What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-04-15 compared with 2025-04-15 · 760 added, 381 removed, 656 unchanged (63% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (WithumSmith + Brown, PC, PCAOB ID:

Report of Independent Registered Public Accounting Firm (Whitley Penn LLP, PCAOB ID:

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Nauticus Robotics, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Nauticus Robotics, Inc.

and subsidiaries (the “Company”) as of December 31, 2025 , and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1, the Company has had recurring net losses, negative operating cash flows, a working capital deficit, and insufficient cash and cash equivalents to fund operations for twelve months from the date of this report.

All of these matters raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ WithumSmith+Brown, PC

We have served as the Company’s auditor since 2025.

Whippany, New Jersey

April 15, 2026

PCAOB ID Number 100

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

26 unchanged sentences

Cash and cash equivalents $ 7,016,610 $ 1,186,047

Restricted certificate of deposit 52,151 201,822

Restricted cash 600,342 52,151

Accounts receivable, net 378,683 238,531

2 unchanged sentences

Other current assets 203,025 574,025

Assets held for sale 750 2,940,254

Total Current Assets $ 9,253,984 $ 4,320,782

1 unchanged sentence

Operating lease right-of-use assets, net 559,005 1,094,743

Goodwill 9,600,745 -

Intangible Assets, net 1,276,916 -

Other assets 91,276 154,316

Total Assets $ 42,609,695 $ 22,685,087

Liabilities and Stockholders’ Deficit

Liabilities and Stockholders’ Equity (Deficit)

Current Liabilities:

3 unchanged sentences

Operating lease liabilities - current 434,200 435,307

Notes payable - current 2,296,627 -

November 2024 Debentures - current, fair value option (related party) 163,672 -

Senior Secured Convertible Term Loan - current, net of discount (related party) 14,113,871 -

Senior Secured Convertible Term Loan - current, net of discount 4,939,247 -

Other creditors 160,110 -

Total Current Liabilities 35,375,461 12,301,000

1 unchanged sentence

Operating lease liabilities - long-term 203,547 768,939

Notes payable - long-term, fair value option (related party) 2,583,832 -

Notes payable - long-term, net of discount (related party) 13,820,366 23,833,848

Notes payable - long-term, net of discount 12,531,332 7,763,801

November 2024 Debentures - long-term, fair value option (related party) - 2,583,832

Senior Secured Convertible Term Loan - long-term, net of discount (related party) - 13,820,366

Senior Secured Convertible Term Loan - long-term, net of discount - 12,531,332

Other liabilities - 895,118

Total Liabilities $ 35,590,289 $ 43,082,500

Stockholders’ Deficit:

Stockholders’ Equity (Deficit):

Series A Convertible Preferred Stock $ 0.0001 par value;

40,000 shares authorized, 35,434 shares issued and 35,034 outstanding.

40,000 shares authorized, 5,546 and 35,034 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively.

Series B Convertible Preferred Stock $ 0.0001 par value;

50,000 shares authorized, 2,813 and 0 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively.

Series C Convertible Preferred Stock $ 0.0001 par value;

100,000 shares authorized, 2,154 and 0 issued and outstanding at December 31, 2025 and December 31, 2024 respectively.

Common Stock, $ 0.0001 par value;

625,000,000 shares authorized, 9,761,895 and 1,389,884 shares issued, respectively, and 9,761,895 and 1,389,884 shares outstanding, respectively (As adjusted, see Note 11).

625,000,000 shares authorized, 28,811,198 and 1,084,655 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively.*

Additional paid-in capital 330,578,863 233,343,056

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Accumulated deficit ( 323,520,110 ) ( 253,698,352 )

Total Stockholders’ Deficit ( 20,397,413 ) ( 41,786,850 )

Total Liabilities and Stockholders’ Deficit $ 22,685,087 $ 26,148,475

Total Stockholders’ Equity (Deficit) 7,019,406 ( 20,397,413 )

Total Liabilities and Stockholders’ Equity (Deficit) $ 42,609,695 $ 22,685,087

* Reflects the 1-for-36 reverse split effected July 22, 2024 and the 1-for-9 effected September 5, 2025.

See accompanying notes to the consolidated financial statements.

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Service $ 5,274,915 $ 1,807,472

Service - related party - 500

Total revenue 5,274,915 1,807,472

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Cost of revenue (exclusive of items shown separately below) 12,336,520 9,732,205

Depreciation 1,736,828 729,412

Depreciation and amortization 2,344,826 1,736,828

Research and development - 82,850

General and administrative 14,320,568 13,570,486

Severance - 1,476,636

Impairment of property and equipment - 25,354,791

Loss on contract - 2,542,913

Total costs and expenses $ 29,001,914 $ 25,122,369

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Other (income) expense:

Other expense, net

110,361 627,580

Loss on lease termination 18,721 453,162

Other income, net ( 134,322 ) ( 70,918 )

Foreign currency transaction loss 54,527 61,597

Loss on extinguishment of debt 6,371,971 127,605,940

Loss on exchange of warrants - 590,266

Change in fair value of warrant liabilities ( 170,632 ) ( 13,559,010 )

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Interest expense, net 8,732,011 5,108,227

Total other (income) expense, net 111,791,752 ( 4,411,122 )

Total other expense, net 17,101,403 111,591,752

Net loss $ ( 40,828,402 ) $ ( 134,906,649 )

1 unchanged sentence

Basic and diluted weighted average shares outstanding (As adjusted, see Note 21)* 6,681,851 408,133

* Reflects the 1-for-36 reverse split effected July 22, 2024 and the 1-for-9 effected September 5, 2025.

See accompanying notes to the consolidated financial statements.

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Comprehensive loss $ ( 40,828,402 ) $ ( 134,948,878 )

See accompanying notes to the consolidated financial statements.

NAUTICUS ROBOTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

Series A Preferred Stock Common Stock Additional Paid-in

Series A Preferred Stock Series B Preferred Stock Series C Preferred Stock Common Stock* Additional Paid-in

Capital Accumulated other Comprehensive Loss Accumulated

Deficit Total Stockholders’

Shares Amount Shares Amount

Balance at January 1, 2023 - $ - 1,312,521 $ 131 $ 68,132,790 $ - $ ( 68,105,102 ) $ 27,819

Stock-based compensation - - - - 4,427,073 - - 4,427,073

Settlement of liquidated damages - - 52,502 6 3,685,623 - - 3,685,629

Exercise of stock options - - 6,329 1 421,174 - - 421,175

Vesting of RSUs - - 13,929 1 ( 1 ) - - -

Exercise of warrants - - 4,603 - 338,055 - - 338,055

Net loss - - - - - - ( 50,686,601 ) ( 50,686,601 )

Shares Amount Shares Amount Shares Amount Shares Amount

Balance at December 31, 2023 - $ - - $ - - $ - 154,432 $ 15 $ 77,004,838 $ - $( 118,791,703 ) $( 41,786,850 )

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Balance at December 31, 2024 35,034 $ 4 - $ - - $ - 1,084,655 $ 108 $ 233,343,056 $ ( 42,229 ) $ ( 253,698,352 ) $ ( 20,397,413 )

Stock-based compensation - - - - - - - - 1,296,555 - - 1,296,555

Conversion of November 24 Debenture to Common Stock - - - - - - 4,549,509 455 4,667,553 - - 4,668,008

Conversion of Term Loan notes to Common Stock - - - - - - 2,344,895 234 6,644,297 - - 6,644,531

Inducement on convertible debt - - - - - - - - 3,941,929 - - 3,941,929

Conversion of Series A Preferred Stock to Common Stock ( 29,488 ) ( 3 ) - - - - 10,768,900 1,077 ( 1,074 ) - - -

Issue of Series B Preferred Stock - - 3,000 - - - - - 2,855,000 - - 2,855,000

Conversion of Series B Preferred Stock to Common Stock - - ( 187 ) - - - 392,490 39 ( 39 ) - - -

Exchange of convertible term loan to Series C Preferred Stock - - - - 3,814 - - - 10,185,929 - - 10,185,929

Conversion of Series C Preferred Stock to Common Stock - - - - ( 1,660 ) - 2,740,740 274 ( 274 ) - - -

At the Market (ATM) share offering - - - - - - 6,826,700 683 31,947,967 - - 31,948,650

Earnout shares - - - - - - - - 6,864,729 - - 6,864,729

Vesting of RSUs - - - - - - 36,995 4 ( 4 ) - - -

Reverse stock split round up & Adj - - - - - - 66,314 7 ( 7 ) - - -

Preferred stock dividend - - - - - - - - 845,890 - ( 1,006,000 ) ( 160,110 )

Deemed dividend - - - - - - - - 27,987,356 - ( 27,987,356 ) -

Net loss - - - - - - - - - - ( 40,828,402 ) ( 40,828,402 )

Balance at December 31, 2025 5,546 $ 1 2,813 $ - 2,154 $ - 28,811,198 $ 2,881 $ 330,578,863 $ ( 42,229 ) $ ( 323,520,110 ) $ 7,019,406

*Reflects the 1-for-36 reverse split effected July 22, 2024 and the 1-for-9 effected September 5, 2025.

See accompanying notes to the consolidated financial statements.

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Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation 1,736,828 729,412

Depreciation and amortization 2,344,826 1,736,828

Accretion of debt discount 40,253 411,705

Loss on extinguishment of debt

127,605,940 -

Amortization of debt issuance cost 886,504 664,690

Capitalized paid-in-kind (PIK) interest 696,345 900,383

Accretion of RCB Equities #1, LLC exit fee 97,694 27,608

Accretion of exit fee ( 9,663 ) 97,694

Stock-based compensation 1,296,555 2,303,054

Loss on exchange of warrants - 590,266

Change in fair value of warrant liabilities ( 170,632 ) ( 13,559,010 )

Change in fair value of New Convertible Debentures - ( 7,989,948 )

Change in fair value of November 2024 Debentures

Change in fair value of November 2024 Convertible Debentures 2,247,848 435,864

Loss on extinguishment of debt 6,371,971 127,605,940

Induced conversion expense 3,941,929 -

Non-cash lease expense 535,738 504,097

Interest expense assumed into Convertible Senior Secured Term Loan - 378,118

Impairment of property and equipment - 25,354,791

Settlement of liquidated damages with Common Stock - 3,685,629

Loss on disposal of assets 25,788 19,202

Loss on lease termination 2,639 18,721

Gain on short-term investments - ( 40,737 )

Inventory write-off 500,332 -

Other notes payable adjustments - 115,394

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Inventories 41,146 ( 58,683 )

Contract assets - 573,895

Prepaid expenses and other assets 1,145,670 2,707,815

Other assets 830,664 995,999

Accounts payable and accrued liabilities 54,009 ( 1,696,525 )

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Capital expenditures ( 961,814 ) ( 501,600 )

Acquisition of business, net of cash acquired ( 4,371,992 ) -

Proceeds from sale of assets held for sale - 676,177

Proceeds from sale of property and equipment 150 5,705

Proceeds from sale of short-term investments - 5,000,000

Net cash from (used in) investing activities ( 5,333,656 ) 180,282

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Proceeds from November 2024 Debentures - 2,150,000

Proceeds from At the Market (ATM) offering 9,857,857 -

Payment of ATM commissions and fees ( 499,903 ) -

Proceeds from exercise of warrants - 338,055

Proceeds from exercise of stock options - 421,175

Proceeds from At the Market (ATM) offering, net 31,948,650 9,357,954

Issuance of Series B Preferred Stock 2,855,000 -

Repayment on Ameristate Loan ( 86,755 ) -

Net cash from financing activities 34,716,895 24,496,163

Effect of changes in exchange rates on cash and cash equivalents - ( 42,229 )

Net change in cash and cash equivalents 432,649 ( 17,033,761 )

Cash and cash equivalents, beginning of year 753,398 17,787,159

Cash and cash equivalents, end of year $ 1,186,047 $ 753,398

Net change in cash, cash equivalents and restricted cash 6,378,755 282,978

Cash, cash equivalents and restricted cash, beginning of year 1,238,198 955,220

Cash, cash equivalents and restricted cash, end of year $ 7,616,953 $ 1,238,198

Supplemental disclosure of cash flow information:

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Non-cash investing and financing activities:

Conversion of convertible debt and accrued interest expense to Common Stock $ 29,741,859 $ -

Conversion of Term Loan notes and interest to common stock $ 6,644,531 $ -

Conversion of convertible debt to Common Stock $ 4,668,008 $ 29,741,859

Issuance of Series B preferred stock $ 2,855,000 $ -

Series C preferred stock issued in exchange for convertible debt $ 10,480,581 $ -

Transfer from inventories to property and equipment $ 414,416 $ 1,376,885

Earnout shares for acquisition $ 6,864,729 $ -

Debt assumed in acquisition $ 2,383,382 $ -

Accrued purchase price $ 3,287,881 $ -

Preferred stock dividend $ 1,006,000 $ -

Deemed dividend $ 27,987,356 $ -

Exchange of convertible debt and accrued interest expense to preferred stock $ - $ 61,429,200

4 unchanged sentences

Operating leases at inception $ - $ 1,185,119

Transfer from inventories to property and equipment $ 1,376,885 $ 15,904,411

Transfer from property and equipment to assets held for sale $ - $ 2,940,254

Capital expenditures included in accounts payable $ - $ 849,951

Receivable portion of convertible senior secured note payable $ - $ 695,000

See accompanying notes to the consolidated financial statements.

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(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 portfolio includes autonomous underwater vehicles (AUVs), electric 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.

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Currently, our primary focus is on oil and gas operations and defense applications.

Liquidity — 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 Going Concern— 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 8 - Notes Payable) and the offer and sale of additional shares of Common Stock under the At The Market Offering Agreement (see Note 24 - 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 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.

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 about the Company's ability to continue as a going concern for a period of at least twelve months form the date these financial statements were issued.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

Reverse Stock Split - On September 5, 2025, the Company effected a 1-for-9 reverse stock split of the shares of the Company's common stock, par value $ 0.0001 per share.

No fractional shares were issued in connection with the reverse stock split, but were instead rounded up to the nearest whole share.

The Reverse Stock Split resulted in 42,758,379 shares of common stock being converted in to 4,750,954 shares of common stock.

The Board of Directors of the Company approved the Certificate of Amendment to meet the share bid price requirements of the NASDAQ Capital Market.

The Company’s stockholders authorized the reverse stock split and the Certificate of Amendment at a special meeting held on June 25, 2025.

On July 22, 2024, the Company effected a 1-for-36 reverse stock split of the shares of the Company's common stock, par value $ 0.0001 per share.

No fractional shares were issued in connection with the Reverse Stock Split, but were instead rounded up to the nearest whole share.

The reverse stock split resulted in 150,107,598 shares of common stock being converted in to 4,169,679 shares of common stock.

The Board of Directors of the Company approved the Certificate of Amendment effecting the reverse stock split in order to meet the share bid price requirements of the NASDAQ Capital Market.

The Company’s stockholders authorized the reverse stock split and the Certificate of Amendment at a special meeting held on June 17, 2024.

All options, warrants and other convertible securities of the Company outstanding immediately prior to the split have been adjusted in accordance with the terms of the plans, agreements or arrangements governing such options, warrants and other convertible securities and subject to rounding to the nearest whole share.

Each stockholder’s percentage ownership interest in the Company and proportional voting power remain virtually unchanged by the split, except for minor changes and adjustments that resulted from rounding fractional shares into whole shares.

The rights and privileges of the holders of shares of the Company’s Common Stock were substantially unaffected.

As the par value per share of common stock was not changed in connection with the 1-for-9 or 1-for-36 reverse stock splits, there was no change in the par value of the preferred stock related to the reverse stock splits recorded in the years ended December 31, 2025 and 2024.

An adjustment to round fractional shares into whole shares was recorded in the year ended December 31, 2025 which increased Common Stock by 64,142 shares and $ 6 with a corresponding decrease in additional paid-in capital.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

adjustment to round fractional shares into whole shares was recorded in the year ended December 31, 2024 which increased Common Stock by 14,886 shares and $ 1 with a corresponding decrease in additional paid-in capital.

Summary of Significant Accounting Policies

Basis of Presentation - The accompanying audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), under the rules and regulations of the U.S.

Basis of Presentation - The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), under the rules and regulations of the U.S.

Securities and Exchange Commission (the “SEC”).

1 unchanged sentence

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.

Significant items subject to such estimates and assumptions include the (i) estimates of future costs to complete customer contracts recognized over time, (ii) valuation allowances for deferred income tax assets, (iii) valuation of stock-based compensation awards, (iv) the valuation of conversion options, warrants and earnouts, (v) fair value of the New Convertible Debentures, (vi) fair value of November 2024 Debentures, and (vii) fair value of Preferred Stock.

Significant items subject to such estimates and assumptions include the (i) estimates of future costs to complete customer contracts recognized over time, (ii) valuation allowances for deferred income tax assets, (iii) valuation of stock-based compensation awards, (iv) the valuation of conversion options, warrants and earnouts, (v) fair value of New Convertible Debentures and November 2024 Debentures, and (vi) fair value of Preferred Stock.

Actual results could differ from those estimates.

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There were no cash equivalents at December 31, 2025 and 2024, respectively.

Restricted Certificate of Deposit - The Company has a restricted certificate of deposit, held by a bank on our behalf, of $ 52,151 and $ 201,822 , as of December 31, 2024 and 2023, respectively.

The balance at December 31, 2024 relates to a guarantee against corporate credit cards.

The balance at December 31, 2023 consisted of $ 150,000 , relating to a restricted certificate of deposit which was required to collateralize a letter of credit, with the remainder held as a guarantee against corporate credit cards.

Restricted Cash - The Company had a restricted cash balance of $ 600,342 at December 31, 2025 relating to a letter of credit for imported inventory items.

The Company had a restricted certificate of deposit, held by a bank on our behalf, of $ 52,151 as of December 31, 2024 which related to a guarantee against corporate credit cards.

Accounts Receivable, Unbilled Revenues, and Allowance for Credit Losses - With the adoption of ASU 2016-13, accounts receivable and contract assets are recorded at the invoiced amount and do not typically bear interest.

3 unchanged sentences

This estimate is calculated on a pooled basis where similar risk characteristics exist.

