What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-04-15 compared with 2025-04-15 · 84 added, 107 removed, 69 unchanged (73% of the section changed)

8 unchanged sentences

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.

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.

Our addressable markets include upstream, midstream, and downstream oil and gas, defense, offshore renewables, seafloor telecommunications, aquaculture, port security, oceanographic research, and subsea mining.

(the "Company", "our", "us" or "we") is a technology-driven company specializing in the development of advanced electric autonomous robotic solutions for subsea applications.

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.

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.

Basis of Presentation – The Company’s consolidated financial statements have been prepared in accordance with U.S.

2 unchanged sentences

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.

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 continues to invest in the development, enhancement, and commercialization of its core technology platforms.

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.

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 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.

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.

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.

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.”

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.

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.

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.

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.

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.

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.

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.

Results of Operations

4 unchanged sentences

Service $ 5,274,915 $ 1,807,472 $ 3,467,443 192 %

Service - related party - 500 (500) -100 %

Total revenue 5,274,915 1,807,472 3,467,443 192 %

1 unchanged sentence

Cost of revenue (exclusive of items shown separately below) 12,336,520 9,732,205 2,604,315 27 %

Depreciation 1,736,828 729,412 1,007,416 138 %

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 %

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 29,001,914 25,122,369 3,879,545 15 %

1 unchanged sentence

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 %

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 %

Loss on exchange of warrants - 590,266 (590,266) -100 %

Change in fair value of warrant liabilities (170,632) (13,559,010) 13,388,378 -99 %

3 unchanged sentences

Interest expense, net 8,732,011 5,108,227 3,623,784 71 %

Total other (income) expense, net 111,791,752 (4,411,122) 116,202,874 -2634 %

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 %

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.

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.

Cost of revenue.

For the year ended December 31, 2024, cost of revenue decreased by $2,196,726, or 18% as compared to 2023 .

The decrease is primarily attributable to the decline in activity partially offset by costs relating to the commercialization of the Aquanaut vehicle.

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.

For 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.

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.

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 .

2 unchanged sentences

General and administrative.

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 costs for the year ended December 31, 2023 related primarily to the change in management team.

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.

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.

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.

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.

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 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.

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".

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.

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.

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.

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.

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 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.

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.

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.

For the year ended December 31, 2024, interest expense, net decreased by $(3,668,050) as compared to 2023.

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.

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.

Interest expense, net included $4 million associated with liquidated damages and interest arising out of the RRA.

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.

Liquidity and Capital Resources

1 unchanged sentence

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 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 may require additional liquidity to continue its operations over

the next twelve months, which a current investor has committed to support.

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").

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

adversely affect the Company's ability to raise capital in an efficient manner.

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.

2 unchanged sentences

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").

• 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").

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.

• 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.

6 unchanged sentences

As of December 31, 2025, we had no material off-balance sheet arrangements.

Critical Accounting Policies and Estimates

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.

1 unchanged sentence

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.

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.

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.

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.

Accordingly, our contracts are typically accounted for as one performance obligation.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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).

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.

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.

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.

On issuance, the SPA Warrants’ fair value upon issuance was estimated using a Monte Carlo valuation model (a Level 3 measurement).

Earnout Shares – Following the closing of the Merger between CleanTech, Merger Sub and Nauticus Robotics Holdings on September 9, 2022, former holders of shares of Nauticus Robotics Holdings’ Common Stock (including shares received as a result of the Nauticus Preferred Stock Conversion and the Nauticus Convertible Notes Conversion) are entitled to receive their pro rata share of up to 208,333 Earnout Shares which are held in escrow.

The Earnout Shares will be released upon occurrence of a Triggering Event within five years from September 9, 2022.

The Earnout Shares are considered legally issued and outstanding shares of Common Stock subject to restrictions on transfer and potential forfeiture pending the achievement of the earnout targets.

The Company evaluated the Earnout Shares and concluded that they meet the criteria for equity classification.

The Earnout Shares were classified in stockholders’ equity, recognized at fair value upon issuance and will not be subsequently remeasured.

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.

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.

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.

Indicators of impairment may include significant adverse changes in business climate, market conditions, operating performance, or the manner in which an asset is used.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Quantitative and Qualitative Disclosure About Market Risk

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis