What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-14 compared with 2025-11-14 · 54 added, 66 removed, 71 unchanged (63% of the section changed)

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Our flagship autonomous vehicle, Aquanaut®, provides advantages over conventionally tethered ROVs and traditional AUVs.

Leveraging advanced thruster configurations, a streamlined hull, and integrated electric manipulation, Aquanaut® performs complex subsea tasks with efficiency, precision, and minimal surface support.

Leveraging advanced thruster configurations, a streamlined hull, payload capacity, and integrated electric manipulation, Aquanaut® performs complex subsea tasks with efficiency, precision, and minimal surface support.

Nauticus ToolKITT™—our intelligent control and autonomy software—extends this capability across platforms, enabling robots to sense, decide, and act autonomously.

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Its patented electric actuators replace traditional hydraulic systems.

A next-generation manipulator is also under development to address known use cases requiring a less complex solution.

These technologies, coupled with the integration of the SeaTrepid acquisition in March 2025, position Nauticus at the forefront of the industry’s shift toward autonomy.

Recent Developments

We continued into the second half of 2025 with significant momentum, strengthened by both strategic execution and market adoption:

• Operational Deployments – Our ROV fleet remained utilized during the quarter.

The ROV assigned to a drill ship completed its project and redeployed to the U.S.

Northeast to perform offshore wind‑farm inspections at the beginning of August followed by additional work in the Gulf of America to finish out the quarter.

Our second ROV remained in the Gulf of America completing work for Oil and Gas producers and environmental contractors while also supporting Aquanaut testing and operations.

We completed projects for nine different customers in the Gulf of America, underscoring strong demand for our services.

Aquanaut Vehicle 2 completed all operational readiness requirements and performed open water testing in the quarter.

• Industry Recognition – In late August, Aquanaut reached a new depth record of 2,300 meters off the coast of Louisiana, without a tether.

This qualification test yielded valuable data on Aquanaut and Nauticus ToolKITT™, particularly regarding acoustic‑communication in ultra‑deep water.

These results validated the robustness of our underwater communications strategy and confirmed that the current 2,300‑meter capability covers roughly 90% of global oil‑and‑gas fields.

We plan to continue testing down to the Aquanaut design depth of 3,000 meters when market demand warrants.

We continued into the first quarter of 2026 with significant momentum, strengthened by both strategic execution and market penetration:

• Operational Deployments – During the quarter, our ROV fleet continued preparations for upcoming projects.

One ROV completed system integration testing (SIT) for an upcoming project and is scheduled to mobilize in May 2026.

This unit also has several potential opportunities with windfarm operators during the next quarter.

Our second ROV remained in Louisiana to continue preparations for work planned in the Gulf of America in the following quarter.

Aquanaut Vehicle 1 remained in Florida, where it advanced client-driven workflow testing related to vertical inspection capabilities, including autonomous mooring-line behaviors.

Aquanaut Vehicle 2 also remained in Florida and continued system testing and preparation activities in advance of offshore deployment.

• Industry Recognition – Development of the next-generation manipulator continued during the quarter.

The initial design of the fit-for-purpose electric manipulator was completed, and the team began sourcing components for the first prototype.

Interest in the manipulator has continued to support broader discussions around the Aquanaut® platform as a differentiating technology.

Recent engagement has been driven primarily by defense sector stakeholders evaluating the potential integration of the Aquanaut® vehicle with an electric manipulation system.

• Integration Progress – SeaTrepid integration is delivering tangible results.

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• Customer and pipeline updates – Market response to our expanded service offerings remains overwhelmingly positive.

Oil‑and‑gas and environmental‑agency customers are requesting operational windows on our Gulf Coast schedule.

Oil‑and‑gas and environmental‑agency customers are requesting operational windows within our Gulf Coast schedule.

Customers continue to approach us for additional commercial work and also to sponsor additional testing and development to further expand our value proposition.

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Aquanaut® achieved several milestones during the quarter.

Vehicle 2 has shown to be operationally ready and deepwater qualification tests pushed the platform to 2,300 meters.

Vehicle 2 has completed over 500 hours of in-water testing on client driven workflows.

The system has performed over 200 successful vertical inspection behaviors on mooring lines.

