Unregistered Securities During the year ended December 31, 2024, we did not have any sales of equity securities that were not registered under the Securities Act of 1933, as amended, that have not been reported on Form 8-K or Form 10-Q.
Recent Sales of Unregistered Securities During the year ended December 31, 2025 , we did not have any sales of equity securities that were not registered under the Securities Act of 1933, as amended, that have not been reported on Form 8-K or Form 10-Q.
Our Common Stock is quoted on The Nasdaq Capital Market under the symbol “KITT.” Our redeemable warrants are quoted on The Nasdaq Capital Market under the symbol “KITTW.” Shareholders As of the date of this Annual Report, there are approximately 38 shareholders of record of our Common Stock based upon our transfer agent’s report.
Our Common Stock is quoted on The Nasdaq Capital Market under the symbol “KITT.” Our redeemable warrants are quoted on The Nasdaq Capital Market under the symbol “KITTW.” Shareholders As of the date of this Annual Report, there are approximately 36 shareholders of record of our Common Stock based upon our transfer agent’s report.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We made no purchases of our equity securities within the fourth quarter of the fiscal year covered by the report. Item 6. [Reserved] 45 Table of Contents
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We made no purchases of our equity securities within the fourth quarter of the fiscal year covered by the report. Item 6. [Reserved] 51 Table of Contents
Refer to Note 13 - Stock-Based Compensation to the consolidated financial statements included in this annual report for additional information relating to restricted stock units.
Refer to Note 18 - Stock-Based Compensation to the consolidated financial statements included in this annual report for additional information relating to restricted stock units.
At December 31, 2024, there were 19,439 options outstanding for the purchase of Company Common Stock. Outstanding options vest assuming continuous service to the Company with 25% of the options vesting one year after grant and the balance vesting in a series of 36 successive equal monthly installments measured from the first anniversary of the grant.
At December 31, 2025, there were 712 options outstanding for the purchase of Company Common Stock. Outstanding options vest assuming continuous service to the Company with 25% of the options vesting one year after grant and the balance vesting in a series of 36 successive equal monthly installments measured from the first anniversary of the grant.
The Omnibus Incentive Plan provides for the grant of options, stock appreciation rights, RSUs, restricted stock and other stock-based awards, any of which may be performance-based, and for incentive bonuses, which may be paid in cash, Common Stock or a combination thereof. At December 31, 2024, 258,424 equity units were available for future grants under the Omnibus Incentive Plan.
The Omnibus Incentive Plan provides for the grant of options, stock appreciation rights, RSUs, restricted stock and other stock-based awards, any of which may be performance-based, and for incentive bonuses, which may be paid in cash, Common Stock or a combination thereof. At December 31, 2025, 143,128 equity units were available for future grants under the Omnibus Incentive Plan.
Refer to Note 13 - Stock-Based Compensation to the consolidated financial statements included in this annual report for additional information relating to outstanding options. At December 31, 2024, there were 317,064 restricted stock units outstanding for the right to receive one share of Company Common Stock.
Refer to Note 18 - Stock-Based Compensation to the consolidated financial statements included in this annual report for additional information relating to outstanding options. At December 31, 2025, there were 112,214 restricted stock units outstanding for the right to receive one share of Company Common Stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

22 edited+30 added−34 removed4 unchanged
Biggest changeThe decrease is primarily attributable to the decline in activity partially offset by costs relating to the commercialization of the Aquanaut vehicle. 47 Table of Contents Depreciation. For the year ended December 31, 2024 , depreciation increased by $1,007,416, or 138%, as compared to 2023 primarily due to the increase in property and equipment. Research and development .
Biggest changeFor the year ended December 31, 2025, cost of revenue increased by $2,604,315, or 27% as compared to 2024. The increase is primarily attributable to the increase in activity partially offset by costs relating to the commercialization of the Aquanaut vehicle.
We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. Overview Nauticus Robotics, Inc. (the "Company", "our", "us" or "we") is a technology-driven company specializing in the development of advanced fully electric autonomous robotic solutions for subsea applications.
We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. Overview Nauticus Robotics, Inc. (the "Company", "our", "us" or "we") is a technology-driven company specializing in the development of advanced electric autonomous robotic solutions for subsea applications.
For the year ended December 31, 2024, loss on the extinguishments of debt of $127,605,940 was reported driven by the Amendment and Exchange Agreement. See Note 7 "Notes Payable". Change in fair value of warrant liabilities.