If applicable, accounts receivable and contract assets are evaluated

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

individually when they do not share similar risk characteristics which could exist in circumstances where amounts are considered at risk or uncollectible.

If applicable, accounts receivable and contract assets are evaluated individually when they do not share similar risk characteristics which could exist in circumstances where amounts are considered at risk or uncollectible.

The allowance estimate is derived from a review of the Company’s historical losses based on the aging of receivables.

3 unchanged sentences

If any recoveries are made from any accounts previously written off, they will be recognized in income in the year of recovery, in accordance with the entity’s accounting policy election.

The total amount of write-offs and expected credit losses were $ 39 and $ 2,040 for the years ending December 31, 2024 and 2023, respectively.

The allowance for current expected credit losses for the years ending December 31, 2024 and 2023 was $ 0 .

Assets Held For Sale - Long-lived assets identified as assets held for sale are categorized on the balance sheet as current assets and are measured at the lower of carrying value or fair value less any costs to sell.

Any liabilities associated with the assets being sold are categorized on the balance sheet as current liabilities.

Assets held for sale are no longer depreciated or amortized.

The total allowance for credit losses was de minimis for the years ending December 31, 2025 and 2024, respectively.

Property and Equipment - Property and equipment is recorded at cost and depreciated using the straight-line method.

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Upon disposition, the cost and accumulated depreciation are removed and any gain or loss on the disposal is reflected in the consolidated statements of operations.

Goodwill – Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations.

Pursuant to ASC Topic 350, Intangibles-Goodwill and Other, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances.

Under authoritative guidance, the

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company first assessed qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment test.

The assessment considers factors such as, but not limited to, macroeconomic conditions, data showing other companies in the industry and our share price.

An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.

Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price

Intangible Assets - Intangible assets consist primarily of trade-names/trademarks, intellectual property and non-compete agreements acquired through the SeaTrepid acquisition.

Finite-lived intangible assets are amortized on a straight-line bases over their estimated useful lives, ranging from 3 to 15 years.

Impairment of Long-Lived Assets - The Company reviews long-lived assets for potential impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

1 unchanged sentence

If the undiscounted future cash flows are less than the carrying amount of the asset, an impairment loss is recognized for the difference between its carrying value and estimated fair value.

For the year ended December 31, 2024, no property and equipment was impaired.

For the year ended December 31, 2023, $ 25,354,791 of property and equipment was impaired.

For the years ended December 31, 2025 and 2024 no property and equipment was impaired.

Segment Reporting - In November of 2023, the Financial Accounting Standards Board (FASB) issued ASU No.

7 unchanged sentences

The Company manages its operations as a single segment because each revenue stream possesses similar production methods, distribution methods, and customer quality and consumption characteristics, resulting in similar long-term expected financial performance.

The adoption of ASU 2023-07 has not had a material impact on our financial statements.

Revenue - Our primary sources of revenue are from providing technology engineering services and products to the offshore industry and governmental entities.

1 unchanged sentence

These contracts can be service sales (cost plus fixed fee or firm fixed price) or product sales and typically have terms of up to 18 months.

The Company had no product sales in 2024 and 2023, respectively.

The Company had no product sales in 2025 and 2024, respectively, nor has it had any firm fixed fee contracts in 2025.

A performance obligation is a promise in a contract to transfer distinct goods or services to a customer.

For all contracts, we assess if there are multiple promises that should be accounted for as separate performance obligations or combined into a single performance obligation.

We generally separate multiple promises in a contract as separate performance obligations if those promises are distinct, both individually and in the context of the contract.

If multiple promises in a contract are highly interrelated or require significant integration or customization within a group, they are combined and accounted for as a single performance obligation.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our 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 our results of operations.

Where the current estimate of total costs at completion for contracts exceeds the total consideration we expect to receive we recognize the entire expected loss in the period that becomes evident.

Estimated contract costs include costs that relate directly to the contract including direct labor, direct materials, and allocations of certain overhead costs.

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.

Our service arrangements generally represent a single performance obligation.

Our performance obligations under service agreements generally are satisfied over a short period of time as the service is provided.

Revenue under these contracts is recognized using an input method based on costs incurred relative to total estimated costs.

This requires management to make estimates and assumptions to estimate contract sales and costs associated with its contracts with customers.

Changes in estimates are recognized in the period in which they become known.

Where the estimated total costs to complete a contract exceed the expected consideration to be received, the full amount of the anticipated loss is recorded in the period the loss becomes evident.

Inventories – Inventories consist of raw materials, work in progress and finished goods, as applicable, and are stated at the lower of cost or net realizable value.

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The associated write-downs or write-offs of inventory are charged to cost of sales.

Inventory write-offs totaling $ 500,332 were included in cost of sales for

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the year ended December 31, 2025 relating to inventory deemed as obsolete.

During the year ended December 31, 2025, $ 414,416 of inventory was transferred from inventories to construction in progress relating to items to be used on our subsea vehicle.

Inventories consisted of the following:

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Management considers the scheduled reversal of deferred tax asset (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

valuation allowance for deferred tax assets is recorded when it is more likely than not that the benefit from the deferred tax asset will not be realized.

A valuation allowance for deferred tax assets is recorded when it is more likely than not that the benefit from the deferred tax asset will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.

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The Company had no material uncertain tax positions as of December 31, 2025 or 2024 .

Foreign Currency Translation – Prior to January 1, 2025, all assets and liabilities in the consolidated balance sheet of the Company's foreign subsidiary, whose functional currency is the Brazilian Real, were translated at period-end exchange rates.

All revenues and expenses in the consolidated statements of operations, of this foreign subsidiary, were translated at average exchange rates for the period.

Translation gains and losses were not included on determining net loss but were shown in accumulated other comprehensive loss on the consolidated balance sheet.

Effective January 1, 2025, the functional currency for the Company's foreign subsidiary was changed from Brazilian Real to U.S.

dollars due to changes in operational and economic circumstances.

The previously recorded cumulative translation adjustment in Accumulated Other Comprehensive Income as of the date of the change remains in equity and will not be reclassified to earnings unless the subsidiary is sold or liquidated.

The change was accounted for prospectively.

Foreign Currency Gains and Losses – Foreign currency transaction gains and losses are included on determining net loss.

The Company purchases certain materials and equipment from foreign companies and these transactions are generally denominated in the vendors’ local currency.

The Company purchases certain materials and equipment from foreign companies and these transactions are generally

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

denominated in the vendors’ local currency.

The Company recorded $ 54,527 and $ 61,597 of foreign currency transaction losses for the years ended December 31, 2025 and 2024, respectively that are included in other income, net.

Fair Value Measurements - The Company categorizes financial assets and liabilities using a three-tier fair value hierarchy, based on the nature of the inputs used to determine fair value.

Inputs refer broadly to assumptions that market participants would use to value an asset or liability and may be observable or unobservable.

When determining the fair value of assets and liabilities, the Company uses the most reliable measurement available.

See Note 22, “Fair Value Measurements.”

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.

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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 sold in a private placement to CLAQ’s co-sponsors in connection with CLAQ’s initial public offering (the “Private Warrants”) and warrants sold to the public in CLAQ’s initial public offering (the “Public Warrants”) should be accounted for as liabilities.

We have determined that the private warrants sold in a private placement (the “Private Warrants”) and warrants sold to the public (the “Public Warrants”) should be accounted for as liabilities.

The Private Warrants and Public Warrants were initially recorded at their estimated fair value on the issuance.

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Derivative warrant liabilities are classified in our balance sheets 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 fair value of the Original SPA Warrants upon issuance was estimated using a Monte Carlo valuation model (a Level 3 measurement).

Fair Value Election for New Co nvertible Debentures and November 2024 Debentures - The Company has elected to measure its new 5 % Original Issue Discount Senior Secured Convertible Debentures (the "New Convertible Debentures") and the 2 % Original Issue Discount Senior Secured Convertible Debentures (the "November 2024 Debentures") at fair value under the fair value option in accordance with ASC 825-10, Financial Instruments – Fair Value Option.

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The fair value of the New Convertible Debentures and November 2024 Debentures are determined using a Monte Carlo simulation model that uses inputs such as the Company’s stock price (KITT), stock price volatility, risk-free interest rate and conversion terms.

As of December 31, 2024, the fair value of the New Convertible Debentures was $ 0 compared to an initial fair value of $ 99,195,791 as of January 30, 2024, as a result of the New Convertible Debentures being exchanged to Series A Preferred stock on December 27, 2024 and December 31, 2024.

A loss on extinguishment of debt of $ 48,870,991 related to this transaction was reported in the consolidated statements of operations for the year ended December 31, 2024.

November 2024 Debentures

The November 2024 Debentures were estimated to have a fair value of $ 2,583,832 as of December 31, 2024.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The New Convertible Debentures were exchanged to Series A Preferred stock on December 27, 2024 and December 31, 202 4.

The init ial fair value of the New Convertible Debentures was $ 99,195,791 as of January 30, 2024, A loss on extinguishment of debt of $ 48,870,991 r elated to this transaction was reported in the consolidated statements of operations for the year ended December 31, 2024 .

November 2024 Debentures - The November 2024 Debentures were estimated to have a fair value of $ 163,672 and $ 2,583,832 as of December 31, 2025 and December 31, 2024 respectively.

The fair value option eliminates the requirement to separately account for embedded conversion features that would otherwise be bifurcated under ASC 815-15, Derivatives and Hedging – Embedded Derivatives.

Instead, all economic impacts of the New Convertible Deb entures and November 2024 Debentures—including interest, conversion features, and market fluctuations—are captured in the fair value measurement.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company believes that the fair value measurement provides a more relevant representation of the liability’s impact on financial position and performance, as it reflects the new convertible debentures’ current economic value and reduces potential measurement inconsistencies.

Earnout Shares – Earnout Shares, issuable to former holders of Nauticus Robotics Holdings, Inc.’s Common Stock, are held in escrow.

The Earnout Shares will be released upon the occurrence of a Triggering Event within 5 years of 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.

A Monte Carlo valuation model (a Level 3 measurement) determined their estimated fair value upon issuance.

Capitalized Interest – The Company capitalizes interest costs incurred to work in progress during the related construction periods.

Capitalized interest is charged to costs of revenue when the related completed project is delivered to the buyer.

The Company did not capitalize interest during the year ended December 31, 2024.

During the year ended December 31, 2023, the Company capitalized interest totaling $ 1,515,446 of which $ 354,162 and $ 1,161,284 related to inventory and property and equipment, respectively.

Earnings (Loss) per Share – Basic earnings per share is computed by dividing income by the weighted average number of shares of Common Stock outstanding during the period.

Earnout Shares – Earnout Shares that may be issued to former holders of Nauticus Robotics Holdings, Inc.’s common stock are held in escrow and will only be issued upon the occurrence of specified Triggering Events within 5 years of September 9, 2022.

As of the reporting date, the Earnout Shares have not been issued and therefore are not considered issued or outstanding shares of common stock.

The Company evaluated the earnout arrangement under ASC 815 – Derivatives and Hedging and concluded that, upon issuance, the Earnout Shares would qualify for equity classification.

Accordingly, the Earnout Shares will be recognized in stockholders’ equity at fair value on the issuance date and will not be subsequently remeasured.

The fair value will be determined using a Monte Carlo simulation model, which represents a Level 3 fair value measurement under ASC 820 – Fair Value Measurement.

Earnings (Loss) per Share – Basic earnings per share is computed by dividing income attributable to common stockholders by the weighted average number of shares of Common Stock outstanding during the period.

Diluted earnings per share is computed in the same manner as basic earnings per share except that the denominator is increased to include the number of additional shares of Common Stock that could have been outstanding assuming the exercise of stock options and warrants (determined using the treasury stock method) and conversion of convertible debt.

The Earnout Shares, which are subject to forfeiture if the achievement of certain stock price thresholds is not met, are not considered participating securities and are not included in the weighted-average shares outstanding for purposes of calculating loss per share.

The Company’s Convertible Preferred Stock is considered a non-participating security as it does not have the right to participate in dividends with common stockholders beyond its stated dividend or share in undistributed earnings.

Accordingly, the Company does not apply the two-class method in computing earnings (loss) per share.

Dividends on preferred stock are recorded as a reduction to net income (loss) attributable to common stockholders in the calculation of basic earnings (loss) per share.

Major Customer and Concentration of Credit Risk – We have a limited number of customers.

During the year ended December 31, 2024, sales to three customers accounted for 82 % of total revenue.

Sales to Customer A accounted for 39 % of total revenue;

sales to Customer B accounted for 27 % of total revenue;

and sales to Customer C accounted for 16 % of total revenue.

During the year ended December 31, 2025, sales to five customers accounted for 69 % of total revenue.

Sales to Customer A and Customer B accounted for 19 % of total revenue, respectively;

sales to Customer C accounted for 11 % of total revenue;

and sales to Customer D and E accounted for 10 % of total revenue, respectively.

Total accounts receivable as of December 31, 2025 was made up by three customers.

As of December 31, 2024, sales to three customers accounted for 82 % of total revenue.

Sales to Customer F accounted for 39 % of total revenue;

sales to Customer G accounted for 27 % of total revenue;

and sales to customer H accounted for 16 % of total revenue.

Total accounts receivable for the year ended December 31, 2024 was made up by three customers.

During the year ended December 31, 2023, sales to two customers accounted for almost 100 % of total revenue.

Sales to Customer D accounted for 61 % of total revenue;

and sales to Customer C accounted for 39 % of total revenue.

The total balance due from these customers as of December 31, 2023 comprised 68 % of accounts receivable with the remaining due from one other customer.

No other customer represented more than 10% of our revenue.

Loss of these customers could have a material adverse impact on the Company.

Reclassifications – Financial statements presented for prior periods include reclassifications that were made to conform to the current year presentation.

There was no material impact to the consolidated financial statements for these changes.

Accounting Standards Issued but not adopted as of December 31, 2024 – In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments require disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions.

The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact that this guidance will have on the disclosures within our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, an update that improves income statement expense disclosure requirements.

Under ASU 2024-03 issuers will be required to incorporate new tabular disclosures disaggregating prescribed expense categories within relevant income statement captions in the notes to their financial statements.

These categories include purchases of inventory, employee compensation, depreciation and intangible asset amortization.

The amendments are effective for fiscal years beginning after December 15, 2026 and

For the year ended December 31, 2024, we reclassified $ 200,000 of franchise tax expense from other expense to general and administrative expense in the consolidated statements of operations to conform to the current year presentation.

There were no other reclassifications that materially impacted the consolidated financial statements.

Distinguishing Liabilities from Equity – The Company evaluates financial instruments, including preferred stock, convertible debt, equity line of credit, and warrants to determine whether they should be classified as liabilities or equity in accordance with ASC 480 and ASC 815.

For warrants, the Company assess whether the instrument is indexed to its own stock and meets the equity classification conditions.

Instruments that fail equity classification are recorded as liabilities and measured at fair value, with changes recognized in earnings.

This assessment is performed at issuance and reassessed each reporting period while outstanding.

Accounting for Business Combinations – The Company accounts for acquisitions in accordance with ASC 805, using the acquisition method.

Under this method, the consideration transferred is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.

Any excess of the purchase price over the fair value of net identifiable assets acquired is recorded as goodwill.

Identifiable intangible assets, are recognized separately from goodwill if they meet the separability criteria and are amortized over the estimated useful lives.

Provisional amounts are adjusted during the measurement period as new information becomes available about facts and circumstances that existed as of the acquisition date.

Accounting Standards Issued and adopted as of December 31, 2025 - The Company has adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures as issued by the Financial Accounting Standards Board

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

should be applied prospectively.

The adoption of ASU 2024-03 will require us to provide additional disclosures related to certain income statement expenses, but otherwise will not materially impact our financial statements.

(“FASB”) in December 2023, which is an update that improves income tax disclosure requirements.

Other than providing additional disclosures related to our income taxes, the adoption, which was done on a prospective basis, did not materially impact our consolidated financial statements.

See “Note 14 – Income Taxes”.

Accounting Standards Issued but not adopted as of December 31, 2025 – In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, an update that improves income statement expense disclosure requirements.

These categories include purchases of inventory, employee compensation, depreciation and intangible asset amortization.

The amendments are effective for fiscal years beginning after December 15, 2026 and should be applied prospectively.

The adoption of ASU 2024-03 will require us to provide additional disclosures related to certain income statement expenses, but otherwise will not materially impact our consolidated financial statements.

Accounting Standards Issued but not adopted as of December 31, 2025 – In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-10, Accounting for Government Grants (Topic 832) , which establishes guidance on the recognition, measurement, presentation and disclosure of government grants received by business entities.

The Company does not currently receive government grants within the scope of this guidance.

The Company is evaluating the potential impact of the adoption of this standard on its consolidated financial statements and if arrangements in the future meet the definition of a government grant, such arrangements would be evaluated under this provision.

All other new accounting pronouncements that have been issued, but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our consolidated financial statements.

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Contract Balances – Accounts receivable, net as of December 31, 2025 totaled $ 378,683 due from customers for contract billings and is expected to be collected within the next three to six months.

At December 31, 2023 and 2022, accounts receivable, net totaled $ 212,428 and $ 1,622,434 , respectively.

Allowances for doubtful accounts included in accounts receivable totaled $ 0 for the years ended December 31, 2024 and December 31, 2023, respectively.

Bad debt expense was $ 39 and $ 2,040 , respectively, for the years ended December 31, 2024 and 2023.

At December 31, 2024 accounts receivable, net totaled $ 238,531 .

Allowances for credit losses included in accounts receivable were de minimis for as of December 31, 2025 and December 31, 2024, respectively.

Bad debt expense was de minimis for the years ended December 31, 2025 and 2024.

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.

There were no contract assets as of December 31, 2024 or December 31, 2023.

Contract assets at December 31, 2022 were $ 573,895 .

There were no contract assets as of December 31, 2025 and December 31, 2024.

Contract liabilities include billings in excess of revenue recognized and accrual of certain contract obligations.

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Contract liabilities at December 31, 2024 relate to billings in excess of revenue recognized.

