Nauticus Robotics(KITT) - 2025 Q2 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section provides a cautionary note regarding statements that involve risks and uncertainties about future events and financial performance Part I — Financial Information Item 1. Financial Statements This section presents Nauticus Robotics, Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, changes in stockholders' equity (deficit), and cash flows. It also includes detailed notes explaining the company's business, significant accounting policies, revenue recognition, debt, equity, and recent business combination Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and stockholders' equity (deficit) at specific points in time | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Assets | | | | Total Current Assets | $7,966,766 | $4,320,782 | | Property and equipment, net | $22,238,369 | $17,115,246 | | Goodwill | $10,652,389 | $- | | Total Assets | $41,881,281 | $22,685,087 | | Liabilities | | | | Total Current Liabilities | $18,310,374 | $12,301,000 | | Total Liabilities | $47,556,621 | $43,082,500 | | Stockholders' Deficit | | | | Total Stockholders' Equity (Deficit) | $(5,675,340) | $(20,397,413) | - Total assets increased significantly from $22.68 million at December 31, 2024, to $41.88 million at June 30, 2025, primarily due to the acquisition of SeaTrepid International LLC, which introduced $10.65 million in goodwill and increased property and equipment[15][16][150] - The company's stockholders' deficit improved from $(20.40) million at December 31, 2024, to $(5.68) million at June 30, 2025, indicating a reduction in the negative equity position[16] Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net income or loss over specific reporting periods | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $2,075,566 | $501,708 | $2,240,822 | $966,062 | | Total costs and expenses | $8,446,793 | $6,514,268 | $14,475,812 | $12,527,952 | | Operating loss | $(6,371,227) | $(6,012,560) | $(12,234,990) | $(11,561,890) | | Total other (income) expense, net | $1,082,949 | $(10,553,535) | $2,786,373 | $56,736,071 | | Net Income (loss) | $(7,454,176) | $4,540,975 | $(15,021,363) | $(68,297,961) | | Basic income (loss) per share | $(0.26) | $2.33 | $(0.53) | $(40.97) | | Diluted loss per share | $(0.26) | $(1.12) | $(0.53) | $(40.97) | - Revenue for the three months ended June 30, 2025, increased by 314% to $2,075,566 compared to $501,708 in the same period of 2024, primarily driven by the SeaTrepid acquisition[18][248] - The company reported a net loss of $(7,454,176) for the three months ended June 30, 2025, a significant decrease from the net income of $4,540,975 in the prior year, largely influenced by changes in fair value of warrant liabilities and convertible debentures[18][256][257] Condensed Consolidated Statements of Changes of Stockholders' Equity (Deficit) This section outlines the changes in the company's equity or deficit over specific reporting periods, reflecting transactions with owners and net income/loss - Total Stockholders' Equity (Deficit) improved from $(20,397,413) at December 31, 2024, to $(5,675,340) at June 30, 2025[10] - Additional paid-in capital increased by approximately $29.7 million during the six months ended June 30, 2025, primarily due to ATM share offerings and conversion of notes payable to Common Stock[10][167][170] - The accumulated deficit increased by approximately $15 million during the six months ended June 30, 2025, reflecting the net loss for the period[10][18] Condensed Consolidated Statements of Cash Flows This section presents the cash inflows and outflows from operating, investing, and financing activities for specific periods | Cash Flow Activity | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(14,006,452) | $(15,051,198) | | Net cash (used in) provided by investing activities | $(3,919,731) | $74,580 | | Net cash provided by financing activities | $19,403,540 | $22,346,163 | | Net change in cash and cash equivalents | $1,477,357 | $7,369,545 | | Cash and cash equivalents, end of period | $2,663,404 | $8,122,943 | - Net cash used in operating activities decreased to $(14.01) million for the six months ended June 30, 2025, from $(15.05) million in the prior year, indicating a slight improvement in operational cash burn[22] - Investing activities shifted from providing $74,580 in cash in 2024 to using $(3.92) million in 2025, primarily due to the acquisition of SeaTrepid and capital expenditures[22][262] - Cash provided by financing activities decreased to $19.40 million in 2025 from $22.35 million in 2024, mainly from ATM share offerings[22][261] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements 1. Description of the Business