For the year ended December 31, 2024, loss on the extinguishments of debt of $127,605,940 was reported driven by the Amendment and Exchange Agreement, see Note 8, "Notes Payable". Change in fair value of warrant liabilities.
A substantial portion of our current revenue may be generated by sales to government entities, which are subject to a number of uncertainties, challenges, and risks,” “Risks Related to Our Business and Industry — Our business plans require a significant amount of capital.
A material portion of our current revenue may be generated by sales to government entities, which are subject to a number of uncertainties, challenges, and risks,” “Risks Related to Our Business and Industry — Our business plans require a significant amount of capital.
Off-Balance Sheet Arrangements As of December 31, 2024, we had no material off-balance sheet arrangements. Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates, assumptions and judgments that can significantly impact the amounts we report as assets, liabilities, revenue, costs and expenses and the related disclosures.
Off-Balance Sheet Arrangements As of December 31, 2025, we had no material off-balance sheet arrangements. Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates, assumptions and judgments that can significantly impact the amounts we report as assets, liabilities, revenue, costs and expenses and the related disclosures.
The Company’s indebtedness at December 31, 2024 is presented in Item 8, “Financial Statements - Note 7 - Notes Payable” and our lease obligations are presented in Item 8, “Financial Statements - Note 8 - Leases.” There are no other new accounting pronouncements that are expected to have a material impact on our consolidated financial statements.
The Company’s indebtedness at December 31, 2025 is presented in Item 8, “Financial Statements - Note 8 - Notes Payable” and our lease obligations are presented in Item 8, “Financial Statements - Note 8 - Leases.” There are no other new accounting pronouncements that are expected to have a material impact on our consolidated financial statements.
The Company currently funds its operations with cash on hand, availability under the November 2024 Debentures (see Item 8, "Financial Statements - Note 7 - Notes Payable") and the offer and sale of additional shares of Common Stock under the At The Market Offering Agreement (see Item 8, "Financial Statements - Note 18 - Subsequent Events").
The Company currently funds its operations with cash on hand, availability under the November 2024 Debentures (see Item 8, "Financial Statements - Note 8 - Notes Payable"), the Equity Purchase Facility Agreement (see Item 8, "Financial Statements - Note 16 - Common Stock") and the offer and sale of additional shares of Common Stock under the At The Market Offering Agreement (see Item 8, "Financial Statements - Note 16 - Common Stock and Note 24 - Subsequent Events").
For the year ended December 31, 2024, total research and development expenses decreased by $1,316,710, or 94%, as compared to 2023 . The decrease was due primarily to the Company achieving technological feasibility in both hardware and software development and focusing on bringing its products to market. General and administrative.
The decrease was due primarily to the Company achieving technological feasibility in both hardware and software development and focusing on bringing its products to market. General and administrative. For the year ended December 31, 2025 , total general and administrative expenses increased b y $750,082 or 6%, as compa red to 2024 .
The Company continues to develop its principal products and conduct research and development activities. The Company currently funds its operations with cash on hand, availability under the November 2024 Debentures (see Note 7 - Notes Payable) and the offer and sale of additional shares of Common Stock under the At The Market Offering Agreement (see Note 18 - Subsequent Events).
The Company currently funds its operations with cash on hand, availability under the November 2024 Debentures (see Note 8 - Notes Payable), the sale of shares of Common Stock under the Equity Purchase Facility Agreement (see Note 16 - Common Stock) and the offer and sale of additional shares of Common Stock under the At The Market Offering Agreement.
For the years ended December 31, 2024 and 2023, the Company reported a gain in change of fair value of warrant liabilities of $13,559,010 and $14,902,427 respectively. Change in f air value of New Convertible Debentures. For the year ended December 31, 2024, a gain on the fair value of the new convertible debentures of $7,989,948 was reported.
For the years ended December 31, 2025 and 2024, the Company reported a gain in change of fair value of warrant liabilities of $170,632 and $13,559,010, respectively, driven by fluctuations in the trading price of the Company's Common Stock. Change in f air value of New Convertible Debentures.
Interest expense, net included $4 million associated with liquidated damages and interest arising out of the RRA. Liquidity and Capital Resources The Company has incurred recurring losses each year since its inception and currently does not generate sufficient revenue to cover operating expenses, working capital and capital expenditures.