Contract liabilities at December 31, 2023 included costs accrued for an ongoing contract expected to be loss making with the loss of $ 2,542,913 reported on the consolidated statements of operations for the year.

Revenue of $ 705,000 was reported during the year ended December 31, 2024 relating to this liability, $ 455,000 of which was related to contract modifications made in 2024.

The decrease in contract liabilities at December 31, 2024 is primarily attributable to costs incurred on the loss making contract in the first half of 2024 being offset against the accrual.

Unfulfilled Performance Obligations – As of December 31, 2024, there were no unfulfilled performance obligations.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash, cash equivalents and restricted cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Statements of Cash Flows to the amounts shown in the Consolidated Balance Sheets:

2025 December 31,

Cash and cash equivalents $ 7,016,610 $ 1,186,047

Restricted cash 600,342 52,151

Total cash, cash equivalents and restricted cash $ 7,616,953 $ 1,238,198

The balance reported as restricted cash for the year ended December 31, 2025 relates primarily to a letter of credit for imported inventory items.

The balance restricted cash for the year ended December 31, 2024 relates to a guarantee against corporate credit cards.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Prepaid Expenses

Prepaid expenses consisted of the following:

2025 December 31,

Prepaid material purchases $ 5,400 $ 394,950

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Total prepaid expenses $ 1,055,324 $ 1,389,434

Term loan receivable $ - $ 695,000

Other current assets 573,275 330,214

Total other current assets $ 573,275 $ 1,025,214

Property and Equipment

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Life (years) December 31, 2025 December 31, 2024

Leasehold improvements 5 $ 833,920 $ 796,136

Land n/a $ 444,435 $ -

Leasehold improvements 5 years 1,823,586 833,920

Property & equipment 3 - 5 years

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Total property and equipment, net $ 21,827,769 $ 17,115,246

During the year ended December 31, 2024 the Company performed a discounted cash flow test to compare the carrying value of its assets with estimated future revenues and concluded that none of its assets were impaired.

For the year ended December 31, 2023, impairments of $ 25,354,791 were reported on the consolidated statements of operations relating to property and equipment, primarily arising from impairment of the Aquanaut Mark 2 vehicles, Hydronaut vessels, Drix, Olympic arms and some leasehold improvements.

During the year ended December 31, 2023, the Company conducted a thorough review of its assets and identified items that no longer aligned with its strategic objectives.

The Company reclassified $ 2,940,254 worth of property and equipment, including Hydronaut vessels, the Drix unmanned surface vessel, and other miscellaneous equipment, as Assets Held For Sale ("AHFS").

At December 31, 2024, property and equipment totaling $ 750 remains as AHFS with the decrease driven primarily by the sale of Hydronaut vessels 1, 2 and 3.

Hydronaut vessels 2 and 3 were sold in January 2024, for $ 1,533,610 , which included cash of $ 375,000 , combined with the offset of open payable invoices.

Hydronaut Vessel 1 was sold in November 2024 for $ 240,337 .

The Drix unmanned surface vessel was transferred back to property and equipment as it became revenue generating in the third quarter of 2024.

The increase in Construction in progress for the year ended December 31, 2024 was mainly driven by a transfer of $ 1,376,885 from Work in progress.

The Company reported a net loss on disposal of property and equipment of $ 19,202 and $ 82,604 for the years ended December 31, 2024 and 2023, respectively, which is reported on the consolidated statements of operations in other (income) expense.

The Company reported a loss on disposal of property and equipment of $ 25,788 and $ 19,202 for the years ended December 31, 2025 and 2024, respectively, which is reported on the consolidated statements of operations in other (income) expense.

During the year ended December 31, 2025, $ 414,416 of inventory was transferred from inventories to construction in progress relating to items to be used on our subsea vehicle.

Depreciation expense for the years ended December 31, 2025 and 2024 was $ 2,192,342 and $ 1,736,828 , respectively.

Accrued Liabilities

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Accrued royalties 337,500 400,000

Accrued AHFS liability - 1,158,609

Accrued lease termination costs - 657,000

Accrued interest 4,303,157 2,302,878

Accrued Audit Fees 531,000 -

Accrued settlement 319,546 -

Other accrued expenses 233,398 40,000

Accrued purchase liability - SeaTrepid 3,287,881 -

Total accrued expenses $ 10,139,275 $ 5,602,721

The Hydronaut vessels 2 and 3 are reported as Assets Held For Sale at December 31, 2023 at an amount based on an offer for sale.

The offer for sale contains both cash and non-cash considerations.

The Assets Held For Sale liability of $ 1,158,609 included the non-cash consideration, which are purchase invoices submitted by the purchaser that will be foregone upon closing of the sale.

The Hydronaut vessels 2 and 3 were sold on January 22, 2024 and the asset held for sale current asset was offset with the asset held for sale liability and cash received.

In December 2023, the Company started negotiations to exit a lease for office space.

The negotiations completed in March 2024 with the Company agreeing a settlement figure with the lessor of $ 657,000 to be paid over 8 months commencing April 2024.

The accrual was recorded under accrued liabilities on the consolidated balance sheet as of December 31, 2023.

See Note 8 - "Leases" for further discussion.

In April 2023, the Company received correspondence from the State of Texas assessing a sale and use tax liability of $ 575,602 for the four year period between January 1, 2017 and December 31, 2020.

The sales and use tax audit has been completed and we received confirmation on November 12, 2024 that the liability for sales and use tax for this period is $ 181,098 .

This is recorded under accrued liabilities of the consolidated balance sheet as of December 31, 2024.

On March 20, 2025, the Company completed the acquisition of SeaTrepid International LLC (“SeaTrepid”), an expert in providing subsea robotic services to customers throughout the world, for total consideration of $ 14,209,810 (see Note 11, "Business Combination").

As of December 31, 2025, a liability of $ 3,287,881 , is outstanding to SeaTrepid payable in cash on or before June 30, 2026.

A partial payment of $ 500,000 was made in the fourth quarter of 2025.

This liability includes the preliminary post-closing working capital adjustment.

Notes Payable

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2025 December 31,

Convertible secured debentures $ - $ 36,530,320

New Convertible Debentures (fair value) - -

November 2024 Debentures (fair value)

$ 163,672 $ 2,583,832

Convertible senior secured term loan 19,284,709 27,500,383

SBA Loan 485,300 -

Ameristate Loan 1,811,327 -

Total 21,745,008 30,084,215

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capitalized debt issuance costs ( 321,004 ) ( 1,207,509 )

Senior bridge note exit fee provision 125,302 27,608

Total notes payable – long-term $ 28,935,530 $ 31,597,649

2023 Term Loan Agreement exit fee provision 115,638 125,302

Total notes payable $ 21,513,417 $ 28,935,530

November 2024 Debentures (principal amount)

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Convertible Secured Debentures

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On September 9, 2022, we issued Debentures, secured debt instruments, which featured a 2 % original issue discount, in an aggregate principal amount of $ 36,530,320 , together with 9,020 associated warrants ("Original SPA Warrants"), for gross proceeds of $ 35,800,000 .

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The debt discount is being amortized to interest expense over the four-year term of the Debentures.

The Debentures were convertible at each holder’s option at 120 % of the principal amount at a conversion price of $ 15.00 or 2,922,425 shares of Common Stock, on a pre Reverse Stock Split basis, subject to certain adjustments including full ratchet anti-dilution price protections.

The Debentures were convertible at each holder’s option at 120 % of the principal amount at a conversion price of $ 4,860 or 9,020 shares of Common Stock, subject to certain adjustments including full ratchet anti-dilution price protections.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Interest accrued on the outstanding principal amount of the Debentures at 5 % per annum, payable quarterly.

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and (e) an option by the holder to extend the maturity date by an additional year.

Generally, upon an event of default the outstanding principal, interest, liquidated damages, and other amounts become immediately due and payable in cash (and interest then accrues at 18 % per annum).

The obligations of the Company under the New Convertible Debentures are generally secured by all assets of the Company and its subsidiaries, and are generally guaranteed by the Company’s subsidiaries.

The New Convertible Debentures include, among other items, representations, warranties, affirmative and negative covenants, certain adjustments (including in respect of stock dividends, stock splits, and subsequent equity sales and rights offerings, pro rata distributions, and fundamental transactions), certain limitations on share issuances (including prior to stockholder approval), optional redemption, liquidated damages, events of default, and remedies, in each case, as further described therein.

On the closing of the Amendment and Exchange Agreement the existing Original Issue Discount Senior Secured Convertible Debentures were extinguished.

The Company has elected to measure the New Convertible Debentures at fair valu e under the fair value option in accordance with ASC 825-10, Financial Instruments – Fair Value Option which eliminates the requirement to separately account for embedded conversion features that would otherwise be bifurcated under ASC 815-15, Derivatives and Hedging – Embedded Derivatives.

The New Convertible Debentures were measured at a fair value of $ 99,195,791 , estimated using Monte Carlo simulations with the following pre Reverse Stock Split assumptions:

The New Convertible Debentures were measured at a fair value of $ 99,195,791 , estimated using Monte Carlo simulations with the following Split assumptions:

stock price of $ 148.65 , a risk free rate of 4.23 %, implied volatility of 121 % and a remaining term of 2.61 years.

A loss on extinguishment of debt of $ 78,734,949 related to this transaction was reported in the consolidated statements of operations for the year ended December 31,2024.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Conversion of New Convertible Debentures

During the year ended December 31, 2024, ATW I and SLS converted New Convertible Debentures with a fair value of $ 29,741,859 , 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.

During the year ended December 31, 2024, ATW I and SLS converted New Convertible Debentures with a fair value of $ 29,741,859 , principal value of $ 12,869,231 and $ 1,836,720 and payable interest of $ 442,140 and $ 4,785 into 535,426 and 77,673 shares of Common Stock, respectively.

Second Amendment and Exchange Agreement

On November 4, 2024, the Company entered into the Second Amendment and Exchange Agreement by and among the Company and ATW I, SLS and MIF pursuant to which such investors would exchange the remaining portion of the amount outstanding under the New Convertible Debentures and certain other amounts outstanding with respect thereto, into shares of Series A preferred convertible stock (see Note 11 - "Equity").

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 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 other amounts outstanding of $ 2,504,440 and $ 240,219 , respectively.

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 other amounts outstanding of $ 2,504,440 and $ 240,219 , respectively.

The total fair value of these exchange transactions was $ 110,300,191 .

A loss on extinguishment of debt of $ 48,870,991 related to this transaction was reported in the consolidated statements of operations for the year ended December 31, 2024.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

extinguishment of debt of $ 48,870,991 related to this transaction was reported in the consolidated statements of operations for the year ended December31,2024.

November 2024 Debentures

On November 4, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) 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”).

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”).

On December 11, 2024, ATW purchased, in a private placement, $ 1,000,000 in principal amount of debentures.

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(e) a maturity date of September 9, 2026, and (f) an option by the holder to extend the maturity date by an additional year.

The Company has elected to add the interest payable to the principal amount of the November 2024 Debentures.

In addition, the exercise price of the November 2024 Debentures is subject to customary anti-dilution adjustments, and, in the case of a subsequent equity sale at a per share price below the exercise price, the exercise price will be adjusted to such lower price.

The fair value of the November 2024 Debentures at December 31, 2024 was estimated at $ 2,583,832 , using Monte Carlo simulations with the following assumptions:

During the year ended December 31, 2025, November 2024 Debentures with a principal value of $ 2,050,000 and interest of $ 202,642 , and fair value of $ 4,668,008 , were converted into 4,549,509 shares of Common Stock.

The fair value of the November 2024 Debentures at December 31, 2025 and December 31,2024 was estimated at $ 163,672 and $ 2,583,832 using Monte Carlo simulations with the following assumptions at December 31, 2025:

stock price of $ 0.77 , a risk free rate of 3.55 % implied volatility of 154 % and a remaining term of 0.69 years and assumptions at December 31, 2024:

stock price of $ 13.95 , a risk free rate of 4.22 % implied volatility of 138 % and a remaining term of 1.69 years .

A gain on change in fair value of $ 435,864 was reported in the consolidated statements of operations for the year ended December 31, 2024.

A gain on change in fair value of $ 2,247,848 and $ 435,864 was reported in the consolidated statements of operations for the years ended December 31, 2025 and 2024.

RCB Equities #1, LLC

2 unchanged sentences

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

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

note provided for an automatic rollover into the structure of certain future debt-financing transactions.

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.

1 unchanged sentence

On September 18, 2023, the Company entered into a convertible senior secured term loan agreement, (the "2023 Term Loan Agreement"), with ATW Special Situations II LLC ("ATW II") as collateral agent (in such capacity, the “Collateral Agent”) and lender, and Transocean Finance Limited ("Transocean Finance"), ATW I, MIF, and RCB, as lenders.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2023 Term Loan Agreement provides the Company with up to $ 20 million of secured term loans.

9 unchanged sentences

In connection with any such election, which shall be irrevocable, the Company shall pay each Lender, on a pro rata basis, an amount in cash equal to the greater of (x) the sum of (i) 100 % of the then outstanding principal amount of the Loans, (ii) accrued but unpaid interest and (iii) all liquidated damages and other amounts due in respect of the Loans (including, without limitation, the Exit Fee (as defined in the 2023 Term Loan Agreement)) (the “Optional Redemption Amount”) and (y) the product of (i) the aggregate number of shares of the Company’s Common Stock, par value $ 0.0001 per share (“Common Stock”), then issuable upon conversion of the applicable Optional Redemption Amount (without regard to any limitations on conversion set forth in the 2023 Term Loan Agreement) multiplied by (ii) the highest closing sale price of the Common Stock on any trading day during the period commencing on the date immediately preceding the date that the applicable notice of redemption is delivered to the Lenders and ending on the trading day immediately prior to the date the Company makes the entire payment required to be made in connection with such redemption.

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 pre Reverse Stock Split conversion price of $ 6.00 per share of Common Stock (the “Conversion Price”), subject to certain customary anti-dilution adjustments as described in the 2023 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 conversion price of $ 1,944 per share of Common Stock (the “Conversion Price”), subject to certain customary anti-dilution adjustments as described in the 2023 Term Loan Agreement.

First Amendment to Convertible Senior Secured Term Loan

3 unchanged sentences

The loan incurred debt issuance costs of $ 72,000 which are being amortized to interest expense over the period of the loan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Second Amendment to Convertible Senior Secured Term Loan

On January 30, 2024, the Company entered into a Second Amendment to Term Loan Agreement, dated as of January 30, 2024 (the “Second Amendment”), by and among the Company, the guarantors (as defined in the Second Amendment) and the required lenders (as defined in the Second Amendment), which amended that certain Term Loan Agreement, dated as of September 18, 2023, by and among the Company, Transocean Finance, ATW I, MIF and RCB as lenders and ATW II, as collateral agent.

In connection with the Second Amendment, the Company also entered into a Second Agreement regarding incremental loans, dated as of January 30, 2024 (the “Second Agreement”), by and among the Company, the guarantors (as defined in the Second Agreement), and ATW II and MIF, as incremental lenders.

The Second Agreement provides the Company with an incremental loan in the aggregate principal amount of $3,753,144 (the “January 2024 Incremental Loan”).

The January 2024 Incremental Loan would be made on the same terms as the 2023 Term Loan and be deemed to be Additional Term Loans for all purposes under the Term Loan Agreement.

The Second Agreement provides the Company with

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

an incremental loan in the aggregate principal amount of $ 3,753,144 (the “January 2024 Incremental Loan”).

The January 2024 Incremental Loan would be made on the same terms as the 2023 Term Loan and be deemed to be Additional Term Loans for all purposes under the Term Loan Agreement.

New Senior Secured Term Loan Agreement

On January 30, 2024, the Company also entered into a senior secured term loan agreement (the “2024 Term Loan Agreement”) with ATW Special Situations Management LLC (“ATW Management”), as collateral agent (in such capacity, the “Collateral Agent”) and lender, and ATW Special Situations III LLC (“ATW III”), MIF, VHG Investments, ATW II and ATW I, as lenders.

The 2024 Term Loan Agreement provides the Company with an aggregate $ 9,551,856 of secured term loans (the “2024 Loans”).

The 2024 Term Loan Agreement provides the Company with an aggregate $ 9,551,856 of secured term loans (the “2024 Loans”), including $ 1,000,000 which has an extended repayment period, (the "ATW Extended Maturity Term Loan").

Any portion of the outstanding principal amount of the 2024 Loans are prepayable at the Company’s option pro rata to each Lender upon at least 5 days’ prior written notice to each Lender.

The 2024 Term Loan Agreement also provides for up to an additional $ 6 million of secured term loans within 180 days of signing.

The 2024 Term Loan Agreement also provided for up to an additional $ 6 million of secured term loans within 180 days of signing.

The 2024 Loans assumed debt issuance costs of $ 1,237,291 which are being amortized to interest expense over the period of the loan.

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 Company shall pay interest in cash or the Company may, at its option, elect for up to (x) 100 % for the six ( 6 ) months after the Closing Date and (y) thereafter, 50 %, in each case, of any accrued but unpaid interest that would otherwise be payable on an Interest Payment Date, to be capitalized and added as of such date to the principal amount of the Loans (the “PIK Interest”).

The principal amount of the Loans shall be deemed to be increased by the PIK Interest so capitalized and added to the unpaid principal balance of the Loans in accordance with the provisions hereof.

The Company opted to capitalize the interest payable.

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”), issued 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”).

(a) the third anniversary of the date of the Term Loan Agreement, (b) the maturity of the Indebtedness under the 2023 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, and (c) 91 days prior to the maturity of the 5 % Original Issue Discount Senior Secured Convertible Debentures, dated as of September 9, 2022, issued 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 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 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 were 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 $ 148.50 per share of Common Stock, subject to certain adjustments as described in the 2024 Term Loan Agreement.

On January 3, 2025, the Company voluntarily reduced the conversion price of the loans under the 2024 Term Loan Agreement dated as of January 30, 2024 to $ 14.31 on a post reverse split basis, in accordance with the original terms and provisions of the note agreement.

Amendment to 2024 Term Loan Agreement

On May 1, 2024, the Company entered into an amendment (the “May 2024 Amendment”) to the 2024 Term Loan Agreement dated January 30, 2024 between the Company, ATW Management as collateral agent, and the lenders party thereto.