These tests are small in scale, but relate directly to offshore operations, and have prepared the vehicle behaviors for offshore testing.

Data from these tests are guiding software and engineering improvements and expanding our technical lead in untethered operations.

Nauticus ToolKITT™ commercialization remains on track.

The software has been exercised extensively during deepwater tests, and in testing at our location in Florida.

Following the quarter end we deployed Nauticus ToolKITT™ on our two Comanche ROV’s performing pool and open water tests and completing our first commercial operation by deploying our autonomy stack on a third-party ROV.

This is advancing commercial discussions with existing and new clients.

Finally, the Olympic Arm™ program continues to mature.

Market demand for a compact, fully electric manipulator remains strong, and we intend to capitalize on that demand as development proceeds.

The third quarter of 2025 reflects continued momentum and execution.

We expanded our operational footprint, achieved new deepwater milestones with Aquanaut® and demonstrated reliable ultra‑deepwater communications.

Customer demand remains robust across oil‑and‑gas, wind and environmental sectors, and our services pipeline is healthy.

The software was exercised extensively during deepwater tests in 2025, and in testing at our location in Florida in Q4 2025 and Q1 2026, where we trained new autonomous behaviors to expand scope and improve reliability, repeatability, and usability.

We continue to advance the software developed for Nauticus' ROVs and will continue to demonstrate the value of autonomy on traditional ROVs.

This is advancing commercial discussions with existing and new clients to deploy Nauticus ToolKITT™ for a wider range of missions and on customer ROVs.

Following the closing of our Joint Manufacturing and Sales Agreement with Forum Energy Technology in Q4 of 2025, we continue to mature the Olympic Arm™ program as we jointly move towards a commercial product targeting the entire ROV market.

The smaller, observation work-class ROV and AUV markets' demand for a next-generation compact, fully electric manipulator remains strong, and we intend to capitalize on that demand as development proceeds.

The first quarter of 2026 set a strong technical and strategic foundation for the year.

Customer demand remains robust across the oil and gas, wind, and environmental sectors, and our services pipeline is healthy.

With a strong team, a differentiated technology suite and growing market acceptance, Nauticus is poised to lead the next phase of subsea autonomy and create long term value for our stakeholders.

Results of Operations

Three and nine months ended September 30, 2025, compared to three and nine months ended September 30, 2024

Three months ended March 31, 2026, compared to three months ended March 31, 2025

The following table sets forth summarized condensed consolidated financial information:

Three months ended

September 30, Nine months ended September 30,

Service $ 159,575 $ 165,256 $ (5,682) -3 %

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Depreciation 624,791 480,376 144,415 30 %

Research and development - - - 0 % - 63,534 (63,534) -100 %

General and administrative 3,224,907 4,359,686 (1,134,779) -26 %

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Other (income) expense, net (3,145) (137,397) 134,252 98 %

Gain on lease termination - - - 0 % - (23,897) 23,897 100 %

Foreign currency transaction loss 970 3,267 (2,297) -70 %

Loss on extinguishment of debt 929,508 - 929,508 0 %

Change in fair value of derivative 515,827 - 515,827 0 %

Change in fair value of warrant liabilities (3,019) (50,888) 47,869 94 %

Change in fair value of New Convertible Debentures - (24,199,071) 24,199,071 100 % - (36,113,800) 36,113,800 100 %

Change in fair value of November 2024 Debentures 1,188,840 723,926 464,914 64 %

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Net income (loss) $ (9,266,081) $ (7,567,187) $ 1,698,894 22 %

For the three and nine months ended September 30, 2025, revenue increased $1,606,608 or 434% and $2,881,368 or 216%, respectively, as compared to the three and nine months ended September 30, 2024, primarily driven by the additional activity from the SeaTrepid acquisition performed on Mar ch 20, 2025.

For the three months ended March 31, 2026, revenue decreased $5,682 or 3%, as compared to the three months ended March 31, 2025, driven by natural fluctuations in our revenue during the off-peak quarter .

Cost of revenue.

For the three months ended September 30, 2025, cost of revenue increased $1,618,875 or 61% as compared to the three months ended September 30, 2024 due to the cost of additional revenue.