Liquidity and Capital Resources The Company has incurred recurring losses each year since its inception and currently does not generate sufficient revenue to cover operating expenses, working capital and capital expenditures. The Company continues to develop its principal products and conduct research and development activities.
Our addressable markets include upstream, midstream, and downstream oil and gas, defense, offshore renewables, seafloor telecommunications, aquaculture, port security, oceanographic research, and subsea mining. Currently, our primary focus is on oil and gas operations and defense applications. Basis of Presentation – The Company’s consolidated financial statements have been prepared in accordance with U.S. GAAP.
The Company's addressable markets include upstream, midstream, and downstream oil and gas, defense, offshore renewables, seafloor telecommunications, aquaculture, port security, oceanographic research, and subsea mining. Currently, our primary focus is on oil and gas operations and defense applications. The Company remains in the early stages of commercialization and continues to invest in product development, system deployment and market-expansion.
See the sections entitled “Risks Related to Our Business and Industry — A significant amount of our revenues in 2024 and 2023 was derived from a limited number of customers.
Additionally, the Company is consistently focused on raising capital, strategic acquisitions and alliances and other initiatives to strengthen the Company. See the sections entitled “Risks Related to Our Business and Industry — A significant amount of our revenues is derived from a limited number of customers.
Our portfolio includes fully autonomous underwater vehicles (AUVs), robotic manipulators, an open robotic operating system, and related consulting and prototype services with a strong alignment to offshore energy and national security interests. Our technology solutions enable autonomous operations for both the commercial and defense sectors.
The Company's portfolio includes: • Autonomous underwater vehicles (AUVs) • Electric Robotic manipulators • A platform-agnostic robotic operating system • Related engineering, consulting and prototype services These solutions are designed to support operations in both commercial and defense markets, with current emphasis on offshore energy and national security applications.
Change in fair value of November 2024 Debentures. For the year ended December 31, 2024, a loss on the fair value of the November 2024 debentures of $435,864 was reported. Interest expense, net. For the year ended December 31, 2024, interest expense, net decreased by $(3,668,050) as compared to 2023.
For the year ended December 31, 2025, a loss on the fair value of the November 2024 debentures of $2,247,848 was reported. For the year ended December 31, 2024, a loss on the fair value of the November 2024 debentures of $435,864 was reported.
The Company may require additional liquidity to continue its operations over the next twelve months, which a current investor has committed to support.
The Company may require additional liquidity to continue its operations over the next twelve months, which a current investor has committed to support. However, factors such as stock price, volatility, trading volume, market conditions, demand and regulatory requirements may adversely affect the Company's ability to raise capital in an efficient manner.
All intercompany balances and transactions have been eliminated in preparation of these consolidated financial statements. Liquidity — Total cash and cash equivalents on hand as of December 31, 2024 was $1,186,047. The Company has incurred recurring losses each year since its inception and currently does not generate sufficient revenue to cover operating expenses, working capital and capital expenditures.
The Company has incurred recurring losses each year since its inception and currently does not generate sufficient revenue to cover operating expenses, working capital and capital expenditures. The Company continues to invest in the development, enhancement, and commercialization of its core technology platforms.
For the year ended December 31, 2024 , net revenue decreased by $4,798,880, or 73%, as compared to 2023 . The decrease in revenue is primarily attributable to t he reduction in government contracts in 2024. Cost of revenue. For the year ended December 31, 2024, cost of revenue decreased by $2,196,726, or 18% as compared to 2023 .
For the year ended December 31, 2025 , net revenue increased by $3,467,443 , or 192%, as compared to 2024 . The increase in revenue is primarily attributable to t he revenue stream from the acquisition of SeaTrepid's ROV fleet. 53 Table of Contents Cost of revenue.
We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. Actual results could differ significantly from these estimates under different assumptions and conditions. Significant accounting policies are described in Note 2, "Summary of Significant Accounting Policies", in Item 8 - "Financial Statements and Supplementary Data" of this Annual Report.
We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. Actual results could differ significantly from these estimates under different assumptions and conditions. Long-Lived Assets - Long-lived assets, including property and equipment and definite-lived intangible assets, are recorded at cost and depreciated or amortized over their estimated useful lives.
Significant sources and uses of cash during the year ended December 31, 2024. Sources of cash: • The Company received net proceeds of $24,496,163 from debt and equity financings comprising of additional convertible secured term loans, convertible debentures and an At The Market Offering (see Item 8, "Financial Statements - Note 7 - Notes Payable" and "Note 11 - Equity").