Pursuant to the Amendment, ATW I, will loan an additional $ 1,000,000 (the “ May 2024 Incremental Loan ” ) to the Company.

The May 2024 Incremental Loan will have the same terms as the ATW Extended Maturity Term Loan under the 2024 Term Loan Agreement and will mature on the 30th anniversary of the date of the 2024 Term Loan Agreement or such earlier date as is required or permitted to be repaid under the 2024 Term Loan Agreement.

Pursuant to the Amendment, ATW I loaned an additional $ 1,000,000 (the “ May 2024 Incremental Loan ” ) to the Company.

The May 2024 Incremental Loan has the same terms as the ATW Extended Maturity Term Loan under the 2024 Term Loan Agreement and will mature on the 30th anniversary of the date of the 2024 Term Loan Agreement or such earlier date as is required or permitted to be repaid under the 2024 Term Loan Agreement.

The May 2024 Incremental Loan incurred debt issuance costs of $ 37,500 which are being amortized to interest expense over the period of the loan.

Interest expense includes the following relating to the 2023 Term Loan, the December 2023 Incremental Loan, the January 2024 Incremental Loan, 2024 Loans and the May 2024 Incremental Loan (collectively the “ convertible senior term loans ” ):

The 2023 Term Loan, the December 2023 Incremental Loan, the January 2024 Incremental Loan, 2024 Loans and the May 2024 Incremental Loan are collectively the S enior Secured Convertible Term Loan.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Term Loan Note Conversions

During the year ended December 31, 2025, ATW I and ATW II exchanged 2023 Term Loan notes with principal and interest amount of $ 3,360,164 and $ 453,794 , respectively, into 3,814 of Series C Preferred Stock (see Note 15, Preferred Stock).

The fair value of the Series C Preferred Stock was $ 10,185,929 and a loss of extinguishment of debt of $ 6,666,623 was reported in the consolidated statements of operations for the year ended December 31, 2025 .

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.

On October 25, 2025, the Company entered into an Amendment to the 2023 Term Loan with each Lender, pursuant to which the conversion price was reduced to $ 1.76 for the period from October 25, 2025 to November 7, 2025, thereafter, the conversion price reverted to $ 1,944 .

During this period, a lender converted 2023 Term Loan notes with principal amount of $ 3,000,000 and interest payable of $ 773,958 into 2,144,295 shares of Common Stock.

The Company evaluated the transaction under ASC 470-20 and concluded it qualified as an induced conversion.

The Company recognized an inducement expense of $ 3,941,929 , which represents the fair value of the incremental benefit provided to the lender.

This amount was reported as interest expense in the consolidated income statements with a corresponding increase to additional paid-in-capital.

This transaction did not involve any cash consideration.

Interest Expense

Interest expense includes the following relating to the S enior Secured Convertible Term Loan:

Twelve months ended December 31,

1 unchanged sentence

Amortization of debt issuance costs 886,504 664,690

Provision for bridge note exit fee 97,694 27,608

Interest expense, net related to notes payable was $ 5,108,227 and $ 8,776,277 for the year ended December 31, 2024 and 2023, respectively.

Provision for 2023 Term Loan Agreement exit fee ( 9,663 ) 97,694

Induced conversion expense 3,941,929 -

During the years ended December 31, 2025 and 2024, $ 696,345 and $ 900,383 of interest relating to the 2024 Term Loans was capitalized as PIK interest.

Small Business Association Loan (SBA)

On June 19, 2020, SeaTrepid entered into a term loan with the US Small Business Administration in response to the COVID-19 pandemic.

The loan amount was $ 485,300 with an annual interest rate of 3.75 %, and a maturity date of June 19, 2050.

In connection with the acquisition of SeaTrepid on March 20, 2025, the loan, with an outstanding principal of $ 485,300 as of December 31, 2025, is now an obligation of the Company.

The loan is secured by collateral which includes all tangible and intangible property of SeaTrepid.

Under the terms of the agreement, the sale of collateral without lender consent constitutes a violation of the loan agreement.

As of December 31, 2025, the lender had not issued a notice of default.

As a result of this and as the Company intends to repay the loan on or before June 30, 2026, the outstanding loan balance has been classified as a current liability.

Ameristate Loan

On August 17, 2017, SeaTrepid entered into a term loan with AmeriState Bank.

The loan amount was $ 2,335,000 with an annual interest rate of prime plus 2.5 %, and a maturity date of May 4, 2036.

In connection with the acquisition of SeaTrepid on March 20, 2025, the loan with an outstanding principal of $ 1,865,689 as of December 31, 2025 is now an obligation of the Company.

The loan is secured by collateral which includes all assets of SeaTrepid.

The loan agreement includes customary affirmative and negative covenants, including financial covenants that require SeaTrepid to maintain a maximum Debt-to-Net Worth Ratio of 9.0 to 1.0 and a minimum Debt Service Coverage Ratio of 1.0 to 1.0, measured annually.

The agreement also restricts the Company’s ability to incur additional indebtedness, pay dividends, compensate officers and owners, invest in fixed asset purchases, and dispose of collateral without the consent of the bank.

Under the terms of the agreement, the sale of collateral without lender consent constitutes a violation of the loan agreement and as such constitutes a noncompliance with the financial covenants related to the debt-to-net worth ratio and debt service

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

coverage ratio.

As of December 31, 2025, the lender had not issued a notice of default.

As a result of this and as the Company intends to repay the loan on or before June 30, 2026, the outstanding loan balance has been classified as a current liability.

Reclassification of Debt

During the year ended December 31, 2025, all of the Company's outstanding notes payable were reclassified from long-term to short-term liabilities, as the related obligations mature within twelve months of the balance sheet date.

The Company determines if an arrangement is a lease at inception based on whether the Company has the right to control the use of an identified asset, the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

9 unchanged sentences

The incremental borrowing rate on this lease of 8 % was used to determine the present value of lease payments and establish the right-of-use asset and lease liability at lease inception for this lease.

In December 2023, the Company started negotiations to exit the lease for office space entered into in April 2023.

The negotiations were completed in March 2024 with a settlement figure of $ 657,000 being agreed between the Company and the lessor.

The Company removed the right-of-use asset and lease liability to this operating lease from the consolidated balance sheet as of December 31, 2023 and recorded a loss on lease termination o f $ 453,162 which is r eported under other (income) expense in the consolidated statements of operations for the year ended December 31, 2023.

The carrying value of leasehold improvements on this office space was included in the impairment loss reported on the consolidated statements of operations for the year ended December 31, 2023.

In August 2023, the Company entered into an operating lease for office space in Norway.

The lease had a term of 5 years.

The Company’s secured borrowing rate of 15 % was used to determine the present value of the lease payments and establish the right-of-use asset and lease liability at lease inception for this lease.

During the year ended December 31, 2024, the Company agreed with the lessor on two separate occasions to reduce the size of the office space leased and subsequently terminated the lease early resulting in a net loss on lease termination of $ 18,365 which was reported under other (income) expense on the consolidated statements of operations.

3 unchanged sentences

During the first quarter of 2024, management decided the Company would not extend this lease beyond its initial term and a loss on lease termination of $ 356 was reported under other (income) expense on the consolidated statements of operations.

During the fourth quarter of 2025 management agreed early termination of the lease with the landlord and a loss on lease termination of $ 2,640 was reported under other (income) expense on the consolidated statement of operations.

The Company’s other operating leases include leases for certain office equipment.

15 unchanged sentences

Total operating lease liabilities $ 637,747 $ 1,204,246

For operating lease assets and liabilities, the weighted average remaining lease term was 3 and 8.7 years as of December 31, 2024 and 2023, respectively.

For operating lease assets and liabilities, the weighted average remaining lease term was 2.7 years and 3 years as of December 31, 2025 and 2024, respectively.

The weighted average discount rate used in the valuation over the remaining lease terms was 10.5 % and 11.9 % as of December 31, 2025 and 2024, respectively.

2 unchanged sentences

2026 $ 413,315

2030 onward -

Total lease payments 734,021

3 unchanged sentences

Litigation – From time to time, we may be subject to litigation and other claims in the normal course of business.

No amounts have been accrued in the consolidated financial statements with respect to any matters.

While the Company records accruals for certain matters as appropriate, it does not believe that any currently pending or threatened matters, individually or in the aggregate, are material to its consolidated financial statements.

Business Combination

On March 20, 2025, the Company acquired substantially all of the assets and certain specified liabilities of SeaTrepid, an expert in providing subsea robotic services to customers throughout the world, for a total consideration of $ 14.2 million.

The acquisition aligns with the Company’s long-term growth strategy and expands its presence in the offshore market.

The acquisition was accounted for as a business combination using the acquisition method in accordance with ASC 805 Business Combinations, because the acquired assets and liabilities met the definition of a business, which includes inputs, processes, and outputs capable of generating revenue.

$ 3.95 million of the total consideration was paid in cash at closing and the remaining purchase price (excluding the contingent consideration) was due on or before September 30, 2025 per the asset purchase agreement.

The Company and counterparty mutually agreed to defer the payment, with the settlement now scheduled June 2026.

The deferred amount is recorded in accrued liabilities in our consolidated balance sheet as of December 31, 2025 and will be settled in cash.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The acquisition of SeaTrepid includes a contingent consideration arrangement in which the Company agreed to issue shares of its common stock to the sellers of SeaTrepid, subject to the achievement of $ 4 million of business revenue for the year ended December 31, 2025.

In accordance with the asset purchase agreement executed on March 5, 2025, the number of earnout shares is equal to $ 5.5 million divided by the Minimum Price, as defined under Nasdaq Rule 5635(d), determined as of the date of the asset purchase agreement.

The Company calculated the number of earnout shares equals 671,544 shares, based on a Minimum Price of $ 8.19 as of the date of execution of the asset purchase agreement.

At the acquisition date, the Company estimated the fair value of the contingent consideration to be approximately $ 6.9 million, which is included in the total consideration transferred for the business combination.

The contingent consideration is classified as equity in accordance with ASC 815-40, as it will be settled in a fixed number of shares and does not meet the definition of a derivative or liability.

As such, it will not be remeasured in future periods.

As of December 31, 2025, the earnout target was achieved and the earnout shares have been issued to the sellers of SeaTrepid in March 2026.

As part of the acquisition agreement, the purchase price is subject to a post-closing working capital adjustment.

Based on the closing balance sheet, a working capital shortfall of approximately $ 0.5 million was identified and reduced the total purchase consideration.

The following table summarizes the consideration transferred to acquire SeaTrepid and preliminary allocation of the purchase price to the identifiable assets acquired and liabilities assumed, based on their estimated fair values as of the acquisition date.

The cash consideration includes the future cash payment of $ 4 million due on September 30, 2025 discounted to a net present value of $ 3.9 million as at March 20, 2025.

Cash consideration $ 7,857,118

Earnout shares (fair value) 6,864,729

Purchase price adjustment ( 512,037 )

Total purchase price $ 14,209,810

Purchase Price Allocation March 20, 2025

Cash $ 78,008

Accounts receivable, net 138,354

Inventory 75,300

Other current assets 62,515

Property and equipment 5,594,303

Intangible assets 1,429,400

Goodwill 9,600,745

Accounts payable ( 287,766 )

Accrued liabilities ( 97,668 )

Notes payable - current ( 2,383,381 )

Total purchase price $ 14,209,810

For additional details on the fair value measurement of the acquired assets and liabilities, including the valuation techniques used, see Note 22 Fair Value Measurements.

The results of SeaTrepid's operations have been included in the Company’s consolidated financial statements since the acquisition date.

The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2024.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31,

Revenue $ 5,772,140 $ 9,518,395

Net loss $ ( 41,516,247 ) $ ( 133,634,269 )

These pro forma amounts reflect the historical operating results of the Company and SeaTrepid, adjusted for the effects of the acquisition, including the additional depreciation that would have been charged assuming the fair value adjustments to acquired property and equipment had been applied from January 1, 2024.

For the year ended December 31, 2025, the Company incurred $ 1 million of acquisition-related costs.

These expenses are included in general and administration expense on the condensed consolidated statement of operations for the year ended December 31, 2025.

Measurement Period Adjustments

The purchase price allocation for the SeaTrepid acquisition was preliminary as of the Company's previously issued interim financial statements and subject to adjustments during the measurement period, which extends up to one year from the acquisition date.

During the measurement period, the Company obtained a third-party valuation report and finalized its assessment of the fair value of identifiable intangible assets acquired.

As a result, the Company recognized $ 1.4 million of identifiable intangible assets, consisting primarily of customer relationships, intellectual property, trade name and non-compete agreements, with a corresponding decrease to goodwill.

This adjustment resulted in incremental amortization expense of approximately $ 0.2 million for the year ended December 31, 2025.

The Company additionally revised its measurement of deferred cash consideration to reflect the present value of the $ 4.0 million payment due subsequent to closing, resulting in a reduction of purchase consideration of approximately $ 0.1 million and a corresponding decrease to goodwill.

The Company also recorded an adjustment to decrease the fair value of certain acquired fixed assets by $ 575,000 based on an independent third-party valuation.

This adjustment resulted in a corresponding increase to goodwill and a reduction in depreciation expense of $ 44,825 for the period.

The Company recognized goodwill as a result of the acquisition of SeaTrepid on March 20, 2025.

The goodwill represents the excess of the purchase price over the fair value of net assets acquired and is attributable to expected synergies and the assembled workforce.

The goodwill is not deductible for tax purposes.

As of December 31, 2025 , goodwill total ed $ 9,600,745 .

The Company did no t have any goodwill recorded on its balance sheet prior to this acquisition.

The Company evaluates goodwill for impairment annually as of December 31, or more frequently if events or changes in circumstances indicate the asset might be impaired.

No indicators of impairment were identified during 2025.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets

Intangible assets consisted of the following:

December 31, 2025

Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Tradename- Trademark 15 years 687,300 35,720 651,580

Intellectual property 5 years 731,900 114,113 617,787

Non-Competes 3 years 10,200 2,651 7,549

Total intangible assets 1,429,400 152,484 1,276,916

A mortization expense is included within operating expense in the consolidated statements of operations.

The following table presents the Company's estimated future amortization expense:

Years ending December 31, Amount

2026 $ 195,600

2027 $ 195,600

2028 $ 192,949

2029 $ 192,200

2030 $ 78,087

Thereafter $ 422,480

Total $ 1,276,916

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of loss from continuing operations before income taxes were as follows:

Year Ended December 31,

Domestic operations $ ( 40,506,558 ) $( 133,802,575 )

Foreign operations ( 321,844 ) ( 1,104,074 )

Loss before income taxes $ ( 40,828,402 ) $ ( 134,906,649 )

The income tax expense consisted of the following :

8 unchanged sentences

Income tax expense $ - $ -

The effective tax rates on continuing operations for the years ended December 31, 2024 and December 31, 2023 were 0 % and 0 %, respectively.

The table below reconciles these effective tax rates with the U.S.

federal statutory income tax rate as follows:

Year Ended December 31,

There is no income tax expense recognized for years ended December 31, 2025 and December 31, 2024.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the U.S.

federal statutory tax rate to the Company’s effective income tax rate is as follows, in accordance with the updated requirements of ASU 2023-09 for the year ended December 31, 2025:

Loss before income taxes ( 40,828,402 ) ( 134,906,649 )

Tax benefit at Federal Statutory Rate ( 28,330,397 ) ( 10,644,186 )

Income taxes at U.S.

federal statutory income tax rate ( 8,573,964 ) 21.0 % ( 28,330,397 ) 21.0 %

State and local income taxes, net - - % - - %

Foreign tax effects - - %

Other foreign jurisdictions 67,587 ( 0.2 ) % - - %

Change in valuation allowance 5,317,285 ( 13.0 ) % 9,141,378 ( 6.8 ) %

Nontaxable or nondeductible items

Debt Extinguishment 1,338,114 ( 3.3 ) % 19,393,825 ( 14.4 ) %

Stock Based Compensation - - %

Other 484,272 ( 1.2 ) % ( 137,868 ) 0.1 %

Other Adjustments

Change in UTP 1,468,795 ( 3.6 ) % - - %

Other ( 102,089 ) 0.3 % ( 66,938 ) - %

Total tax provision and effective tax rate - - % - - %

As previously disclosed for the years ended December 31, 2024, and December 31, 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

Year Ended December 31, Year Ended December 31,

Loss before income taxes $ ( 134,906,649 ) $ ( 50,686,601 )

Tax at Federal Statutory Rate ( 28,330,397 ) ( 10,644,186 )

Debt extinguishment

Nondeductible (add back) expenses ( 137,868 ) 1,251,583

14 unchanged sentences

Business credit carryforward - 1,441,159

Capitalized R & D 467,113 614,299

Capitalized R&D expenses 306,914 467,113

Accrued expenses 352,206 496,060

Other assets 13,621 266,367

ROU Liability $ 133,927 $ -

Subtotal 37,240,659 32,035,879

2 unchanged sentences

Deferred tax liabilities:

Unrealized F/X - ( 54,729 )

Other liabilities ( 117,391 ) ( 229,896 )

1 unchanged sentence

Net deferred tax assets/(liabilities) $ - $ -

The Company has federal net operating loss carryforwards of approximately $ 121 million at December 31, 2024, of which ab out $ 646,000 b egin to expire in 2035 and the remainder have no expiration.

The Company has federal net operating loss carryforwards of approximately $ 157 million and $ 121 million for as of December 31, 2025 and December 31, 2024, respectively, Approximately $ 31,000 begin to expire in 2035 and the remainder have no expiration.

The Company has recorded a full valuation allowance against its net deferred tax assets due to recurring net losses.

Series A Convertible Preferred Stock - A total of 35,034 shares of Series A Convertible Preferred Stock were outstanding at December 31, 2024.

On November 4, 2024, the Company entered into the Second Amendment and Exchange Agreement (the “Exchange Agreement”), by and among the Company and ATW I, SLS and MIF pursuant to which such investors would exchange the remaining portion of the amount outstanding under the New Original Issue Discount Exchanged Senior Secured Convertible Debentures (the “New Convertible Debenture”) and certain other amounts outstanding with respect thereto, into shares of Series A preferred convertible stock (the “Series A Preferred Stock”), subject to certain adjustments, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.