For the nine months ended September 30 2025, cost of revenue increased $1,392,524 or 18% , as compared to the nine months ended September 30, 2024 driven by the increase in revenue.

For the three months ended March 31, 2026, cost of revenue increased $754,937 or 61% as compared to the three months ended March 31, 2025 due to additional costs primarily in salaries as well as direct materials.

Depreciation.

For the three and nine months ended September 30, 2025, depreciation increased $144,733 or 32% and $361,901, or 28%, respectively, as compared to the three and nine mon ths ended September 30, 2024, due to the increase in property and equipment primarily related to the acquisition of SeaTrepid.

Research and development.

For the nine months ended September 30, 2025, research and development costs decreased $63,534, or 100%, respectively, compared to the nine months ended September 30, 2024, due to the Company achieving technological feasibility in both hardware and software development and focusing on bringing its products to market.

From April 1, 2024, no costs were classified as research and development.

For the three months ended March 31, 2026, depreciation increased $144,415 or 30% , as compared to the three mon ths ended March 31, 2025, due to the increase in property and equipment primarily related to the acquisition of SeaTrepid.

General and administrative.

For the three and nine months ended September 30, 2025, general and administrative costs increased $151,045 or 5% and $2,171,620, or 23%, respectively, compared to the three and nine months ended September 30, 2024, driven by the SeaTrepid acquisition related costs as well as integration of their structure.

For the three months ended March 31, 2026, general and administrative costs decreased $1,134,779 or 26%, compared to the three months ended March 31, 2025, as 2025 included non-recurring expenses related to the SeaTrepid acquisition.

Other (income) expense, net.

For the three months ended September 30, 2025, other expense is attributable to franchise tax liabilities incurred in relation to activity in Brazil.

For the nine months ended September 30, 2025, other expense related to prior year reimbursement of costs from client.

For the three months ended September 30, 2024, other expense related primarily to franchise tax expense and taxes incurred from activity in Brazil.

For the nine months ended September 30, 2024, other expense related to franchise tax expense and taxes incurred from activity in Brazil partially offset by proceeds received from the sale of expensed equipment.

Gain on lease termination.

For the three months ended September 30, 2024, no gain on lease termination was reported.

For the nine months ended September 30, 2024, a gain on lease termination of $23,897 was reported, primarily due to the reduction in leased office space in Norway.

For the three months ended March 31, 2026, other expense is minimal.

For the three months ended March 31, 2025, other income related primarily to proceeds received from the sale of expensed equipment.

Loss on extinguishment of debt.

For the nine months ended September 30, 2024, a loss on the extinguishment of debt of $78,734,949 was reported driven by the Amendment and Exchange Agreement.

For the three months ended March 31, 2026 a loss on the extinguishment of debt of $929,508 was reported driven by the exchange of November 2024 Debentures for Series C Preferred Stock.

See Note 8 "Notes Payable".

Change in fair value of derivative.

For the three months ended March 31, 2026, a loss on derivative of $515,827 was reported driven by the change in fair value of the EPFA.

See Note 17 "Equity Purchase Facility Agreement and Derivative Liability".

Change in fair value of warrant liabilities.

For the three months ended September 30, 2025, the Company reported a loss in the fair value of warrant liabiliti es of ($103,607);

for the three months ended September 30, 2024, the Company reported a gain in fair value of warrant liabilities $615,505.

For the nine months ended September 30, 2025 and 2024, the Company reported a gain in the fair value of warrant liabilities of $145,738 and $13,347,829, respectively.

Change in fair value of New Convertible Debentures.

For the three and nine months ended September 30, 2024, a gain on the fair value of the new convertible debentures of $24,199,071 and $36,113,800 was reported respectively.

For the three months ended March 31, 2026 and 2025, the Company reported a gain in the fair value of warrant liabilities of $3,019 and $50,888, respectively.

Change in fair value of November 2024 Debentures.

For the three months ended September 30, 2025 a gain on the fair value of the new convertible debentures of ($407,938);

for the nine months ended September 30, 2025 a loss on the fair value of the new convertible debentures of $128,122 was reported.

For the three months ended March 31, 2026 , the Company reported a loss on the fair value of the November 2024 convertible debentures of $1,188,840.