Sources of cash: • The Company received net proceeds of $34,716,895 from equity financings comprising of an At The Market Offering and the issuance of Series B Preferred Stock (see Item 8, "Financial Statements - Note 15 - "Preferred Stock" and "Note 16 - "Common Stock").
The Company may require additional liquidity to continue its operations over 48 Table of Contents the next twelve months, which a current investor has committed to support.
The Company may require additional liquidity to continue its operations over the next twelve months. While a current investor has expressed an intention to provide financial support, factors such as stock price, volatility, trading volume, market conditions, demand and regulatory requirements may 54 Table of Contents adversely affect the Company's ability to raise capital in an efficient manner.
The Company believes that with this investor support there will be sufficient resources to continue as a going concern for at least one year from the date that the consolidated financial statements contained in this Form 10-K are issued. As of December 31, 2024, we had $1,186,047 of cash and cash equivalents. The cash equivalents consist of money market funds.
Because of these factors, the Company believes that this creates substantial doubt with the Company's ability to continue as a going concern. As of December 31, 2025, we had $7,016,610 of cash and cash equivalents. The cash equivalents consist of money market funds. Significant sources and uses of cash during the year ended December 31, 2025.
Removed
The Company believes that with this investor support there will be sufficient resources to continue as a going concern for at least one year from the date that the consolidated financial statements contained in this Form 10-K are issued.
Added
Basis of Presentation – The Company’s consolidated financial statements have been prepared in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated in preparation of these consolidated financial statements. Liquidity — Total cash and cash equivalents on hand as of December 31, 2025 was $7,016,610.
Removed
Our future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders or introduce covenants that may restrict our operations or our ability to pay dividends,” “Risks Related to Our Business and Industry — With our service offering still being commercialized at a large scale, we have limited current customers, and there is no assurance that expected customer demand will result in binding orders or subscriptions,” “Risks Related to Our Business and Industry — If we are successful in commercializing our products and services, our revenue will be concentrated in a limited number of models for the foreseeable future,” “Risks Related to Our Business and Industry — We may be unable to adequately control the costs associated with our operations.” 46 Table of Contents Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table sets forth summarized consolidated financial information: For The Year Ended December 31, Change $ Change % 2024 2023 Revenue: Service $ 1,807,472 $ 6,605,852 $ (4,798,380) -73 % Service - related party - 500 (500) -100 % Total revenue 1,807,472 6,606,352 (4,798,880) -73 % Costs and expenses: Cost of revenue (exclusive of items shown separately below) 9,732,205 11,928,931 (2,196,726) -18 % Depreciation 1,736,828 729,412 1,007,416 138 % Research and development 82,850 1,399,560 (1,316,710) -94 % General and administrative 13,370,486 18,271,832 (4,901,346) -27 % Severance - 1,476,636 (1,476,636) -100 % Impairment of property and equipment - 25,354,791 (25,354,791) -100 % Loss on contract - 2,542,913 (2,542,913) -100 % Total costs and expenses 24,922,369 61,704,075 (36,781,706) -60 % Operating loss (23,114,897) (55,097,723) 31,982,826 -58 % Other (income) expense: Other (income) expense, net 110,361 627,580 (517,219) -82 % Loss on lease termination 18,721 453,162 (434,441) -96 % Foreign currency transaction loss 61,597 44,020 17,577 40 % Loss on extinguishment of debt 127,605,940 - 127,605,940 100 % Loss on exchange of warrants - 590,266 (590,266) -100 % Change in fair value of warrant liabilities (13,559,010) (14,902,427) 1,343,417 -9 % Change in fair value of New Convertible Debentures (7,989,948) - (7,989,948) 100 % Change in fair value of November 2024 Debentures 435,864 - 435,864 100 % Interest expense, net 5,108,227 8,776,277 (3,668,050) -42 % Total other (income) expense, net 111,791,752 (4,411,122) 116,202,874 -2634 % Net loss $ (134,906,649) $ (50,686,601) $ (84,220,048) 166 % Revenue.
Added
Because of these factors, the Company believes that this creates substantial doubt with the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon the ability to generate sufficient revenues and to control operating expenses.
Removed
For the year ended December 31, 2024 , total general and administrative expenses decreased by $4,901,346 or 27% , as compa red to 2023 . The decrease was driven by headcount reductions and a concerted effort to reduce costs. Severance. Severance costs for the year ended December 31, 2023 related primarily to the change in management team.
Added
Our future capital needs may require us to sell additional 52 Table of Contents equity or debt securities that may dilute our stockholders or introduce covenants that may restrict our operations or our ability to pay dividends,” “Risks Related to Our Business and Industry.
Removed
There were no severance costs reported for the year ended December 31, 2024. Impairment of property and equipment . There were no impairments for the year ended December 31, 2024. I mpairment of property and equipment for the year ended December 31, 2023 included partial impairments of the Aquanaut vehicles, Olympic Arms and Hydronaut vessels. Loss on contract.
Added
If we are successful in commercializing our products and services, our revenue will be concentrated in a limited number of models for the foreseeable future,” and “Risks Related to Our Business and Industry — We may be unable to adequately control the costs associated with our operations.” Recent Developments OBBBA - On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”) was enacted into U.S. law.
Removed
For the year ended December 31, 2023, contract liability costs of $2,542,913 were accrued associated with the expected loss on a current contract. There were no contract liability costs reported for the year ended December 31, 2024. Other expense, net. For the year ended December 31, 2024 , other expense, net decreased by $517,219 as compared to 2023.
Added
The OBBBA includes changes to several corporate tax provisions, including tax deductions for qualified research expenditures, changes to business interest expense limitations and bonus depreciation. The OBBBA legislation does not materially impact our 2025 annual effective tax rates as we remain on a loss position.
Removed
The year ended December 31, 2023 included an accrual for a state sales tax assessment of $600,000 . Loss on lease termination . For the year ended December 31, 2024, a loss on lease termination of $18,721 was reported primarily driven by the early termination of leased office space in Norway.
Added
Results of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table sets forth summarized consolidated financial information: For The Year Ended December 31, Change $ Change % 2025 2024 Revenue: Service $ 5,274,915 $ 1,807,472 $ 3,467,443 192 % Total revenue 5,274,915 1,807,472 3,467,443 192 % Costs and expenses: Cost of revenue (exclusive of items shown separately below) 12,336,520 9,732,205 2,604,315 27 % Depreciation and amortization 2,344,826 1,736,828 607,998 35 % Research and development - 82,850 (82,850) -100 % General and administrative 14,320,568 13,570,486 750,082 6 % Total costs and expenses 29,001,914 25,122,369 3,879,545 15 % Operating loss (23,726,999) (23,314,897) (412,102) 2 % Other (income) expense: Other income, net (134,322) (70,918) (63,404) -89 % Foreign currency transaction loss 54,527 61,597 (7,070) -11 % Loss on extinguishment of debt 6,371,971 127,605,940 (121,233,969) -95 % Change in fair value of warrant liabilities (170,632) (13,559,010) 13,388,378 -99 % Change in fair value of New Convertible Debentures - (7,989,948) (7,989,948) -100 % Change in fair value of November 2024 Debentures 2,247,848 435,864 1,811,984 416 % Interest expense, net 8,732,011 5,108,227 3,623,784 71 % Total other expense, net 17,101,403 111,591,752 (94,490,349) -85 % Net loss (40,828,402) $ (134,906,649) $ 94,078,247 -70 % Revenue.
Removed
For the year ended December 31, 2023, the loss on lease termination of $453,162 relates to the exit of office space for which an exit fee arrangement was agreed with the lessor. Loss on extinguishments of debt.
Added
Cost of sales for the year ended December 31, 2025 included inventory write-offs of $500,332 relating to Olympic Arms inventory deemed as obsolete. Depreciation and amortization. For the year ended December 31, 2025 , depreciation and amortization increased by $607,998, or 35%, as compared to 2024.
Removed
Interest expense, net decreased due to no interest on the New Convertible Debentures or the November 2024 Debentures because this interest was included in the fair value of these instruments.
Added
The variance is primarily due t o the increase in property and equipment, and amortization of $152,484 relating to intangible assets acquired under the SeaTrepid acquisition. Research and development . For the year ended December 31, 2025, total research and development expenses decreased by $82,850, or 100%, as compared to 2024 .
Removed
This was offset by interest on the convertible senior secured term loans which were received in the second half of 2023 and first half of 2024 and debt discount relating to the New Convertible Debentures being fully amortized due to the conversions to Common Stock and Series A Preferred Stock.
Added
The increase was driven by high professional fees related to the SeaTrepid acquisition and integration of their overhead into Nauticus. Other income, net. For the year ended December 31, 2025 , other income, net increased by $63,404 as compared to 2024. Loss on extinguishments of debt.
Removed
The Company continues to develop its principal products and conduct research and development activities.
Added
For the year ended December 31, 2025, a loss on the extinguishment of debt of $6,371,971 was reported relating to the conversion of 2023 Term Loan Notes to Series C Preferred Stock.
Removed
Uses of cash: • Cash used in operating activities was $24,201,567, of which $2,559,532 was used to increase working capital. • Cash used in investing activities related to capital expenditures of $501,600 partially offset by proceeds from the sale of Assets Held For Sale of $676,177. Future sources and uses of cash.
Added
For the year ended December 31, 2024, a gain on the fair value of the new convertible debentures of $7,989,948 was reported, driven by fluctuations in the trading price of the Company's Common Stock. Change in fair value of November 2024 Debentures.
Removed
The accounting policies discussed below are critical to understanding our historical and future performance as these policies involve a greater degree of judgment and complexity. Revenue Recognition - Our primary sources of revenue are from providing technology and engineering services and products to the offshore industry and governmental entities.
Added
Changes in fair value of the November 2024 Debentures are driven by fluctuations in the trading price of the Company's Common Stock. Interest expense, net.
Removed
Revenue is generated pursuant to contractual arrangements to design and develop subsea robots and software and to provide related engineering, technical, and other services according to the specifications of the customers. These contracts can be service sales (cost plus fixed fee or firm fixed fee) or product sales and typically have terms of up to 18 months.
Added
For the year ended December 31, 2025, interest expense, net increased by $3,623,784 as compared to 2024 primarily driven by a $3,941,929 inducement expense incurred on the conversion of Convertible Senior Secured Term Loan notes during the period in which the conversion price was temporarily reduced, see Note 8, Notes Payable.
Removed
The Company has limited product sales as its core products are still under development. A performance obligation is a promise in a contract to transfer distinct goods or services to a customer. The products and services in our contracts are typically not distinct from one another.
Added
Uses of cash: • Cash used in operating activities was $23,004,484. • Cash used in investing activities related to the acquisition of SeaTrepid of $4,371,992 and capital expenditures of $961,814. Future sources and uses of cash.
Removed
Accordingly, our contracts are typically accounted for as one performance obligation. 49 Table of Contents The Company’s performance obligations under service agreements generally are satisfied over time as the service is provided. Revenue under these contracts is recognized over time using an input measure of progress (typically costs incurred to date relative to total estimated costs at completion).
Added
The determination of estimated useful lives requires significant management judgment and is based on factors such as the expected use of the asset, historical experience with similar assets, technological developments, and anticipated economic benefits to be derived from the asset.
Removed
This requires management to make significant estimates and assumptions to estimate contract sales and costs associated with its contracts with customers. At the outset of a long-term contract, the Company identifies risks to the achievement of the technical, schedule and cost aspects of the contract.
Added
Changes in these estimates could result in changes to the timing and amount of depreciation or amortization expense recognized in future periods. We also evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable, in accordance with ASC 360 – Property, Plant, and Equipment.
Removed
Throughout the contract term, on at least a quarterly basis, we monitor and assess the effects of those risks on its estimates of sales and total costs to complete the contract. Changes in these estimates could have a material effect on the Company’s results of operations. Cost plus fixed fee contracts are largely used for development projects.
Added
Indicators of impairment may include significant adverse changes in business climate, market conditions, operating performance, or the manner in which an asset is used.
Removed
Firm-fixed price contracts provide products or services generally over an agreed upon time frame for a predetermined amount. Firm-fixed price contracts present the risk of unreimbursed cost overruns, potentially resulting in lower-than-expected contract profits and margins. This risk is generally lower for cost plus fixed fee contracts which, as a result, generally have a lower margin.
Added
When such indicators are present, we assess recoverability by comparing the carrying value of the asset group to the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset group.
Removed
Service revenue includes equipment operating lease income recognized based on the contractual cash lease payments for the period. Contract assets include unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer.
Added
If the carrying value exceeds the estimated undiscounted cash flows, an impairment loss is recognized for the amount by which the carrying value exceeds the asset group’s estimated fair value. 55 Table of Contents The impairment analysis requires significant estimates and assumptions, including projections of future revenues, operating costs, asset utilization, and the determination of appropriate discount rates used to estimate fair value.