The Company accounts for uncertain tax positions in accordance with guidance in ASC Topic 740, which prescribes the minimum recognition threshold a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the financial statements.

A reconciliation of the beginning and ending amount of uncertain tax positions is as follows:

2025 Activity Amounts

Balance at January 1, 2025 -

Additional based on tax positions related to prior years $ 1,441,159

Settlements $ -

Balance at December 31, 2025 $ 1,441,159

The total amount of unrecognized tax benefits at December 31, 2025 was $ 1.4 million, of which it is reasonably possible that $ 0 could be settled during the next twelve-month period as a result of the conclusion of various tax audits or due to the expiration of the applicable statute of limitations.

We estimate that $ 0 of the unrecognized tax benefits at December 31, 2025, excluding consideration of valuation allowance, would impact our future effective income tax rate, if recognized.

We recognize interest and penalties related to uncertain tax positions within the provision for income taxes in the consolidated statements of comprehensive loss.

As of December 31, 2025, we had accrued approximately $ 0 in interest and

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

penalties, respectively.

During the year ended December 31, 2025, the change to our uncertain tax positions primarily relates to the recognition of certain tax credits from prior years.

With the adoption of ASU 2023-09, a disclosure of income taxes paid, net of refunds received, to an individual taxing jurisdiction is now required if the net payments exceed a certain threshold.

The Company did not have any income tax payments or refunds for both periods ending December 31, 2025 and December 31, 2024.

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 is not expected to have a material impact on the provision as of YE 2025.

Preferred Stock

Rights and Preferences of the Series A, B and C Preferred Stock

Each share of Series A, B and C Preferred Stock has a stated value of $ 1,000 per share and, when issued, the Preferred Stock will be fully paid and non-assessable.

The Preferred Stock, with respect to the payment of dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, ranks senior to all capital stock of the Company, unless the Required Holders (as defined in the applicable Certificate of Designations) consent to the creation of other capital stock of the Company that is senior or equal in rank to the specific series of Preferred Stock.

For the avoidance of doubt, the Series A, B and C Preferred Stock ranks in parity with each other.

The holders of Series B and C Preferred Stock will be entitled to a 10 % per annum dividends and holders of Series A Preferred Stock will be entitled to 5 % per annum dividends.

The dividends are payable to each record holder of the Preferred Stock in shares of Common Stock so long as there has been no Equity Conditions Failure (as defined in the applicable Certificate of Designations), and the Company may, at its option, under certain circumstances, capitalize the dividend by increasing the stated value of each Preferred Shares or elect a combination of the capitalized dividend and a payment in dividend shares.

Management has elected to capitalize dividends on each dividend date, which is the first Trading Day of the quarter after to which the dividend relates.

During the year ended December 31, 2025, dividends relating to the Series A, B and C Preferred Stock of $ 792,882 , $ 49,943 and $ 3,065 , respectively, were capitalized.

The stated value of the Series A and B Preferred Stock increased to $ 1,037.97 and $ 1,015.28 , respectively.

At December 31, 2025, dividends payable of $ 71,958 , $ 71,399 and $ 16,753 relating to Series A, B and C Preferred Stock, respectively, were reported under other creditors in the Consolidated Balance Sheets.

If at any time the Company grants, issues or sells any options, convertible securities, or rights to purchase stock, warrants, securities or other property pro rata to all or substantially all of the record holders of any class of Common Stock (the “Purchase Rights”), then each holder of Preferred Stock will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of shares of Common Stock acquirable upon complete conversion of all the Preferred Stock held by such holder immediately prior to the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights at the Alternate Conversion Price (as defined below);

subject to certain limitations on beneficial ownership.

Conversion at Option of Holder

At any time from and after the first date of issuance of any Preferred Shares, each holder of Preferred Stock may convert all, or any part, of the outstanding Preferred Stock, at any time at such holder’s option, into shares of the Common Stock (which converted shares of Common Stock are referred to as “Conversion Shares” herein) at the fixed “Conversion Price” of $ 0.95 for Series C, and $ 0.5942 for Series A and B respectively, which is subject to proportional adjustment upon the

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

occurrence of any stock split, stock dividend, stock combination and/or similar transactions.

The amounts to be converted include unpaid dividends and other charges for the Preferred Shares.

Subject to the rules and regulations of the Nasdaq, the Company has the right, at any time, with the written consent of the Required Holders, to lower the fixed conversion price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

Alternate Conversion at the Holder’s Election

At any time after the Initial Issuance Date, a holder may elect to convert the Preferred Stock held by such holder at the “Alternate Conversion Price” equal to the lesser of:

• the Conversion Price;

• the greater of:

◦the floor price of $ 0.19 , $ 1.6524 and $ 2.214 for Series C, B and A Preferred Stock respectively (the “Floor price”);

◦ 98 % of the lowest volume weighted average price ("VWAP") of the Common Stock during the 10 consecutive trading days immediately prior to such conversion.

Alternate Conversion Upon a Triggering Event

Following the occurrence and during the continuance of a Triggering Event (as defined below), each holder may alternatively elect to convert the Preferred Stock at the “Alternate Conversion Price”.

The Certificate of Designations contains standard and customary triggering events (each, a “Triggering Event” including certain Bankruptcy Triggering Event (as defined therein)), including but not limited to:

(i) the suspension from trading or the failure to list the Common Stock within certain time periods;

(ii) failure to declare or pay any dividend when due;

(iii) the occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $ 500,000 of Indebtedness (as defined in the applicable exchange or purchase agreements) of the Company, (iv) the Company’s failure to cure a conversion failure of failure to deliver shares of the Common Stock upon conversion, or notice of the Company’s intention not to comply with a request for conversion of any Preferred Stock, and (v) bankruptcy or insolvency of the Company.

From and after the occurrence and during the continuance of any Triggering Event, the Dividend Rate in effect shall automatically be increased to the lesser of 18 % per annum and the maximum rate permitted under applicable law.

If at the time of a conversion the Alternate Conversion Price is determined to be the Floor Price because such Floor Price is greater than 98 % of the lowest VWAP of a share of Common Stock during the ten ( 10 ) trading day period ending and including the trading day immediately preceding the delivery or deemed delivery of the applicable conversion notice, then the Conversion Amount (as defined in the applicable Certificate of Designations) shall automatically increase pro rata, by the applicable Alternate Conversion Floor Amount (as defined in the applicable Certificate of Designations).

Rights Upon Issuance of Other Securities

If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share.

For the purposes of this Section, the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof;

and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

thereof or otherwise pursuant to the terms thereof, minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) with respect to any one share of Common Stock upon the issuance or sale (or the agreement to issue or sell, as applicable) of such Convertible Security plus the value of any other consideration received or receivable (including, without limitation, any consideration consisting of cash, debt forgiveness, assets or other property) by, or benefit conferred on, the holder of such Convertible Security (or any other Person).

In determining the classification of the Series A, B and C Preferred Stock, the Company considered ASC 480 - Distinguishing Liabilities from Equity and ASC 815 - Derivatives and Hedging.

The Company concluded the Preferred Stock be classified as permanent equity because it is not mandatorily redeemable except upon a Bankruptcy Triggering Event, which the Company views as a liquidation-type contingency rather than a substantive redemption feature.

The instrument also does not provide holders with a general put right, and any holder-controlled exchange is contingent upon a Change of Control, an event subject to the Company’s governance and approval processes.

In addition, the Company may settle the Change of Control Election Price in equity-linked rights convertible into the same consideration payable to common stockholders, and management has concluded that sufficient authorized shares exist to settle conversions in shares.

Series A Convertible Preferred Stock - A total of 5,546 and 35,034 shares of Series A Convertible Preferred Stock were outstanding at December 31, 2025 and 2024, respectively.

On November 4, 2024, the Company entered into the Second Amendment and Exchange Agreement, by and among the Company and ATW I, SLS and MIF pursuant to which such investors would exchange the remaining portion of the amount outstanding under the New Convertible Debenture and certain other amounts outstanding with respect thereto, into shares of Series A preferred convertible stock (the “Series A Preferred Stock”), subject to certain adjustments, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.

On December 26, 2024, the Company filed with the Secretary of State of the State of Delaware the Certificate of Designation of Series A Convertible Preferred Stock of the Company and designated 40,000 shares of Series A Preferred Stock.

Under the terms of the Series A Certificate of Designation, each share of Series A Preferred Stock has a stated value of $ 1,000 per share and a par value of $ 0.0001 per share and, when issued, the Series A Preferred Stock will be fully paid and non-assessable.

The holders of Series A Preferred Stock will be entitled to a 5 % per annum dividends, on an as-if converted basis, equal to and in the same form as dividends actually paid on shares of Common Stock of the Company, when and if actually paid.

The holders of the Series A Preferred Stock shall have no voting power and no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of share of capital stock,

On August 6, 2025, the Company issued additional equity securities (see Series B Convertible Preferred Stock) at a price per share below the then-effective conversion price of its Series A Preferred Stock triggering a full-ratchet anti-dilution adjustment.

The conversion price of the Series A Preferred Stock was reduced from $ 11.07 per share to $ 8.26 per share.

The resulting $ 4,047,585 value transfer was recorded as a reclassification within equity (charged to Accumulated Deficit and credit to APIC) and treated as a deemed dividend to preferred shareholders for EPS purposes.

There was no impact on total stockholders’ equity or the consolidated statement of operations.

On December 3, 2025, the Company issued additional equity securities (see Series C Convertible Preferred Stock) at a price per share below the then-effective conversion price of its Series A Preferred Stock.

Under the terms of the Series A Certificate of Designation, a full-ratchet anti-dilution adjustment was triggered, reducing the conversion price of the Series A Preferred Stock from $ 8.26 per share to $ 0.5942 per share.

The resulting $ 15,673,199 value transfer was recorded as a reclassification within equity (charged to Accumulated Deficit and credit to APIC) and treated as a deemed dividend to preferred shareholders for EPS purposes.

There was no impact on total stockholders’ equity or the consolidated statement of operations.

During the year ended December 31, 2025, 29,488 Series A Convertible Preferred Stock were converted into 10,768,900 shares of Common Stock.

Series B Convertible Preferred Stock - A total of 2,813 and 0 shares of Series B Convertible Preferred Stock were outstanding at December 31, 2025 and December, 2024, respectively.

On August 6, 2025, the Company, entered into a Securities Purchase Agreement (the “Series B Purchase Agreement”), by and among the Company and ATW pursuant to which the Company agrees to issue and sell in a private offering to ATW 3,000 shares of Series B Convertible Preferred Stock of the Company, $ 0.0001 par value (the “Series B Preferred Stock”), at a price per share of $ 980 (the “Series B Preferred Offering”) for an aggregate purchase price of $ 2,940,000 less offering costs of $ 85,000 .

The Series B Preferred Offering also relates to the offering of the shares of the Company’s common stock issuable upon the conversion of or otherwise pursuant to the terms of the Series B Preferred Stock.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and shall not be entitled to call a meeting of such holders for any purpose nor shall they be entitled to participate in any meeting of the holders of Common Stock, except as provided in the Series A Certificate of Designation (or as otherwise required by applicable law).

The Series A Preferred Stock holders may convert all, or any part, of the outstanding Series A Preferred Stock, at any time at such holder’s option, into shares of the Common Stock at the fixed “Conversion Price” of $ 1.23 , which is subject to proportional adjustments, or a holder may elect to convert the Series A Preferred Stock held by such holder at the “Alternate Conversion Price” (as defined in the Series A Certificate of Designation) at holder’s election or at certain triggering event.

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.

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.

On December 31, 2024, the Company issued 2,504 and 5,342 shares of Series A Preferred Stock to SLS and MIF, respectively.

The total fair value of these exchange transactions was $ 110,300,191 .

These shares of the Preferred Stock are convertible into shares of the Company’s Common Stock, subject to a beneficial ownership cap of 9.9 % of the issued and outstanding Common Stock of the Company (with the exception to one investor), and to the stockholder approval requirement pursuant to Nasdaq rule 5635.

Reverse Stock Split - On July 22, 2024, the Company effected a 1-for-36 reverse stock split (“Reverse Stock Split”) of the shares of the Company's Common Stock, par value $ 0.0001 per share.

On August 7, 2025, the Company filed with the Secretary of State of the State of Delaware the Certificate of Designations of Rights and Preferences of the Series B Convertible Preferred Stock of the Company and designated 50,000 shares of Series B Preferred Stock.

On August 8, 2025, the Company and ATW closed on the initial closing transactions contemplated by the Purchase Agreement, and the Company issued 3,000 shares of Series B Preferred Stock to ATW.

Under the terms of the Series B Certificate of Designation, a full-ratchet anti-dilution adjustment was triggered, reducing the conversion price of the Series B Preferred Stock from $ 8.26 per share to $ 0.5942 per share.

The resulting $ 8,266,572 value transfer was recorded as a reclassification within equity (charged to Accumulated Deficit and credit to APIC) and treated as a deemed dividend to preferred shareholders for EPS purposes.

There was no impact on total stockholders’ equity or the consolidated statement of operations.

During the year ended December 31, 2025, 187 Series B Convertible Preferred Stock were converted into 392,490 shares of Common Stock.

Series C Convertible Preferred Stock - A total of 2,154 and 0 shares of Series C Convertible Preferred Stock were outstanding at December 31, 2025 and December, 2024, respectively.

On December 3, 2025, the Company and certain institutional investors affiliated with ATW each entered into an Amendment and Exchange Agreement (collectively, the “Series C Exchange Agreements"), pursuant to which such investors may exchange, in one or more exchanges, portions of certain secured convertible term loans of the Company and the November 2024 Debentures (collectively the “Existing Securities”), into 3,814 of Series C preferred convertible stock (the “Series C Preferred Stock”), as set forth and subject to the terms and conditions in the Exchange Agreements, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933.

In addition, by written notice from holders of the Existing Securities to the Company and subject to other terms and conditions set forth in the Series C Exchange Agreements, the Company shall exchange additional portion of the amounts outstanding under the Existing Securities as set forth in such notice into shares of Series C Preferred Stock, through one or more additional Exchanges, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.

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.

The fair value of the Series C Preferred Stock issued in this transaction was $ 10,185,929 .

The Company designated 100,000 shares of the Company’s authorized and unissued preferred stock as Series C Preferred Stock and established the rights, preferences and privileges of the Series C Preferred Stock pursuant to the Certificate of Designations of Rights and Preferences of the Series C Preferred Stock, as summarized below.

During the year ended December 31, 2025, 1,660 Series C Convertible Preferred Stock were converted into 2,740,740 shares of Common Stock.

A total of 28,811,198 shares of Common Stock were outstanding at December 31, 2025.

Reverse Stock Split -

On September 5, 2025, the Company effected a 1-for-9 reverse stock split of the shares of the Company's common stock, par value $ 0.0001 per share.

No fractional shares were issued in connection with the reverse stock split, but were instead rounded up to the nearest whole share.

The Reverse Stock Split resulted in 42,758,379 shares of common stock being converted in to 4,750,954 shares of common stock.

The Board of Directors of the Company approved the Certificate of Amendment to meet the share bid price requirements of the NASDAQ Capital Market.

The Company’s stockholders authorized the reverse stock split and the Certificate of Amendment at a special meeting held on June 25, 2025.

On July 22, 2024, the Company effected a 1-for-36 reverse stock split of the shares of the Company's common stock, par value $ 0.0001 per share.

No fractional shares were issued in connection with the Reverse Stock Split, but were instead rounded up to the nearest whole share.

The reverse stock split resulted in 150,107,598 shares of common stock being

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

converted in to 4,169,679 shares of common stock.

The Board of Directors of the Company approved the Certificate of Amendment effecting the reverse stock split in order to meet the share bid price requirements of the NASDAQ Capital Market.

3 unchanged sentences

The rights and privileges of the holders of shares of the Company’s Common Stock were substantially unaffected.

As the par value per share of Common Stock was not changed in connection with the Reverse Stock Split, we recorded a decrease of $ 14,460 and $ 4,865 to Common Stock on our consolidated balance sheet with a corresponding increase in additional paid-in capital as of December 31, 2024 and 2023, respectively.

Unless otherwise noted, all references in the consolidated financial statements and notes to consolidated financial statements to the number of shares, per share data, restricted stock and stock option data have been retroactively adjusted to give effect to the Reverse Stock Split.

Common Stock – A total of 9,761,895 shares of Common Stock were outstanding at December 31, 2024.

An adjustment to round fractional shares into whole shares was recorded in the year ended December 31, 2024 which increased Common Stock by 14,886 shares and $ 1 with a corresponding decrease in additional paid-in capital.

Common Stock –

In October 2025, the Company filed a prospectus supplement to its shelf registration statement on Form S-3 (File No.

333-284675), initially filed with the SEC on February 3, 2025 registering the sale of up to $ 92 million of its common stock pursuant to its ATM offering program.

During the year ended December 31, 2025, we issued and sold 6,826,700 shares, for gross proceeds of $ 33,124,953 and net proceeds of $ 31,948,652 after deducting commissions and offering expenses totaling $ 1,176,301 .

At December 31, 2025, $ 86,036,768 remains available for issuance under the Company's ATM program pursuant to the prospectus supplement filed on October 31, 2025 under a registration statement on Form S-1.

During the year ended December 31, 2024, the Company entered into an ATM Offering Agreement to offer and sell shares of our Common Stock having an aggregate offering price of up to $ 9,858,269 .

Under this offering we issued and sold 156,269 shares, for gross proceeds of $ 9,857,857 and net proceeds of $ 9,357,954 after deducting commissions and offering expenses totaling $ 499,903 .

During the year ended December 31, 2025, ATW I and SLS converted 27,188 and 2,300 shares of Series A Preferred Shares into 10,458,152 and 310,748 shares of Common Stock respectively.

During the year ended December 31, 2024, ATW I converted 400 shares of Series A Preferred Shares into 61,659 shares of Common Stock.

During the year ended December 31, 2025, 187 Series B Convertible Preferred Stock were converted into 392,490 shares of Common Stock.

During the year ended December 31, 2025, 1,660 Series C Convertible Preferred Stock were converted into 2,740,740 shares of Common Stock.

During the year 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.

During the year ended December 31, 2025, a lender converted 2023 Term Loan notes with principal amount of $ 3,000,000 and interest payable of $ 773,958 into 2,144,295 shares of Common Stock.

During the year ended December 31, 2025, November 2024 Debentures with a principal value of $ 2,050,000 and interest of $ 202,642 , were converted into 4,549,509 shares of Common Stock.

During the year ended December 31, 2024, ATW I and SLS converted New Convertible Debentures with a fair value of $ 29,741,859 , principal values 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.

During the year ended December 31, 2024, ATW I converted 400 shares of Series A Preference Shares into 554,931 shares of Common Stock.

During the year ended December 31, 2024, the Company entered into an At The Market (“ATM”) Offering Agreement to offer and sell shares of our Common Stock having an aggregate offering price of up to $ 9,858,269 .

Under this offering we

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

issued and sold 1,406,424 shares, for gross proceeds of $ 9,857,857 and net proceeds of $ 9,357,954 after deducting commissions and offering expenses totaling $ 499,903 .

On December 31, 2023, the Company and ATW Special Situations I LLC, as the purchaser, entered into a Securities Purchase Agreement (the “PIPE SPA”), pursuant to which the purchaser agreed to purchase up to an aggregate of $ 5,000 of the shares of Common Stock of the Company, par value $ 0.0001 per share (the “Common Stock”), at a $ 2 per share purchase price.

The sale of these shares of Common Stock was subject to the terms and conditions set forth in the PIPE SPA and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder as a transaction by an issuer not involving a public offering.

As a result of the sale of shares under the PIPE SPA, the conversion prices under the warrants and debentures issued pursuant to the Securities Purchase Agreement were reset to $ 2 pursuant to their terms, removing future dilutive effects pursuant to the “ratchet” provisions of such warrants and debentures .

On August 3, 2023, the Company issued 1,890,066 shares of Common Stock (on a pre Reverse Stock Split basis), at the closing price of $ 1.95 , to the SPA parties as payment for liquidated damages and interest relating to the Registration Rights Agreement.

See further discussion under Note 12 - "Warrants".

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.

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 23,149 Earnout Shares which are held in escrow.

The Earnout Shares will be released from escrow upon the occurrence of the following (each a “triggering event”):

one-half of the Earnout Shares will be released if, within a 5 -year period from September 9, 2022, the volume-weighted average price of our Common Stock equals or exceeds $ 15.00 (on a pre Reverse Stock Split basis) per share over any 20 trading days within a 30 -day trading period;

one-quarter of the Earnout Shares will be released if, within a 5 -year period from September 9, 2022, 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;

one-quarter of the Earnout Shares will be released if, within a 5 -year period from September 9, 2022, 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.

As of December 31, 2024, the earnout targets have not been achieved and the Earnout Shares remain in escrow.

Public Warrants – We assumed 8,624,991 Public Warrants on September 9, 2022, which remained outstanding as of December 31, 2024.

For every 36 Public Warrant, the holder is entitled to purchase one share of Common Stock at a price of $ 11.50 , subject to adjustment.

one-half of the Earnout Shares will be released if, within a 5 -year period from September 9, 2022, 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;

one-quarter of the Earnout Shares will be released if, within a 5 -year period from September 9, 2022, 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;

one-quarter of the Earnout Shares will be released if, within a 5 -year period from September 9, 2022, 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.

As of December 31, 2025, the earn out targets have not been achieved and the Earnout Shares remain in escrow.

Equity Purchase Facility Agreement

On October 24, 2025, the Company entered into an equity purchase facility agreement (the “EPFA”) and a registration rights agreement (the “Registration Rights Agreement”) with a certain institutional investor (“Investor”), pursuant to which the Investor has committed to purchase up to $ 250.0 million of the Company’s common stock, par value $ 0.0001 per share.

Upon the terms and subject to the satisfaction of the conditions set forth in the EPFA, the Company has the right, but not the obligation, to sell to the Investor, and the Investor is obligated to purchase, up to $ 250.0 million (the “Commitment Amount”) in shares of Common Stock.

Such sales of Common Stock by the Company, if any, are subject to certain limitations set forth in the EPFA, and may occur from time to time, at the Company’s sole discretion, over a period of up to 24 months, commencing on the date of the EPFA (such period, the “Commitment Period”).

During the Commitment Period, the Company may from time to time, by written notice delivered by the Company to the Investor (each, an “Advance Notice”), direct the Investor to purchase a number of shares of Common Stock up to the Maximum Advance Amount (as defined therein) as set forth in the Advance Notice, subject to limitations and adjustments as set forth in the EPFA.

The prices at which such shares will be sold will be based on the applicable Market Price (as defined therein).

Unless earlier terminated as provided under the EPFA, the term of the facility provided under the EPFA expires on the earlier to occur of (i) the first day of the next month following the 24-month anniversary of the first trading date after the date of the EPFA (the “Effective Date”), (ii) the date on which the Investor shall have made payment of Advances (as defined therein) pursuant to the EPFA for shares of Common Stock equal to the Commitment Amount and all shares of Common Stock purchased pursuant to the EPFA have been delivered, and (iii) the date on which the Company announces or publicly discloses a material restatement of its financial statements for two or more fiscal quarters (the “Lapsed Registration Termination”).

Under the EPFA, the Company will control the timing and amount of sales of Common Stock to the Investor, if any.

The Investor has no right to require the Company to sell any shares of Common Stock to the Investor, but the Investor is obligated to make purchases as the Company directs, subject to certain conditions set forth in the EPFA.

Actual sales of shares of Common Stock to the Investor, if any, will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, trading volume, the trading prices for the Common Stock, and determinations by the Company as to the appropriate sources of funding for the Company and its operations.

Consistent with the applicable Nasdaq listing rules, the aggregate number of shares of Common Stock that the Company may issue to the Investor under the EPFA may not exceed 19.99 % of the shares of Common Stock issued and outstanding as of the execution date of the EPFA (the “Exchange Cap”), unless the Company first obtains stockholder approval to issue shares of Common Stock in excess of the Exchange Cap in accordance with applicable Nasdaq listing rules.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the EPFA, the Company is required to provide each stockholder entitled to vote at a meeting of stockholders of the Company (the “Stockholder Meeting”), which shall be promptly called and held not later than 60 days following the date of the EPFA, a proxy statement in a form reasonably acceptable to the Investor and its counsel, at the expense of the Company to solicit each of the Company’s stockholders’ affirmative vote at the Stockholder Meeting for approval of the proposal to authorize the issuance of all shares of Common Stock issuable thereunder in compliance with the rules and regulations of Nasdaq, and the Company is required to use its reasonable best efforts to solicit its stockholders’ approval of such proposal and to cause the board of directors of the Company to recommend to the stockholders that they approve such proposal.

A special meeting of stockholders was held on January 28, 2026 and the issuance of shares of Common Stock pursuant to the EPFA was approved.

In connection with the EPFA, on October 24, 2025, the Company also entered into the Registration Rights Agreement with the Investor with respect to the resale of the shares of Common Stock issuable under the EPFA Agreement and the Commitment Shares.

The Registration Rights Agreement requires a registration statement registering such shares (the “Resale Registration Statement”) to be filed and that to be declared effective under the Securities Act of 1933, as amended, by the earlier of the (i) 90th day after following the date the Resale Registration Statement is filed, or (ii) the fifth business day following the date when the SEC notifies the Company that the Resale Registration Statement will not be reviewed or is no longer subject to further review and comments of the SEC.

Public Warrants – As of December 31, 2025 there were 11,779,167 Public Warrants outstanding.

For every 324 Public Warrants, the holder is entitled to purchase one share of Common Stock at a price of $ 11.50 , subject to adjustment.

However, no Public Warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to such shares of Common Stock.

Notwithstanding the foregoing, if a registration statement covering the shares of Common Stock issuable upon exercise of the Public Warrants is not effective within 120 days of September 9, 2022, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise Public Warrants on a cashless basis pursuant to an available exemption from exemption under the Securities Act.

The Public Warrants expire on September 9, 2027, or earlier upon redemption or liquidation.

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• upon not less than 30 days’ prior written notice of redemption to each warrant holder,

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• if, and only if, the reported last sale price of the shares of Common Stock equals or exceeds $ 5,346 per share (subject to adjustment for splits, dividends, recapitalizations, and other similar events), for any 20 trading days within a 30 -day trading period ending on the third business day prior to the notice of redemption to warrant holders, and

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The gain in value of the Public Warrants during the year ended December 31, 2025 and 2024 totaled $ 7,468 and $ 442,008 , respectively and was reported with other (income) expense in our consolidated statements of operations.

Private Warrants – We assumed 7,175,000 Private Warrants, which are not publicly traded, on September 9, 2022.

These remain outstanding as of December 31, 2024.

For every 36 Private Warrants, the holder is entitled to purchase one share of Common Stock at an exercise price of $ 11.50 and are identical in all material respects to the Public Warrants except that such Private Warrants are exercisable for cash (even if a registration statement covering the shares of Common Stock issuable upon exercise of such warrants is not effective) or on a cashless basis, at the holder’s option, and will not be redeemable by us, in each case so long as they are still held by the initial purchasers or their affiliates.

The Private Warrants purchased by CleanTech Investments are not exercisable after July 14, 2026, as long as Chardan Capital Markets, LLC or any of its related persons beneficially own these Private Warrants.

Private Warrants – As of December 31, 2025, 4,020,833 Private Warrants were outstanding.

For every 324 Private Warrants, the holder is entitled to purchase one share of Common Stock at an exercise price of $ 11.50 and are identical in all material respects to the Public Warrants except that such Private Warrants are exercisable for cash (even if a registration statement covering the shares of Common Stock issuable upon exercise of such warrants is not effective) or on a cashless

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basis, at the holder’s option, and will not be redeemable by us, in each case so long as they are still held by the initial purchasers or their affiliates.

The Private Warrants purchased by CleanTech Investments are not exercisable after 5 years from September 9, 2022, as long as Chardan Capital Markets, LLC or any of its related persons beneficially own these Private Warrants.

The Private Warrants, which are accounted for as liabilities in our consolidated balance sheets, were valued as of December 31, 2025 and 2024 at $ 589 and $ 7,884 , respectively.

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The gain in value of the Private Warrants during the years ended December 31, 2025 and 2024 totaled $ 7,295 and $ 372,651 respectively, and was reported with other (income) expense in our consolidated statements of operations.

SPA Warrants – On September 9, 2022 and pursuant to the Securities Purchase Agreement, we issued an aggregate 2,922,425 Original SPA Warrants, on a pre Reverse Stock Split basis, to the SPA Parties.

SPA Warrants – On September 9, 2022 and pursuant to the Securities Purchase Agreement, we issued an aggregate 9,020 Original SPA Warrants to the SPA Parties.

Upon issuance, each whole Original SPA Warrant was exercisable over its 10-year term for one share of Common Stock at a price of $ 6,480.00 per share, subject to certain adjustments including full ratchet anti-dilution price protections.

In connection with the Securities Purchase Agreement, the Company and the SPA Parties entered into that certain Registration Rights Agreement, dated as of September 9, 2022 (the “RRA”), pursuant to which the Company and the SPA Parties agreed to certain requirements and conditions covering the resale by the SPA Parties of the shares of Common Stock underlying the Debentures and Original SPA Warrants.

Under the terms of the RRA, the Company was required to (i) file a registration statement (the “Initial Registration Statement”) covering such underlying shares within 15 business days of the September 9, 2022 and (ii) use its best efforts to cause the Initial Registration Statement to be declared effective as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date (as defined in the RRA) (the “Registration Requirements”).

The RRA additionally provided for liquidated damages if the Registration Requirements were not met.

On June 22, 2023, the Company and the SPA Parties entered into the first amendment to the RRA (the “RRA Amendment”), pursuant to which the Company agreed to deliver to the SPA Parties an aggregate 1,890,066 shares of Common Stock at an agreed upon price of $ 2.286 , on a pre Reverse Stock Split basis, (the “RRA Amendment Shares”) in exchange for the waiver and release by the SPA Parties of any and all claims, remedies, causes of action and any other Initial Effectiveness Date Claims (as defined in the RRA Amendment) under any of the Transaction Documents (as defined

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in the RRA), including all past and future claims for liquidated damages under the RRA with respect to, and any other amounts that may be payable by reason of or otherwise relating to, the Effectiveness Date (as defined in the RRA) of the Initial Registration Statement.

During the third quarter of 2023, the Company issued 1,890,066 shares of Common Stock, on a pre Reverse Stock Split basis, as payment for liquidated damages and interest of $ 4,320,690 , and the damages and interest are recorded under interest expense in the consolidated statements of operations.

The settlement date of the liquidated damages occurred August 3, 2023, with a closing price of $ 1.95 , with the change in the agreed upon price of $ 2.286 to settlement resulting in a gain of $ 635,061 , which is also included in interest expense in the consolidated statements of operations.

Pursuant to the RRA Amendment, the Company also agreed to file a registration statement on Form S-3 for the registration and resale of the RRA Amendment Shares by the SPA Parties and to cause such registration statement to become effective as soon as practicable thereafter in accordance with the terms of the RRA, as amended by the RRA Amendment.

The registration statement was filed on August 7, 2023 and was declared effective on September 12, 2023.

On June 22, 2023, we entered into the Letter Agreements with the SPA Parties (the “Letter Agreements”), pursuant to which the SPA Parties (also being the holders of the Original SPA Warrants) agreed to amend the exercise price of the Original SPA Warrants, which, since issuance, had been exercisable to purchase an aggregate 2,922,425 shares of Common Stock, on a pre Reverse Stock Split basis, in exchange for the Company’s agreement to (i) lower the exercise price of the Original SPA Warrants to a weighted average of $ 3.28 per share, with multiple tranches priced between $ 2.04 and $ 4.64 per share, and (ii) upon the SPA Parties’ exercise of the Amended SPA Warrants, issue New SPA Warrants to the SPA Parties to purchase, in the aggregate, up to 2,922,425 shares of Common Stock, on a pre Reverse Stock Split basis.

On June 22, 2023, we entered into the Letter Agreements with the SPA Parties (the “Letter Agreements”), pursuant to which the SPA Parties (also being the holders of the Original SPA Warrants) agreed to amend the exercise price of the Original SPA Warrants, which, since issuance, had been exercisable to purchase an aggregate 9,020 shares of Common Stock in exchange for the Company’s agreement to (i) lower the exercise price of the Original SPA Warrants to a weighted average of $ 1062.72 per share, with multiple tranches priced between $ 660.96 and $ 1503.36 per share, and (ii) upon the SPA Parties’ exercise of the Amended SPA Warrants, issue New SPA Warrants to the SPA Parties to purchase, in the aggregate, up to 9,020 shares of Common Stock.

During any period when we shall have failed to maintain an effective registration statement covering the shares of Common Stock issuable upon exercise of the Amended SPA Warrants, the registered holder may exercise its Amended SPA Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act.

On June 23, 2023, pursuant to its Letter Agreement with the Company, ATW exercised 165,713 Amended SPA Warrants, pursuant to which 165,713 shares of Common Stock, on a pre Reverse Stock Split basis, ( 4,603 shares of Common Stock post Reverse Stock Split) and 165,713 New SPA Warrants were issued to ATW by the Company in accordance with the terms of the Letter Agreement.

The Company received proceeds of $ 338,055 from the warrants exercised by ATW.

On September 18, 2023, the Company entered into a convertible senior secured term loan agreement convertible at $ 6.00 per share.

Based on the letter agreement, SPA warrants holders who exchange through March 1, 2024, the exercise price was reset from $ 20.00 to $ 6.00 a warrant pursuant to the full-ratchet provision.

The exchange warrants were reset to $ 6.00 with a factor of 3.3333 , increasing the number of warrants to 552,377 , on a pre Reverse Stock Split basis.

The New SPA Warrants will be (and, with respect to those already issued, are) substantially in the form of the Amended SPA Warrants as described above except that the New SPA Warrants (i) have an exercise price of $ 6,480.00 per share (including, for purposes of clarification, full-ratchet anti-dilution on the exercise price and number of underlying shares issuable based on the aggregate exercise price using $ 6,480.00 as the base exercise price), (ii) are immediately exercisable upon issuance, and (iii) are exercisable until September 9, 2032.

If a registration statement covering the shares of Common Stock issuable upon exercise of the New SPA Warrants is not effective 60 days after March 1, 2024 (or, in the event of a “full review” by the SEC, 120 days after March 1, 2024), upon the registered holder’s election to exercise its New SPA Warrants, the registered holder may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise its New SPA Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act.

On December 31, 2023, the Company and ATW Special Situations I LLC, as the purchaser, entered into a Securities Purchase Agreement (the “PIPE SPA”), pursuant to which the purchaser agreed to purchase up to an aggregate of $ 5,000 of the shares of Common Stock of the Company at a $ 2 per share purchase price on a pre Reverse Stock Split basis.

Based on the PIPE SPA, the exercise price of the SPA Warrants was reset from $ 6.00 to $ 2.00 .

On January 30, 2024 SPA Warrants held by MIF and SLS were adjusted downwards by 258,621 and 93,103 (on a pre Reverse Stock Split basis), respectively, in connection with the Second Lien Restructuring Agreements.

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During the year ended December 31, 2024, ATW I and SLS exercised 22,161,186 and 1,376,267 SPA Warrants (on a pre Reverse Stock Split basis), respectively, in exchange for Common Stock.

The Company did not receive cash in respect of these transactions.

On January 30, 2024 SPA Warrants held by MIF and SLS were adjusted downwards by 798 and 287 , respectively, in connection with the Second Lien Restructuring Agreements.

During the year ended December 31,2024, ATW I and SLS exercised 68,399 and 4,248 SPA Warrants, respectively, in exchange for the maximum number of shares of Common Stock purchasable and the Company did no t receive cash in respect of these transactions.

Unless context otherwise requires, the term “SPA Warrants” means (i) before the entry into the Letter Agreements, the Original SPA Warrants, and (ii) upon and following the entry into the Letter Agreements, (a) the Amended SPA Warrants, and (b) the New SPA Warrants.

