Nauticus Robotics, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of disclosure controls and procedures. Our management, with the participation and supervision of our chief executive officer and our chief financial officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting at the Company. The Company’s internal control over financial reporting is a process designed under the supervision of the Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that: ● Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. With the participation of the Chief Executive Officer and the Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022, based on the framework and criteria established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Because of the previously disclosed material weakness in our internal control over financial reporting discussed below, our chief executive officer and chief financial officer concluded that, as of December 31, 2022, our disclosure controls and procedures were not effective. In light of this fact, our management, including our chief executive officer and chief financial officer, has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weakness in our internal control over financial reporting, the consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP. Previously identified material weakness. In 2021, we identified a material weakness in our internal control over financial reporting, as defined in the standards established by the Sarbanes-Oxley Act of 2002. This material weakness related to a lack of qualified accounting and financial reporting personnel with an appropriate level of experience and inadequate procedures for the accounting close process including obtaining information supporting significant accounting estimates and judgments affecting the financial statements on a timely basis. As a result, our management concluded that a material weakness existed in our internal control over financial reporting. 52 A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Through the year ended December 31, 2022, we continued to implement remediation initiatives in response to the previously identified material weakness, including, but not limited to, hiring additional experienced accounting and financial reporting personnel, as well as designing and implementing additional controls over financial reporting, including those designed to strengthen our segregation of duties and review processes related to accounting and financial statement presentation and disclosures. While we believe that these efforts have improved and will continue to improve our internal control over financial reporting, remediation of the material weakness will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. Our remediation activities are ongoing and are subject to continued management review supported by ongoing design and testing of our framework of internal controls over financial reporting. Changes in internal control over financial reporting. We implemented changes to our internal control over financial reporting regarding our close procedures including adding qualified staffing to address segregation of duties concerns. There were no other changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Identified Material Weakness as of September 2022. We identified a material weakness in controls over the accounting for complex warrant issuances and the classification of these issued warrants. While we have processes to properly identify and evaluate the appropriate accounting technical pronouncements, other literature, and consultation with third-party experts, we did not classify the warrants correctly. This material weakness resulted in the failure to prevent material errors in accounting for the warrants as equity classification when the warrants should have been classified as liabilities, and marked to market each reporting period, resulting in restatement of our financial statements for the nine months ended September 30, 2022. Remediation Plan. Management and our Audit Committee are currently reviewing and determining a plan to remediate the material weakness described above and to enhance our overall control environment. We will not consider the material weakness remediated until our enhanced control is operational for a sufficient period of time and tested, enabling management to conclude that the enhanced controls are operating effectively. Our remediation plan includes the implementation of controls over the process of reviewing significant and complex contracts and agreements. Inherent limitation on the effectiveness of internal control. The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosures Regarding Foreign Jurisdiction that Prevent Inspections None. 53 PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2023 Annual Meeting of Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year. Item 11. Executive Compensation The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2023 Annual Meeting of Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2023 Annual Meeting of Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year. Item 13. Certain Relationships and Related Transactions and Director Independence The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2023 Annual Meeting of Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year. Item 14. Principal Accountant Fees and Services The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2023 Annual Meeting of Stockholders, which is expected to be filed with the SEC within 120 days after the close of our fiscal year. Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this report: (1) All financial statements: Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021 F-4 Consolidated Statements of Equity (Deficit) for the Years Ended December 31, 2022 and 2021 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 F-6 Notes to Consolidated Financial Statements F-7 (2) Financial statement schedules Not Applicable (3) Exhibits required by Item 601 of Regulation S-K: 54 Incorporated by Reference Exhibit Description Schedule/ Form File Number Exhibits Filing Date 2.1 Merger Agreement dated as of December 16, 2021, by and among CleanTech Acquisition Corp., CleanTech Merger Sub, Inc., Nauticus Robotics, Inc., and Nicolaus Radford, as amended on January 30, 2021. Form 8-K 001-40611 2.1 December 17, 2021 2.1.1 Amendment No. 1 to Underwriting Agreement dated January 27, 2023 Form 8-K 001-40611 2.1 June 6, 2022 3.1 Amended and Restated Certificate of Incorporation of CleanTech Acquisition Corp. Form 8-K 001-40611 3.1 July 21, 2021 3.1.1 Amendment to the Amended and Restated Certificate of Incorporation of CleanTech Acquisition Corp. Form 8-K 001-40611 3.1 July 19, 2022 3.2 Form of Second Amended and Restated Certificate of Incorporation of CLAQ. Form S-4 Am. No. 11 333-262431 10.33 August 12, 2022 3.3 Bylaws of CleanTech Acquisition Corp. Form S-1/A 333-256578 3.3 July 6, 2021 3.4 Form of Amended and Restated Bylaws of CleanTech Acquisition Corp. Form S-4 Am. No. 11 333-262431 10.33 August 12, 2022 3.5 Second Amended and Restated Certificate of Nauticus Robotics, Inc. Form 8-K 001-40611 3.5 September 15, 2022 3.6 Amended and Restated Bylaws of Nauticus Robotics, Inc. Form 8-K 001-40611 3.6 September 15, 2022 4.1 Specimen Unit Certificate of CleanTech Acquisition Corp. Form S-1/A 333-256578 4.1 July 6, 2021 4.2 Specimen Common Stock Certificate of CleanTech Acquisition Corp. Form S-1/A 333-256578 4.2 July 6, 2021 4.3 Specimen Warrant Certificate of CleanTech Acquisition Corp. Form S-1/A 333-256578 4.3 July 6, 2021 4.4 Warrant Agreement, dated July 14, 2021, by and between Continental Stock Transfer & Trust Company and CleanTech Acquisition Corp. Form 8-K 001-40611 4.1 July 21, 2021 4.5 Rights Agreement, dated July 14, 2021, by and between Continental Stock Transfer & Trust Company and CleanTech Acquisition Corp. Form 8-K 001-40611 4.2 July 21, 2021 4.6 Form of 5% Original Issue Discount Senior Secured DEBENTURE to be issued pursuant to the Securities Purchase Agreement dated December 16, 2021 Form S-4 Am. No. 4 333-262431 4.6 June 16, 2022 4.7 Form of Warrants to be issued pursuant to the Securities Purchase Agreement dated December 16, 2021 Form S-4 Am. No. 4 333-262431 4.7 June 16, 2022 4.8† Description of Registrant’s Securities 10.1 Letter Agreement, dated July 14, 2021, by CleanTech Acquisition Corp.’s officers and directors. Form 8-K 001-40611 10.1 July 21, 2021 10.2 Letter Agreement, dated July 14, 2021, by CleanTech Sponsor, LLC and CleanTech Investments, LLC. Form 8-K 001-40611 10.2 July 21, 2021 10.3 Investment Management Trust Agreement, dated July 14, 2021, by and between Continental Stock Transfer & Trust Company and CleanTech Acquisition Corp. Form 8-K 001-40611 10.3 July 21, 2021 10.3.1 Amendment to the Investment Management Trust Agreement, dated July 19, 2022, by and between Continental Stock Transfer & Trust Company and CleanTech Acquisition Corp. Form 8-K 001-40611 1.1 July 19, 2022 10.4 Escrow Agreement, dated July 14, 2021, by and among CleanTech Acquisition Corp., Continental Stock Transfer & Trust Company and each of the initial stockholders. Form 8-K 001-40611 10.4 July 21, 2021 55 Incorporated by Reference Exhibit Description Schedule/ Form File Number Exhibits Filing Date 10.5 Registration Rights Agreement, dated July 14, 2021, by and among CleanTech Acquisition Corp., and the initial stockholders. Form 8-K 001-40611 10.5 July 21, 2021 10.6 Indemnity Agreements dated July 14, 2021 by and between CleanTech Acquisition Corp. and its directors and officers. Form 8-K 001-40611 10.6 July 21, 2021 10.7 Subscription Agreement, dated July 14, 2021, by and between CleanTech Acquisition Corp., CleanTech Sponsor, LLC and CleanTech Investments, LLC. Form 8-K 001-40611 10.7 July 21, 2021 10.8 Business Combination Marketing Agreement, dated July 14, 2021, by and between CleanTech Acquisition Corp. and Chardan Capital Markets, LLC. Form 8-K 001-40611 10.8 July 21, 2021 10.9 Administrative Services Agreement, dated July 14, 2021, by and between CleanTech Acquisition Corp. and Chardan Capital Markets, LLC. Form 8-K 001-40611 10.9 July 21, 2021 10.10 Financial Advisory Agreement by and between CleanTech Acquisition Corp. and Chardan Capital Markets, LLC dated December 14, 2021. Form S-4 Am. No. 1 333-262431 10.10 March 31, 2022 10.11 Support Agreement by and among CleanTech Acquisition Corp., CleanTech Sponsor I LLC, CleanTech Investments, LLC and Nauticus Robotics, Inc. Form 8-K 001-40611 10.1 December 17, 2021 10.12 Support Agreement by and among CleanTech Acquisition Corp., Nauticus Robotics, Inc. and certain shareholders of Nauticus Robotics, Inc. Form 8-K 001-40611 10.2 December 17, 2021 10.13 Form of Subscription Agreement for certain investors Form 8-K 001-40611 10.3 December 17, 2021 10.14 Securities Purchase Agreement by and among CleanTech Acquisition Corp., Nauticus Robotics, Inc. and certain investors named therein. Form 8-K 001-40611 10.4 December 17, 2021 10.14.1 Agreement among CleanTech Acquisition Corp., Nauticus Robotics, Inc. and ATW Partners Opportunities Management, LLC dated January 31, 2022 Form S-4 Am. No. 1 333-262431 10.14.1 March 31, 2022 10.14.2 Letter Agreement between ATW Special Situations I LLC and Material Impact Fund II, L.P. dated December 15, 2021 Form S-4 Am. No. 3 333-262431 10.14.2 May 23, 2022 10.14.3 Letter Agreement between ATW Special Situations I and The 2022 SLS Family Irrevocable Trust dated September 9, 2022 Form 8-K 001-40611 10.14.3 September 15, 2022 10.15 Form of Nauticus Robotics, Inc. Stockholder Lock-up Agreement (included as Exhibit H-1 to Exhibit 2.1 hereto) Form 8-K 001-40611 10.5 December 17, 2021 10.16 Form of Lock-up Agreement for certain holders of Nauticus Robotics, Inc. (f/k/a CleanTech Acquisition Corp.) (included as Exhibit H-2 to the Exhibit 2.1 hereto) Form 8-K 001-40611 10.6 December 17, 2021 10.17 Form of Amended and Restated Registration Rights Agreement by and among CleanTech Acquisition Corp., Nauticus and certain stockholders. Form 8-K 001-40611 10.7 December 17, 2021 10.18 Form of Director Nomination Agreement. Form 8-K 001-40611 10.8 December 17, 2021 10.19 Director Designation Agreement Form 8-K 001-40611 10.9 December 17, 2021 10.20 Battery Supplier Agreement, dated as of January 18, 2021. Form S-4 Am. No. 4 333-262431 10.20 June 16, 2022 10.21 Fabrication Agreement, dated as of January 17, 2022. Form S-4 Am. No. 4 333-262431 10.21 June 16, 2022 56 Incorporated by Reference Exhibit Description Schedule/ Form File Number Exhibits Filing Date 10.22 Construction Agreement, dated as of February 14, 2022. Form S-4 Am. No. 4 333-262431 10.22 June 16, 2022 10.23 Commercial Proposal, dated as of December 6, 2021. Form S-4 Am. No. 4 333-262431 10.23 June 16, 2022 10.24 Defense Innovation Unit Agreement, dated as of August 10, 2021. Form S-4 Am. No. 4 333-262431 10.24 June 16, 2022 10.25 Subcontract Agreement, dated as of August 10, 2021. Form S-4 Am. No. 4 333-262431 10.25 June 16, 2022 10.26 Amended and Restated Financial Advisory Agreement by and between Nauticus Robotics, Inc. and Coastal Equities, Inc. dated April 25, 2022 Form S-4 Am. No. 2 333-262431 10.27 April 27, 2022 10.27 Financial Advisory Agreement by and between CleanTech Acquisition Corp. and Roth Capital Partners, LLC dated February 11, 2022 Form S-4 Am. No. 3 333-262431 10.28 May 23, 2022 10.28 Financial Advisory Agreement by and among CleanTech Acquisition Corp., Nauticus Robotics, Inc. and Lake Street Capital Markets dated February 28, 2022 Form S-4 Am. No. 3 333-262431 10.29 May 23, 2022 10.29 Kongsberg Maritime AS Agreement, dated March 21, 2022 Form S-4 Am. No. 4 333-262431 10.30 June 16, 2022 10.30 Collaboration Agreement, dated as of December 4, 2020 Form S-4 Am. No. 4 333-262431 10.31 June 16, 2022 10.31 Memorandum of Understanding, effective as of April 21, 2022 Form S-4 Am. No. 3 333-262431 10.32 May 23, 2022 10.32 2022 Nauticus Robotics, Inc. Omnibus Incentive Plan. Form 8-K 001-40611 10.9 September 15, 2022 14.1 Code of Business Conduct and Ethics of Nauticus Robotics, Inc. Form 8-K 001-40611 14.1 September 15, 2022 16.1 Letter from WithumSmith+Brown, PC to the Securities and Exchange Commission Form 8-K 001-40611 16.1 September 15, 2022 21.1† List of Subsidiaries. 24.1† Power of Attorney (included on the Signatures page of this Annual Report on Form 10-K) 31.1† Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2† Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1† Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. 32.2† Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. 101.INS Inline XBRL Instance Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). † Filed herewith 57 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. March 28, 2023 /s/ Nicolaus Radford Nicolaus Radford Chief Executive Officer (principal executive officer) Power of Attorney KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Nicolaus Radford and Rangan Padmanabhan, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 28, 2023 /s/ Nicolaus Radford Nicolaus Radford Chief Executive Officer (principal executive officer) March 28, 2023 /s/ Rangan Padmanabhan Rangan Padmanabhan Chief Financial Officer (principal financial officer) March 28, 2023 /s/ Lisa J. Porter Lisa J. Porter Chairman of the Board March 28, 2023 /s/ Jim Bellingham Jim Bellingham Director March 28, 2023 /s/ Joseph W. Dyer Joseph W. Dyer Director March 28, 2023 /s/ John W. Gibson, Jr. John W. Gibson, Jr. Director March 28, 2023 /s/ Mark Mey Mark Mey Director March 28, 2023 /s/ Adam Sharkawy Adam Sharkawy Director March 28, 2023 /s/ Eli Spiro Eli Spiro Director 58