This note describes Nauticus Robotics, Inc.'s core business, products, strategic acquisitions, and financial viability - Nauticus Robotics, Inc. develops ocean robots, cloud software, and services for the ocean industry, focusing on offshore energy and national security[26] - Key products include autonomous underwater vehicles (AUVs) like Aquanaut®, remotely operated vehicles (ROVs), robotic manipulators (Olympic Arm™), and the open robotic operating system Nauticus ToolKITT™[26][27] - The strategic acquisition of SeaTrepid International LLC on March 20, 2025, aims to integrate Nauticus' AI-driven autonomy software into SeaTrepid's ROV fleet, enhancing operational performance and unlocking new service opportunities[28] - The company currently does not generate sufficient revenue to cover operating expenses and requires additional liquidity, which a current investor has committed to provide, supporting its going concern for at least one year[29] 2. Summary of Significant Accounting Policies This note outlines the key accounting principles, estimates, and assumptions used in preparing the financial statements - The financial statements are unaudited and prepared in accordance with SEC rules and GAAP, with interim results not necessarily indicative of full-year performance[30] - Significant estimates and assumptions are made for future costs on customer contracts, deferred income tax assets, stock-based compensation, and fair value of conversion options, warrants, earnouts, and the SeaTrepid acquisition[32][34] - The functional currency for the foreign subsidiary changed from Brazilian Real to U.S. dollars effective January 1, 2025, due to changes in operational and economic circumstances[56] - Common stock warrants are classified as liabilities and revalued at each reporting date, with changes in fair value reported in the condensed consolidated statements of operations[58][59] - The company elected the fair value option for New Convertible Debentures and November 2024 Debentures to provide greater transparency, with changes in fair value recognized in earnings[63][64] 3. Revenue This note provides a breakdown of revenue by type and details related accounts receivable and unfulfilled performance obligations | Revenue Type | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost plus fixed fee | $2,075,566 | $- | $2,240,822 | $214,414 | | Firm fixed-price | $- | $501,708 | $- | $751,648 | | Total Revenue | $2,075,566 | $501,708 | $2,240,822 | $966,062 | - Total revenue for the three months ended June 30, 2025, increased by 314% to $2,075,566, primarily from cost plus fixed fee services, compared to $501,708 from firm fixed-price contracts in the prior year[77][248] - Accounts receivable, net, significantly increased to $2,283,131 as of June 30, 2025, from $238,531 at December 31, 2024[78] - The company expects to recognize approximately $180,000 of revenue in future periods from unfulfilled performance obligations as of June 30, 2025[82] 4. Prepaid Expenses and Other Current Assets This note details the composition of prepaid expenses and other current assets | Category | June 30, 2025 | December 31, 2024 | | :---------------------- | :-------------- | :------------------ | | Prepaid material purchases | $395,554 | $394,950 | | Prepaid insurance | $798,317 | $817,717 | | Other prepayments | $252,505 | $176,767 | | Total prepaid expenses | $1,446,376 | $1,389,434 | | Other current assets | $607,491 | $573,275 | | Total other current assets | $607,491 | $573,275 | - Total prepaid expenses increased slightly to $1,446,376 at June 30, 2025, from $1,389,434 at December 31, 2024[84] 5. Property and Equipment This note provides a breakdown of property and equipment, net of accumulated depreciation | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :------------------ | | Land | $444,435 | $- | | Leasehold improvements | $1,804,884 | $833,920 | | Property & equipment | $11,863,554 | $7,528,597 | | Technology hardware equipment | $1,969,841 | $1,966,841 | | Total | $16,082,714 | $10,329,358 | | Less accumulated depreciation | $(5,011,362) | $(3,958,780) | | Construction in progress | $11,167,017 | $10,744,668 | | Total property and equipment, net | $22,238,369 | $17,115,246 | - Net property and equipment increased by approximately $5.1 million to $22,238,369 at June 30, 2025, primarily due to the acquisition of SeaTrepid, which added land, buildings, and machinery and equipment[85][144][250] 6. Accrued Liabilities This note details the various accrued liabilities of the company | Category | June 30, 2025 | December 31, 2024 | | :---------------------- | :-------------- | :------------------ | | Accrued compensation | $450,847 | $956,399 | | Accrued severance | $336,538 | $1,031,731 | | Accrued professional fees | $150,000 | $2,350 | | Accrued insurance | $249,858 | $440,562 | | Accrued sales and property taxes | $400,630 | $428,801 | | Accrued royalties | $475,000 | $400,000 | | Accrued interest | $3,432,419 | $2,302,878 | | Accrued purchase liability | $3,537,963 | $- | | Other accrued expenses | $355,833 | $40,000 | | Total accrued expenses | $9,389,088 | $5,602,721 | - Total accrued liabilities increased by approximately $3.79 million to $9,389,088 at June 30, 2025, primarily due to a $3,537,963 accrued purchase liability related to the SeaTrepid acquisition[87] 7. Notes Payable This note provides details on the company's various notes payable, including fair value adjustments and conversions | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------- | :-------------- | :------------------ | | November 2024 debentures - fair value | $3,119,892 | $2,583,832 | | Convertible senior secured term loan | $25,287,311 | $27,500,383 | | SBA loan | $485,300 | $- | | Ameristate loan | $1,917,863 | $- | | Total notes payable – long-term | $27,677,366 | $28,935,530 | - Total notes payable (long-term) decreased slightly to $27,677,366 at June 30, 2025, from $28,935,530 at December 31, 2024[88] - The fair value of November 2024 Debentures increased to $3,119,892 at June 30, 2025, from $2,583,832 at December 31, 2024, with a reported loss on change in fair value of $536,060 for the six months ended June 30, 2025[94] - During the six months ended June 30, 2025, ATW I and ATW II converted $2,551,855 in principal and $318,718 in interest from 2024 Term Loan notes into 1,805,392 shares of Common Stock[123][214] - SBA and Ameristate loans, totaling $485,300 and $1,917,863 respectively, were assumed with the SeaTrepid acquisition and are classified as current liabilities due to the company's intent to repay them by December 31, 2025[124][125] 8. Leases This note provides information on the company's lease arrangements, including expenses and right-of-use assets | Lease Cost Category | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Fixed lease expense | $122,318 | $122,798 | $244,636 | $259,443 | | Variable lease expense | $54,081 | $89,910 | $126,275 | $214,271 | | Short-term lease expense | $39,379 | $6,915 | $47,236 | $27,428 | | Total lease expense | $215,778 | $219,623 | $418,147 | $501,142 | - Total lease expense for the six months ended June 30, 2025, decreased to $418,147 from $501,142 in the prior year[133] - Operating lease right-of-use assets, net, decreased to $900,292 at June 30, 2025, from $1,094,743 at December 31, 2024[136] - The weighted average remaining lease term was 2.7 years as of June 30, 2025, with a weighted average discount rate of 10.3%[136] 9. Commitments and Contingencies This note addresses potential future obligations and legal matters that could impact the company's financial position - The company is not currently a party to any material legal proceedings, and no amounts have been accrued in the financial statements for such matters[138] 10. Business Combination This note details the acquisition of SeaTrepid International LLC, including consideration and allocation of the purchase price - On March 20, 2025, Nauticus Robotics acquired SeaTrepid International LLC for a total consideration of $14.4 million, expanding its subsea robotic services[139] | Consideration/Allocation | Amount | | :-------------------------- | :------------- | | Cash consideration | $8,000,000 | | Earnout shares (fair value) | $6,864,729 | | Purchase price adjustment | $(512,037) | | Total purchase price | $14,352,692 | | Goodwill | $10,652,389 | | Property and equipment acquired | $6,169,303 | | Notes payable assumed | $(2,437,743) | - The acquisition included a contingent consideration arrangement of 6,043,896 earnout shares, valued at approximately $6.9 million, subject to achieving $4 million in business revenue for the year ended December 31, 2025[141] - SeaTrepid contributed approximately $2.21 million in revenue and $54,800 in net income to the company's consolidated financial statements for the six months ended June 30, 2025[145] 11. Goodwill This note explains the goodwill recognized from the SeaTrepid acquisition and its tax implications - Goodwill of $10,652,389 was recognized as a result of the SeaTrepid acquisition on March 20, 2025, representing expected synergies and assembled workforce[150] - The goodwill is not deductible for tax purposes, and no impairment indicators were identified through the second quarter of 2025[150][151] 12. Income Taxes This note discusses the company's income tax expense and valuation allowance against deferred tax assets - No income tax expense was recognized for the three and six months ended June 30, 