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The change in the value of the SPA Warrants during the years ended December 31, 2025 and 2024 was a gain of $ 155,869 and $ 12,744,351 , respectively, and was reported with other (income) expense in our consolidated statements of operations.

Due to entering into the Letter Agreements, the warrants were accounted for and treated as warrant repricing, resulting in a loss of $ 590,266 , which was reported with other (income) expense in our consolidated statements of operations during the year ended December 31, 2023.

Proceeds from the exercise of SPA Warrants for the years ended December 31, 2024 and 2023 wer e $ 0 and $ 338,055 , respectively.

Stock-Based Compensation

On September 6, 2022, shareholders approved our 2022 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) and on September 9, 2022, our board of directors ratified 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.

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

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performance-based, and for incentive bonuses, which may be paid in cash, Common Stock or a combination thereof.

As of December 31,2025, there were 305,556 shares authorized for issuance under the Omnibus Incentive Plan, and there were 143,128 remaining shares available for future grants.

As of December 31, 2024, 19,439 options to purchase Common Stock remained outstanding and there are no remaining shares available for future grant.

As of December 31, 2025, 712 options to purchase Common Stock remained outstanding from a legacy plan that was superseded by the Omnibus Incentive Plan.

There are no remaining shares available for future grant under the legacy plan.

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 grant.

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For the years ended December 31, 2025 and December 31, 2024, stock-based compensation expense for options totaled $ 48,046 and $ 132,335 , respectively, and was recorded in general and administrative expense.

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As of December 31, 2025, there was $ 1,909 of total unrecognized compensation cost related to options to be recognized over a remaining weighted average period of less than 1 year

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Exercisable as of December 31, 2025 707 $ 647.21 $ -

The weighted average remaining contractual term of outstanding options and exercisable options as of December 31, 2024, was 4.5 years and 4.3 years, respectively.

The weighted average remaining contractual term of both outstanding options and exercisable options as of December 31, 2025, was 3.8 years.

The maximum contractual term of options is ten years .

There were no options granted in 2023 or 2024, and there were no options exercised in 2024.

The total intrinsic value of all options exercised during the year ended December 31, 2023 was $ 104,985 .

There were no options granted or exercised in 2024 or 2025.

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The following tabulation summarizes certain information related to outstanding and exercisable options at December 31, 2025:

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Non-employee director RSU grants are time-based and vest fully on the earlier of the one-year anniversary of the grant date or the next Board of Directors Annual General Meeting if a grantee is not on the election ballot, conditional upon continued service as a director.

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Executive RSU grants issued as executive sign-on bonuses are time-based and vest 50 % on the one-year anniversary of the new hire date and 50 % on the two-year anniversary of the new-hire date.

In addition, during 2022, the Compensation Committee and Board of Directors granted Performance-based Restricted Stock Units (“PRSUs”) to senior executives.

Each PRSU is a notional amount that represents the right to receive one share of Common Stock if and when the PRSU vests.

PRSU participants may earn between 0 % and 150 % of the PRSUs, subject to attainment of certain performance conditions which were based upon the Company’s 2022 revenues.

In April 2023, the Company’s board of directors determined that 51 % of the performance target of the PRSUs was achieved and an aggregate 17,207 PRSUs were deemed earned by the members of the senior executive management team and vested 50 % on December 31, 2023 and 50 % on December 31, 2024, in accordance with the terms of the applicable award agreements.

Performance-based RSU grants ("PRSU") granted to senior executives in 2022, were deemed earned in April 2023 and vested 50 % on December 31, 2023 and 50 % on December 31, 2024, in accordance with the terms of the applicable award agreements.

No additional PRSUs were granted in 2024 or 2025.

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federal income tax gross-up payments to any of its directors or executive officers in connection with future awards of restricted stock or stock units.

The following is a summary of our restricted and performance stock unit activity for 2024:

The following is a summary of our restricted stock unit activity for 2025:

Shares Weighted

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The total fair value of RSUs and PRSUs vested during the years ended December 31, 2025 and 2024 was $ 351,882 and $ 1,156,065 .

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The RSUs granted in 2024 and 2025 do not have voting rights or dividend rights unless the RSU has vested and the share of Common Stock underlying it has been distributed to the participant.

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therefore, these grants were valued using the closing price of our stock on the Nasdaq Capital Market on the date of grant.

The PRSUs granted in 2022 were subject only to performance and service conditions and did not contain a market condition.

As a result, these grants were also valued using the closing price of our stock on the Nasdaq Capital Market on the date of grant.

Stock-based compensation expense attributable to PRSUs under the Omnibus Incentive Plan for the years ended December 31, 2024 and December 31, 2023 was a reversal of expense of $ 284,707 and expense of $ 480,279 , respectively, and recorded in general and administrative expense.

Stock-based compensation expense attributable to PRSUs under the Omnibus Incentive Plan for the years ended December 31, 2025 and December 31, 2024 was $ 0 and a reversal of expense of $ 284,707 , respectively, and recorded in general and administrative expense.

Stock-based compensation expense attributable to RSUs under the Omnibus Incentive Plan for years ended December 31, 2025 and December 31, 2024, respectively, was $ 1,248,509 and $ 2,455,426 and recorded in general and administrative expense.

As of December 31, 2024, we had no future expense related to PRSUs and $ 1,794,941 of future expense related to RSUs to be recognized over a weighted-average period of 2 years.

Stock-based compensation expense for the years ended December 31, 2024 and December 31, 2023, including options, PRSUs, and RSUs, totaled $ 2,303,054 and $ 4,427,073 , respectively.

As of December 31, 2025, we had no future expense related to PRSUs and $ 1,132,373 of future expense related to RSUs to be recognized over a weighted-average period of approximately 2 years.

Stock-based compensation expense for the years ended December 31, 2025 and December 31, 2024, including options, TPRSUs, and RSUs, totaled $ 1,296,555 and $ 2,303,054 , respectively.

Total related recognized tax benefit for the years ended December 31, 2025 and 2024, was $ 262,000 and $ 457,000 , respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employee Benefit Plan

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Further, MIF is considered a related party as Adam Sharkawy is a member of the Board of Directors of the Company and the founder and managing partner of MIF.

Transocean was considered a related party until December 18, 2023 as Mark Mey, a member of the Board of Directors of the Company, was also the Chief Financial Officer of Transocean.

Mark Mey resigned as a director of the Company on December 18, 2023.

SPA Warrants – As of December 31, 2024, ATW I and MIF held 336 and 106,194 SPA Warrants, respectively.

As of December 31, 2023, ATW I, MIF and SLS held 615,924 , 113,378 and 40,816 SPA Warrants, respectively (see Note 12 - Warrants).

On January 30, 2024, SPA Warrants held by MIF and SLS were adjusted downwards by 258,621 and 93,103 , respectively (on a pre Reverse Stock Split basis) in connection with the Second Lien Restructuring Agreements.

During the year ended December 31, 2024, ATW I and SLS exercised 22,161,186 and 1,376,267 SPA Warrants (on a pre Reverse Stock Split basis), respectively, in exchange for Common Stock.

The Company did not receive cash in respect of these transactions.

Exchanged Senior Secured Convertible Debenture - On January 30, 2024, the Company and certain of its subsidiaries and ATW I entered into an Amendment and Exchange Agreement (the “Amendment and Exchange Agreement”), pursuant to which ATW I transferred its existing 5 % Original Issue Discount Senior Secured Convertible Debenture to the Company in exchange for a new Original Issue Discount Exchanged Senior Secured Convertible Debenture due September 9, 2026 (the “New Convertible Debentures”) in the aggregate principal amount of $ 29,591,600 .

SPA Warrants – The SPA Warrants are held by related parties ATW I, MIF and SLS Family Irrevocable Trust (see Note 17 – Warrants).

Exchanged Senior Secured Convertible Debenture -

On January 30, 2024, the Company and certain of its subsidiaries and ATW I entered into an Amendment and Exchange Agreement (the “Amendment and Exchange Agreement”), pursuant to which ATW I transferred its existing 5 % Original Issue Discount Senior Secured Convertible Debenture to the Company in exchange for a new Original Issue Discount Exchanged Senior Secured Convertible Debenture due September 9, 2026 (the “New Convertible Debentures”) in the aggregate principal amount of $ 29,591,600 .

In addition, on January 30, 2024, the Company and certain of its subsidiaries entered into additional Amendment and Exchange Agreements with MIF and SLS on substantially similar terms, pursuant to which MIF and SLS transferred their existing 5 % Original Issue Discount Senior Secured Convertible Debentures to the Company in exchange for New Convertible Debentures in the aggregate principal amount of $ 5,102,000 and $ 1,836,720 , respectively.

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The fair value of the conversion was $ 29,741,859 .

Second Amendment and Exchange Agreement - On November 4, 2024, the Company entered into the Second Amendment and Exchange Agreement (the “Exchange Agreement”), by and among the Company and ATW I, SLS and MIF pursuant to which such investors would exchange the remaining portion of the amount outstanding under the New Original Issue Discount Exchanged Senior Secured Convertible Debentures and certain other amounts outstanding with respect thereto, into shares of Series A Preferred Stock (see Note 11 - "Equity").

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Original Issue Discount Exchanged Senior Secured Convertible Debentures and certain other amounts outstanding with respect thereto, into shares of Series A Preferred Stock (see Note 15 - "Preferred Stock").

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.

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November 2024 Debentures - On November 4, 2024, the Company entered into a Securities Purchase Agreement with ATW I, pursuant to which ATW I 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”).

On December 11, 2024, ATW I purchased, in a private

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placement, $ 1,000,000 in principal amount of debentures.

The principal amount outstanding on the November 2024 Debentures at December 31, 2024 was $ 2,150,000 and had a fair value of $ 2,583,832 .

On December 11, 2024, ATW I purchased, in a private placement, $ 1,000,000 in principal amount of debentures.

The principal amount outstanding on the November 2024 Debentures at December 31, 2025 and 2024 was $ 100,000 and $ 2,150,000 with a fair value of $ 163,672 and $ 2,583,832 , respectively.

2023 Term Loan Agreement - On September 18, 2023, the Company entered into a convertible senior secured term loan agreement (the “2023 Term Loan Agreement”) with ATW II as collateral agent and lender, and Transocean Finance Limited, ATW I, MIF and RCB, as lenders.

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On January 30, 2024, the Company entered into a second amendment to the 2023 Term Loan Agreement, which provided the Company with an incremental loan in the aggregate principal amount of $ 3,753,144 (see Note 8 - Notes Payable).

During the year ended December 31, 2025, ATW I and ATW II converted 2023 Term Loan notes with principal and interest amount of $ 3,360,164 into 3,814 of Series C Preferred Stock (see Note 15 - "Preferred Stock").

2024 Term Loan Agreement - On January 30, 2024, the Company also entered into a senior secured term loan agreement (the “2024 Term Loan Agreement”) with ATW Special Situations Management LLC, as collateral agent (in such capacity, the “Collateral Agent”) and lender, and ATW III, MIF, VHG Investments LLC, ATW II and ATW I, as lenders.

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The principal amount outstanding on the convertible senior term loans on December 31, 2025 to ATW I, ATW II, ATW III and MIF was $ 0 , $ 2,687,981 , $ 7,197,668 , and $ 4,399,060 , respectively.

The principal amount outstanding on the convertible senior term loans on December 31, 2023 to ATW I, ATW II and MIF was $ 2,338,933 , $ 956,067 and $ 1,000,000 , respectively.

The principal amount outstanding on the convertible senior term loans on December 31, 2024 to ATW I, ATW II, ATW III and MIF was $ 2,933,362 , $ 5,666,638 , $ 1,112,943 and $ 4,224,983 , respectively.

For the year ended December 31, 2025 interest expense attributable to ATW I, ATW II, ATW III and MIF, on the convertible senior term loans was $ 0 , $ 541,487 , $ 104,489 and $ 462,365 .

For the year ended December 31, 2023, interest expense attributable to ATW I, ATW II and MIF, on the convertible senior term loans was $ 59,364 , $ 34,525 and $ 36,111 , respectively.

For the year ended December 31, 2024 interest expense attributable to ATW I, ATW II, ATW III and MIF, on the convertible senior term loans was $ 351,640 , $ 709,245 , $ 154,297 and $ 551,753 .

Series A Convertible Preferred Stock - During the year ended December 31, 2025, ATW and SLS converted 27,188 and 2,300 Series A Convertible Preferred Stock were converted into 10,458,152 and 310,748 shares of Common Stock, respectively.

As at December 31, 2025 MIF and SLS held 5,342 and 204 Series A Convertible Preferred Stock, respectively.

Series B Convertible Preferred Stock - On August 8, 2025, the Company sold ATW 3,000 shares of Series B Convertible Preferred Stock for an aggregate purchase price of $ 2,940,000 .

During the year ended December 31, 2025, ATW

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converted 187 Series B Convertible Preferred Stock in 392,490 shares of Common Stock.

At December 31, 2025, ATW held 2,813 shares of Series B Convertible Preferred Stock.

Series C Convertible Preferred Stock - On December 3, 2025 ATW exchanged 2023 Term Loan notes with principal and interest amount of $ 3,360,164 and $ 453,794 into 3,814 of Series C Convertible Preferred Stock.

During the year ended December 31, 2025, ATW converted 1660 Series C Convertible Preferred Stock into 2,740,740 shares of Common Stock.

At December 31, 2025, ATW held 2,154 shares of Series C Convertible Preferred Stock.

Flexible Consulting, LLC - On December 1, 2023, the Board appointed Victoria Hay as the Interim Chief Financial Officer and principal financial officer of the Company.

Victoria Hay is the co-owner and President of Flexible Consulting, LLC, a financial and accounting consulting firm, with which the Company has engaged with since January 2023 to provide it with accounting and finance services relating to its quarterly reporting and mergers/acquisition activity.

On July 25, 2025, the Board appointed Jimena Begaries, also a Flexible Consulting LLC employee, as the Interim Chief Financial Officer succeeding Victoria Hay.

Flexible Consulting, LLC is considered to be a related party from December 1, 2023.

The total value of services provided by Flexible Consulting, LLC to the Company for the year ended December 31, 2024 is $ 1,015,558 and accounts payable included $ 160,366 due to Flexible Consulting, LLC at December 31, 2024.

From the period from December 1, 2023 to December 31, 2023, the total value of services provided was $ 65,735 and $ 95,177 was included in accounts payable.

Revenue and Accounts Receivable – Revenue from Transocean Ltd.

for contract services totaled $ 0 and $ 500 for the years ended December 31, 2024 and 2023, respectively.

Accounts receivable included $ 0 outstanding from Transocean Ltd.

at December 31, 2024 and 2023.

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The total value of services provided by Flexible Consulting, LLC to the Company for the year ended December 31, 2025 and 2024 was $ 1,177,684 and $ 1,015,558 respectively.

Accounts payable included $ 45,000 and $ 160,366 due to Flexible Consulting, LLC at December 31, 2025 and December 31, 2024, respectively.

Loss Per Share

2 unchanged sentences

Net loss $ ( 40,828,402 ) $ ( 134,906,649 )

Preferred stock dividend ( 1,006,000 ) -

Deemed dividends for Series A and B Convertible Preferred Stock ( 27,987,356 ) -

Net loss attributable to Common Stockholders ( 69,821,758 ) ( 134,906,649 )

6 unchanged sentences

Earnout shares 23,149 23,149

SeaTrepid earnout shares 671,544 -

Convertible debt 877,567 318,437

Series A Convertible Preferred Stock 34,179,512 -

Series A, B and C Convertible Preferred Stock 20,115,072 3,797,724

Total 21,808,163 4,237,301

Basic loss per share (“EPS”) is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In computing the loss attributable to common shareholders, the Company deducts dividends on its preferred stock in accordance with ASC 260, Earnings Per Share.

For the year ended December 31, 2025, total preferred dividends of $ 1,006,000 were deducted from net loss, consisting of $ 845,890 of dividends that were capitalized and added to the stated value of the preferred stock in accordance with the Certificates of Designation;

and $ 106,110 of dividends that were accrued but unpaid as of December 31, 2025.

Total preferred dividends increased the loss attributable to common shareholders for purposes of calculating basic and diluted earnings per share.

During the year ended December 31, 2025, the Company recognized deemed dividends totaling $ 27,987,356 associated with the down-round adjustments of its Series A Preferred Stock conversion price on December 3, 2025 and August 6, 2025 of $ 15,673,199 and $ 4,047,585 , respectively, and its Series B Preferred Stock conversion price on December 3, 2025 of $ 8,266,572 .

This amount was deducted from net loss in determining loss attributable to common shareholders for purposes of calculating basic and diluted earnings per share.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements

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Notes payable with related parties may not be arms-length transactions and therefore may not reflect fair value.

The estimated fair value of the Debentures approximates their carrying amount due to their recent issuance.

The fair value of the New Convertible Debentures are measured at each reporting date in accordance with ASC 820-10, Fair Value Measurement , using a Monte Carlo simulation model.

This model incorporates Level 3 inputs, including, current stock price, stock price volatility (historical and implied), risk-free interest rate (U.S.

Treasury rates) and expected term to maturity.

The fair value measurement is classified as Level 3 in the fair value hierarchy due to the use of unobservable inputs.

See the assumptions used to estimate the fair value of the New Convertible Debentures upon issuance in Note 7.

The New Convertible Debentures were exchanged for Series A Preferred Stock during the year and have a fair value of $ 0 as of December 31, 2024.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company elected to measure the November 2024 Debentures at fair value under the fair value option in accordance with ASC 825-101, Financial Instruments - Fair Value Option.

The fair value of the November 2024 Debentures are measured at each reporting date in accordance with ASC 820-10, Fair Value Measurement, using a Monte Carlo simulation model.

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The fair value measurement is classified as Level 3 in the fair value hierarchy due to the use of unobservable inputs.

At December 31, 2024 the following post Reverse Stock Split assumptions were used in order to estimate the fair value of the November 2024 Debentures:

At December 31, 2025 the following assumptions were used in order to estimate the fair value of the November 2024 Debentures:

stock price of $ 0.77 a risk free rate of 3.55 %, implied volatility of 154 % and a remaining term of 0.69 years.