Interest expense, net.

For the three months ended September 30, 2025, interest expense, net increased $64,415, or 6%, driven by interest on the convertible senior secured term loans.

For the nine months ended September 30, 2025, interest expense, net decreased, $252,574 or 7% driven by interest on the convertible senior secured term loans.

For the three months ended March 31, 2026, interest expense, net decreased $161,433, or 14%, driven by reduced outstanding balances on the convertible senior secured term loans due to conversions in 2025.

Liquidity and Capital Resources

The Company has incurred recurring losses each year since its inception and currently does not generate sufficient revenue to cover operating expenses, working capital and capital expenditures.

The Company continues to develop its principal products and conduct research and development activities.

Currently, the Company does not generate sufficient revenue to cover operating expenses, working capital and capital expenditures.

Cost-cutting measures have been implemented to preserve cash and will continue to be implemented where practicable.

A dditional liquidity may be required over the next twelve months, which a current investor has committed to provide (See discussion of the equity line of credit in Note 20 (Subsequent Events).

With this investor support, the Company believes there will be sufficient resources to continue as a going concern for at least one year from the date that the condensed consolidated financial statements contained in this Form 10-Q are issued.

The Company also has an active At-The-Market ("ATM") offering program and may offer and sell shares of common stock thereunder from time to time.

As of September 30, 2025, the Company h ad $5,492,350 of cash and cash equivalents.

Significant sources and uses of cash during the nine months ended September 30, 2025.

The Company currently funds its operations with cash on hand, availability under the November 2024 Debentures (see Note 8 - "Notes Payable"), the Equity Purchase Facility Agreement (see Note 15 - "Common Stock") and the offer and sale of additional shares of Common Stock under the At The Market Offering Agreement (see Note 15 - "Common Stock" and Note 23 - "Subsequent Events").

The Company may require additional liquidity to continue its operations over the next twelve months.

While a current investor has expressed an intention to provide financial support, factors such as stock price, volatility, trading volume, market conditions, demand and regulatory requirements may adversely affect the Company's ability to raise capital in an efficient manner.

Because of these factors, the Company believes that this creates substantial doubt about the Company's ability to continue as a going concern for a period of at least twelve months from the date the March 31, 2026 financial statements were issued.

As of March 31, 2026, the Company h ad $5,285,230 of cash and cash equivalents.

Significant sources and uses of cash during the three months ended March 31, 2026 and 2025

Sources of cash:

• The Company received net proceeds of $27,171,088 from equity financing attributable mostly to the ATM share offering as well as the issuance of Series B Preferred Stock (see Statement of Cash Flows) .

• During the three months ended March 31, 2026, the Company received net proceeds of $5,276,843 from financing activities attributable to proceeds from November 2024 debentures and the ATM share offering.

• During the three months ended March 31, 2025, the Company received net proceeds of $19,438,121 from equity financing attributable to the ATM share offering.

Uses of cash:

• Cash used in operating activities wa s $18,943,935 , of which $1,322,226 was used to increase working capital.

• Cash used in investing activities related to the acquisition of SeaTrepid o f $3,871,992 and capital expenditures of $48,358.

Indebtedness.

The Company’s indebtedness as of September 30, 2025, is presented in Item 1, “Financial Statements – Note 7 – Notes Payable” and our lease obligations are presented in Item 1, “Financial Statements – Note 8 – Leases.”

• Cash used in operating activities wa s $7,005,769 and $6,649,394 during the three months ended March 31, 2026 and 2025, respectively.

• Cash used in investing activities during the three months ended March 31, 2025 related to the acquisition of SeaTrepid of $3,871,992 and capital expenditures of $47,989.

Critical Accounting Policies and Estimates

Certain of our accounting estimates are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain.

Management's discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements included in this Form 10-Q, which have been prepared in accordance to US GAAP.

Estimates are susceptible to material changes as a result of changes in facts and circumstances.

Please refer to “Critical Accounting Policies and Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, for a complete discussion of our critical accounting estimates.

Please refer to “Critical Accounting Policies and Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with SEC for a complete discussion of our critical accounting estimates.

There have been no significant changes to our accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q

Item 2. Management’s Discussion and Analysis