Removed
Contract assets are recorded at the net amount expected to be billed and collected. Contract liabilities include billings in excess of revenue recognized and accrual of certain contract obligations. Stock-Based Compensation - Nauticus recognizes the cost of stock-based awards granted to its employees and directors based on the grant-date fair value of the awards.
Added
These assumptions are inherently uncertain and are based on management’s expectations regarding future economic and operating conditions. Changes in these assumptions, including reductions in expected future cash flows or shorter estimated useful lives, could result in higher depreciation or amortization expense or the recognition of impairment charges in future periods.
Removed
Cost is recognized on a straight-line basis over the service period, which is the vesting period of the award. Nauticus elected to recognize the effect of forfeitures in the period they occur.
Added
Fair Value Measurements - We measure the fair value of certain financial instruments, including preferred stock and convertible debt, using valuation techniques consistent with the guidance in ASC 820 – Fair Value Measurement. In certain cases, these instruments contain complex features, such as conversion options that require significant judgment in determining their fair value.
Removed
Nauticus determines the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the following assumptions: • Expected Term—We use the “simplified method” for expected term. • Expected Volatility—We use the historical volatility of Nauticus’ publicly traded Common Stock. • Expected Dividend Yield—The dividend rate used is zero as Nauticus has never paid any cash dividends on its Common Stock and does not anticipate doing so in the foreseeable future. • Risk-Free Interest Rate—The interest rates used are based on the implied yield available on U.S.
Added
When observable market prices are not available, we estimate fair value using valuation models such as Monte Carlo simulations. These models require the use of significant unobservable inputs, including expected volatility of the Company’s stock, risk-free interest rates, discount rates and expected term and other market-based assumptions.
Removed
Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. Common Stock Warrants – We account for Common Stock warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance.
Added
Because these valuations involve significant management judgment and unobservable inputs, changes in the underlying assumptions could materially affect the estimated fair value of the preferred stock and convertible debt. Management evaluates these assumptions each reporting period and updates the valuations as necessary based on changes in market conditions, company-specific factors, and other relevant information.
Removed
This assessment considers whether the warrants are freestanding financial instruments, meet the definition of a liability or requirements for equity classification, including whether the warrants are indexed to the Company’s Common Stock, among other conditions for equity classification.
Added
Business Combinations - We account for acquisitions of businesses using the acquisition method of accounting in accordance with ASC 805 – Business Combinations. Under this method, the total consideration transferred is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.
Removed
This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. We have determined that the Private Warrants and Public Warrants should be accounted for as liabilities.
Added
Any excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires significant management judgment and estimates, particularly with respect to identifiable intangible assets and certain tangible assets. Identifiable intangible assets include customer relationships, trade names, non-competes and other intellectual property.
Removed
The Private Warrants and Public Warrants were initially recorded at their estimated fair value on issuance and are then revalued at each reporting date thereafter, with changes in the fair value reported in the consolidated statements of operations.
Added
We valued these assets using income-based valuation approaches, such as the multi-period excess earnings method, relief-from-royalty method or with and without method, which required assumptions regarding projected revenues, sales attrition rates, royalty rates, discount rates, probability of competing and the estimated useful lives of the assets.
Removed
Derivative warrant liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The fair value of the Private Warrants was estimated using a Black-Scholes option pricing model (a Level 3 measurement).
Added
Property and equipment acquired in a business combination are recorded at estimated fair value, determined using market-based valuation techniques. These valuations require assumptions regarding replacement cost, physical deterioration, economic obsolescence, and remaining useful lives. The fair value of consideration transferred may also require significant judgment when it includes non-cash components, such as equity instruments.
Removed
The Public Warrants are valued using their publicly traded price at each measurement date (a Level 1 measurement). We have determined that the SPA Warrants (defined below) should be accounted for as liabilities.
Added
The equity consideration was measured based on the fair value of the Company’s stock at the acquisition date. The valuation of assets acquired, liabilities assumed, and consideration transferred required the use of significant assumptions and estimates, which are inherently uncertain.
Removed
The SPA Warrants were initially recorded at their estimated fair value on issuance and are then re-valued at each reporting date thereafter, with changes in the fair value reported in the consolidated statements of operations.
Added
Changes in these assumptions could materially affect the amounts recognized for identifiable intangible assets, property and equipment, goodwill, and contingent consideration. During the measurement period, we may record adjustments to the provisional amounts recognized if new information becomes available about facts and circumstances that existed as of the acquisition date. Item 7A.

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