The Company’s non-financial assets measured at fair value on a recurring basis include SPA Warrants and Private Warrants.

These are considered Level 3 measurements as they involve significant unobservable inputs.

See Note 12 for more information about the valuation methodologies and assumptions.

The fair value of the Series A Preferred Stock is measured on the exchange dates of December 27, 2024 and December 31, 2024 in accordance with ASC 820-10, Fair Value Measurement, using a Monte Carlo simulation model.

The fair value of the Public, Private and SPA Warrants are measured at each reporting date in accordance with ASC 820-10.

The Public Warrants were valued based on their publicly-traded price.

The Private and SPA Warrants are considered Level 3 measurements as they involve significant unobservable inputs.

In connection with the acquisition of SeaTrepid on March 20, 2025, the Company measured the identifiable assets acquired and liabilities assumed at fair value in accordance to ASC 820-10.

The fair value of land and buildings acquired were measured using the market approach and considered Level 2 measurements as observable inputs from comparable sales were used.

Machinery and equipment acquired were measured using cost approach and considered Level 3 measurements due to the use of unobservable inputs.

The fair values of intangibles assets were measured based on the income approach and considered Level 3 measurements due to the use of unobservable inputs.

Tradename/trademarks were valued using the Relief from Royalty Method assuming a royalty rate of 1.6 % and discount rate of 19.1 %.

Intellectual property was valued using the Relief from Royalty Method assuming a royalty rate of 6.4 % and discount rate of 19.1 %.

Non-competes were valued with the "With and Without" method assuming a 5 % probability of competing and impact on sales, a term of 3 years and discount rate of 17.5 %.

The fair value of the earnout shares related to the acquisition were measured using the Monte Carlo simulation model.

The model incorporates Level 3 inputs, including stock price of $ 10.26 , stock price volatility of 99.9 %, revenue volatility of 101.4 %, risk free rate of 4.15 % and a remaining term of 0.78 years.

The fair value of notes payable acquired approximated their carrying values at the acquisition date as the Company plans to pay off the notes in the short term.

The fair values of working capital items, including cash, accounts receivable, accounts payable, and accrued expenses, approximated their carrying values at the acquisition date due to their short-term nature.

These items are not presented in the table below.

The fair value of the Series C and A Preferred Stock were measured on the exchange dates of December 3, 2025, December 27, 2024 and December 31, 2024, respectively, in accordance with ASC 820-10, Fair Value Measurement, using a Monte Carlo simulation model.

This model incorporates Level 3 inputs, including, current stock price, stock price volatility (historical and implied), risk free interest rate (U.S.

1 unchanged sentence

The fair value measurement is classified as Level 3 in the fair value hierarchy due to the use of unobservable inputs.

The following post Reverse Stock Split assumptions were used in order to estimate the fair value of the Series A Preferred Stock at December 27, 2024 and December 31, 2024:

The following assumptions were used in order to estimate the fair value of the Series C Preferred Stock at December 3, 2025:

stock price of $ 1.17 , risk free rate of 3.57 %, implied volatility of 174 %, and remaining term of 1.32 years respectively.

The following assumptions were used in order to estimate the fair value of the Series A Preferred Stock at December 27, 2024 and December 31, 2024:

stock price of $ 2.16 and $ 1.55 , risk free rate of 4.24 % and 4.19 %, implied volatility of 145 % and 148 %, and remaining term of 1.34 years and 1.33 years, respectively.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the issuance of Series C Preferred Stock on December 3, 2025, the Company measured the fair value of the Series A and B Preferred stock using a Monte Carlo simulation model.

Consistent with the guidance in ASC 260-10-S99-2, the valuation incorporated two separate simulations:

(a) the fair value of the instrument assuming the pre-reset conversion price ($ 8.26 per share), and (b) the fair value of the instrument assuming the reduced conversion price resulting from the down-round trigger ($ 0.5942 per share).

All other model inputs, including the fair value of the Company’s common stock, volatility, and risk-free interest rate, were held constant between the two simulations.

The incremental fair value resulting from the difference between these two measurements represents the value transferred due to the down-round feature and was recognized in the period’s fair-value remeasurement.

In connection with the issuance of Series B Preferred Stock on August 6, 2025, the Company measured the fair value of the Series A Preferred stock using a Monte Carlo simulation model.

The valuation incorporated two separate simulations:

(a) the fair value of the instrument assuming the pre-reset conversion price ($ 11.07 per share post-reverse stock split), and (b) the fair value of the instrument assuming the reduced conversion price resulting from the down-round trigger ($ 8.26 per share post-reverse stock split).

All other model inputs, including the fair value of the Company’s common stock, volatility, and risk-free interest rate, were held constant between the two simulations.

In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial liabilities that are required to be measured at fair value on a recurring and non-recurring basis and the related activity for periods presented:

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Financial liabilities:

November 2024 Debentures

$ 2,583,832 $ - $ - $ 2,583,832 $ - $ - $ - $ -

Public Warrants 9,080 9,080 - - 451,088 451,088 - -

Private Warrants 7,884 - - 7,884 380,531 - - 380,531

SPA Warrants 164,949 - - 164,949 17,544,561 - - 17,544,561

November Convertible Debentures 163,672 - - 163,672 2,583,832 - - 2,583,832

Warrant liability - Public Warrants 1,612 1,612 - 9,080 9,080 - -

Warrant liability - Private Warrants 589 - - 589 7,884 - - 7,884

Warrant liability - SPA Warrants 9,080 - - 9,080 164,949 - - 164,949

Total warrant liability $ 11,281 $ 1,612 $ - $ 9,669 $ 181,913 $ 9,080 $ - $ 172,833

$ 181,913 $ 9,080 $ - $ 172,833 $ 18,376,180 $ 451,088 $ - $ 17,925,092

Non-recurring fair value instruments:

Series A Preferred Stock $ - $ - $ - $ - $ 110,300,391 $ - $ - $ 110,300,391

Series C Preferred Stock at December 3, 2025 $ 10,185,929 $ - $ - $ 10,185,929 $ - $ - $ - $ -

Series A Preferred Stock - strike price $ 0.5942 at December 3, 2025

$ 25,448,502 $ - $ - $ 25,448,502 $ - $ - $ - $ -

Series A Preferred Stock - strike price $ 8.26 at December 3, 2025

$ 9,775,304 $ - $ - $ 9,775,304 $ - $ - $ - $ -

Series B Preferred Stock - strike price $ 0.5942 at December 3, 2025

$ 13,509,764 $ - $ - $ 13,509,764 $ - $ - $ - $ -

Series B Preferred Stock - strike price $ 8.26 at December 3, 2025

$ 5,243,192 $ - $ - $ 5,243,192 $ - $ - $ - $ -

Series A Preferred Stock - strike price $ 8.26 at August 6, 2025

$ 31,365,924 $ - $ - $ 31,365,924 $ - $ - $ - $ -

Series A Preferred Stock - strike price $ 11.07 at August 6, 2025

$ 27,318,339 $ - $ - $ 27,318,339 $ - $ - $ - $ -

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value as of March 20, 2025 Fair Value as of December 31, 2024

Carrying Value Level 1 Level 2 Level 3 Carrying Value Level 1 Level 2 Level 3

SeaTrepid Acquisition:

Land $ 444,435 $ - $ 444,435 $ - $ - $ - $ - $ -

Buildings $ 970,904 $ - $ 970,904 $ - $ - $ - $ - $ -

Machinery and equipment $ 4,753,964 $ - $ - $ 4,753,964 $ - $ - $ - $ -

Intangible assets $ 1,429,400 $ - $ - $ 1,429,400 $ - $ - $ - $ -

Earnout shares $ 6,864,729 $ - $ - $ 6,864,729 $ - $ - $ - $ -

The following table sets forth a summary of the changes in fair value of the Company’s financial liabilities categorized within Level 3:

New Convertible Debentures November 2024 Debentures

Warrant Liability November 2024 Debentures New Convertible Debentures

Balance, December 31, 2023 $ 17,925,092 $ - $ -

5 unchanged sentences

Exchange of New Convertible Debentures to Series A Preferred Stock ( 61,429,200 )

( 61,429,200 ) - -

( 34,784 ) 40,968 —

Other - 40,968 ( 34,784 )

Balance, December 31, 2024 172,833 2,583,832 -

Change in fair value of November 2024 Debentures - 2,247,848 -

Fair value conversion of November 2024 Debentures to Common Stock - ( 4,668,008 ) -

Change in fair value of warrant liabilities ( 163,164 ) - -

Balance, December 2025 $ 9,669 $ 163,672 $ -

Segment Information

The Company operates as a single operating and reportable segment.

The Company's Chief Operating Decision Maker ("CODM"), the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operational decisions, allocating resources, and evaluating financial performance.

The Company’s operations are organized and managed as a single segment because its products and services share similar economic characteristics, including production processes, customer types, distribution methods and regulatory environment.

Accordingly, the Company has determined that it has one reportable segment.

The CODM assesses performance by reviewing the Consolidated Balance Sheets and Consolidated Statements of Operations quarterly.

Segment assets are not regularly reviewed by the CODM and, therefore, are not disclosed.

Substantially all of the Company's revenues are derived from customers located in the United States, and substantially all long-lived assets are located in the United States.

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent Events

Change of Note Conversion Price

Pursuant to the terms of the Senior Secured Term Loan Agreement, dated as of January 30, 2024 by and among the Company, as borrower, the lenders from time to time party thereto and ATW Special Situations Management LLC, as collateral agent the Lenders agreed to make Loans to the Company which Loans are convertible, in whole or in part, into shares of Common Stock of the Company at an initial Conversion Price of $ 0.4582 subject to adjustment from time to time as provided in the Term Loan Agreement (including the reverse stock split of the Company).

Pursuant to Section 5(d) of the Loan Agreement, the Company may, with the prior written consent of the Required Lenders (ATW, or if ATW does not hold any Loans, lenders holding at least 50.1 % of the outstanding principal Loan balance), and subject to Nasdaq rules, voluntarily reduce the then current conversion price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

The conversion of the Loans is subject to the Lender’s beneficial ownership limitation of 4.99 % of outstanding shares (except one Lender).

On January 3, 2025, the Company reduced the conversion price of the loans under the Senior Secured Term Loan Agreement, dated as of January 30, 2024 to $ 1.59 .

In January, 2025 the Company conducted At The Market (“ATM”) offerings to offer and sell shares of the Company's Common Stock for an aggregate offering price of up to $ 20,189,798 .

Under this offering we issued and sold 7,488,822 shares, for gross proceeds of $ 20,141,905 and net proceeds of $ 19,438,100 after deducting commissions and offering expenses totaling $ 703,805 .

SeaTrepid Acquisition

On March 5, 2025, the Company and SeaTrepid International, L.L.C., a Louisiana limited liability company, SeaTrepid Deepsea LLC, a Louisiana limited liability company, Remote Inspection Technologies, L.L.C., a Louisiana limited liability company (each, a “Seller” and collectively, “Sellers”), and certain individual selling persons entered into an Asset Purchase Agreement.

Pursuant to the Purchase Agreement, the Company agreed to acquire (the “Acquisition”) substantially all of the assets and certain specified liabilities of the Sellers related to applied robotic solutions and the robotic equipment development and operation.

Securities Purchase Agreement

On February 6, 2026, the Company entered into a Securities Purchase Agreement and a registration rights agreement with Master Investment Group ("Investor"), pursuant to which the Company agreed to issue and sell in a private offering to Investor, (1) certain shares of Series D Convertible Preferred Stock of the Company, $ 0.0001 par value (the “Series D Preferred Stock”) for an aggregate purchase price of up to $ 3,000,000 and may issue additional shares of Series D Preferred Stock valued at up to $ 47,000,000 and (2) certain common stock purchase warrants (the “Warrants”) to purchase up to a number of shares of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”), equal to 30 % of the aggregate purchase price (the “Preferred Offering”).

The Preferred Offering also relates to the offering of the shares of the Common Stock issuable upon the conversion of or otherwise pursuant to the terms of the Series D Preferred Stock (“Conversion Shares”) and the shares of the Common Stock issuable upon the exercise of the Warrants.

Pursuant to the Purchase Agreement, the Company agreed to issue the Initial Preferred Shares for an aggregate purchase price of $ 3,000,000 in two closings, in each case following the demonstration that Investor has made expenditures agreed by, and on behalf of, the Company in an aggregate amount equal to the applicable milestone aggregate investment amount specified in the Purchase Agreement.

At each such milestone closing, the Company will issue to Investor a number of shares of Series D Preferred Stock equal to the applicable milestone aggregate investment amount invested by Investor, at a price of $ 1,000 per share.

The Company and Investor agree that the proceeds of the Preferred Offering will be deployed to exclusively as UAE related working capital to fund and support, directly or indirectly, the establishment and operation of the Company’s business in the United Arab Emirates.

In addition, for a period of up to 3 years from the date of the Purchase Agreement (or such later date as mutually agreed to by the Company and Investor), by written notice from the Company to Investor and subject to other terms and conditions set forth in the Purchase Agreement, the Company may require the Investor to participate in one or more additional milestone closings and issue additional shares of Series D Preferred Stock to Investor up to an aggregate maximum purchase price of $ 47,000,000 in one or more tranches, and additional Warrants exercisable for an amount of shares of Common Stock with an aggregate initial value equal to 30 % of the value of the Series D Preferred Stock to be issued at each such additional closings, subject to mutually agreed milestones, assignments, and definitive documentation, and in each case, consent of certain existing holders of securities of the Company.

The Purchase Agreement further provides for a two-year lock-up period, during which Investor shall not, without the prior written consent of the Company and certain existing holders of securities of the Company, sell, transfer, pledge or otherwise dispose of any shares of Common Stock upon conversion of the Series D Preferred Stock, nor enter into any swap or other arrangement that transfers the economic consequence of ownership of such shares.

Pursuant to the Registration Rights Agreement, the Company agreed that in the event that the Company files a registration statement with the Securities and Exchange Commission, registering the offer and sale of any shares of its Common Shares under the Securities Act, the Investor shall have the option to require the Company to include registration under the Securities Act of 1933, as amended (the “Securities Act”), of the resale by Investor of shares of Common Stock issuable upon conversion of the Series D Preferred Stock and upon the exercise of the Warrants.

The Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties, conditions and indemnification obligations of the parties.

The Warrants, when issued pursuant to the Purchase Agreement, are immediately exercisable upon issuance and will expire on the fifth anniversary of the original issuance date.

The Warrants have an initial exercise price equal to $ 1.1125 , subject to certain adjustments as described in the Warrant.

A Warrant holder will not have the right to exercise any portion of the Warrants to the extent that, after giving effect to such conversion, the holder would beneficially own in excess of 4.99 % (the “Maximum Percentage”) of the number of shares of the Common Stock outstanding immediately after giving effect to such conversion.

Series D Preferred Stock

On or prior to the first milestone closing, the Company will designate 50,000 shares of the Company’s authorized and unissued preferred stock as Series D Preferred Stock and establish the rights, preferences and privileges of the Series D

NAUTICUS ROBOTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 20, 2025, the Company consummated the Acquisition pursuant to the terms of the Purchase Agreement for a total value of $ 16 million, which consists of (1) the aggregate purchase price of $ 4 million in cash paid at closing and $ 4 million in cash that will be paid on or before September 30, 2025 and (2) Earn-Out Shares valued at $ 5.5 million;

and the assumption of $ 2.8 million in Sellers’ notes payable.

An aggregate amount of newly issued shares of the Company’s common stock, par value $ 0.0001 per share (the “Earn-Out Shares”) worth $ 5.5 million may be paid to Sellers, subject to and payable in accordance with earn-out thresholds during the measurement period between closing and six months after closing, as specified in the Purchase Agreement.

Nasdaq Listing Compliance

On February 18, 2025, the Company received a letter from Nasdaq confirming that the Company has demonstrated compliance with the Nasdaq Capital Market’s continued listing requirements as confirmed by the staff on February 10, 2025.

The Company remains subject to a discretionary panel monitor through February 18, 2026.

Preferred Stock pursuant to the Certificate of Designations of Series D Preferred Stock (the “Certificate of Designations”), to be filed with the Secretary of State of the State of Delaware.

From January 1 2026 to April 15 2026, the Company has conducted ATM offerings to offer and sell shares of the Company's Common Stock.

Under this offering we issued and sold 2,914,114 shares, for gross proceeds of $ 2,464,316 and net proceeds of $ 2,343,144 after deducting commissions and offering expenses totaling $ 121,172 .

November 2024 Debentures Additional Notes and Conversions

On February 9, 2026, the Company issued an Original Issue Discount Senior Secured Convertible Debenture Due 2026, in the aggregate principal amount of $ 2,000,000 (the “February 2026 Additional Note”), to an institutional investor which is convertible into 3,365,871 shares of common stock of the Company calculated at a conversion price of $ 0.5942 .

On March 10, 2026, the Company issued an Original Issue Discount Senior Secured Convertible Debenture Due 2026, in the aggregate principal amount of $ 1,020,408 (the “March 2026 Additional Note”), to an institutional investor, which is convertible into 1,717,281 shares of common stock of the Company calculated at a conversion price of $ 0.5942 .

The February 2026 and March 2026 Additional Notes (collectively the "Additional Notes") were issued pursuant to the securities purchase agreement dated as of November 4, 2024.

The Additional Notes have the same terms as the Notes under the Securities Purchase Agreement dated November 4, 2024 and will mature on September 9, 2026 or such earlier date as is required or permitted to be repaid under such Additional Notes.

On March 27, 2026, such Investor and the Company consummated an Exchange pursuant to the Exchange Agreement by and between the Company and such Investor, whereby the Investor exchanged $ 2,000,000 of the principal amount and corresponding interest of the Existing February Debenture into 2,023 shares of Series C Preferred Stock.

Corrections to Certificates of Designations

On April 15, 2026, the Company filed with the Secretary of State of the State of Delaware, amendments to the Certificates of Designations of Rights and Preferences, respectively, of the Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, and the Series C Convertible Preferred Stock, to correct an error in each such instrument.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

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 8. Financial Statements and Supplementary Data