2025, or 2024[152] - The company maintains a full valuation allowance against its net deferred tax assets as of June 30, 2025, and December 31, 2024[152] 13. Equity This note provides details on changes in the company's equity, including preferred and common stock, ATM offerings, and stock splits - Outstanding Series A Convertible Preferred Stock decreased from 35,034 shares at December 31, 2024, to 18,296 shares at June 30, 2025, due to conversions into Common Stock[153][169] - Common Stock outstanding significantly increased to 37,404,948 shares at June 30, 2025, from 9,761,895 shares at December 31, 2024[166] - During the first quarter of 2025, the company issued 7,488,822 shares through ATM offerings, generating net proceeds of $19,438,121[167] - A 1-for-36 reverse stock split was effected on July 22, 2024, to meet NASDAQ bid price requirements, retroactively adjusting all share and per-share data[161][165] - Earnout Shares related to the 2022 Merger, totaling 208,333 post-reverse split, remain in escrow as the stock price targets have not been achieved as of June 30, 2025[173][174] 14. Warrants This note details the accounting treatment and fair value measurements of various types of warrants - Public Warrants, Private Warrants, and SPA Warrants are accounted for as liabilities and revalued at each reporting date[179][181][199] | Warrant Type | Fair Value as of June 30, 2025 | Fair Value as of December 31, 2024 | | :------------- | :----------------------------- | :--------------------------------- | | Public Warrants | $31,778 | $9,080 | | Private Warrants | $11,682 | $7,884 | | SPA Warrants | $96,322 | $164,949 | | Total Warrant Liability | $139,782 | $181,913 | - The company reported a loss in fair value of Public Warrants of $11,465 for the three months ended June 30, 2025, and a gain of $22,698 for the six months ended June 30, 2025[179] - The fair value of Private Warrants was estimated using a Black-Scholes model, resulting in a gain of $1,179 for the three months ended June 30, 2025, and a loss of $3,798 for the six months ended June 30, 2025[181] - The fair value of SPA Warrants was estimated using a Black-Scholes model, showing a gain of $1,499 for the three months ended June 30, 2025, and a gain of $68,627 for the six months ended June 30, 2025[199] 15. Stock-Based Compensation This note provides details on the stock-based compensation expense recognized by the company | Period | Stock-Based Compensation Expense | | :------------------------------- | :------------------------------- | | Three months ended June 30, 2025 | $257,334 | | Six months ended June 30, 2025 | $570,015 | | Three months ended June 30, 2024 | $809,310 | | Six months ended June 30, 2024 | $1,339,965 | - Total stock-based compensation expense decreased for both the three and six months ended June 30, 2025, compared to the prior year, reflecting changes in equity incentive awards[201] 16. Employee Benefit Plan This note outlines the costs associated with the company's 401(k) employee benefit plan | Period | 401(k) Plan Cost | | :------------------------------- | :----------------- | | Three months ended June 30, 2025 | $61,231 | | Six months ended June 30, 2025 | $95,692 | | Three months ended June 30, 2024 | $48,261 | | Six months ended June 30, 2024 | $103,265 | - The company's cost for the 401(k) plan increased for the three months ended June 30, 2025, but slightly decreased for the six months ended June 30, 2025, compared to the same periods in 2024[202] 17. Related Party Transactions This note discloses transactions and relationships with related parties, including significant investors and management - ATW I, ATW II, ATW III, MIF, and SLS are considered related parties due to their significant influence and consent requirements on material transactions[204] - Related parties hold SPA Warrants, November 2024 Debentures, and are lenders in Convertible Senior Secured Term Loans[204][210][211] - During the six months ended June 30, 2025, ATW I and SLS converted Series A Preferred Shares into Common Stock, and ATW I and ATW II converted 2024 Term Loan notes into Common Stock[209][214] | Related Party | Principal Amount Outstanding (June 30, 2025) | | :-------------- | :------------------------------------------- | | ATW I | $1,643,933 | | ATW II | $4,404,211 | | ATW III | $1,155,306 | | MIF | $4,309,674 | - Flexible Consulting, LLC, co-owned by the Interim CFO, provided $319,726 in services for the six months ended June 30, 2025, with $45,000 due at period-end[216] 18. Loss Per Share This note presents the calculation of basic and diluted loss per share, including anti-dilutive securities | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) for basic EPS | $(7,454,176) | $4,540,975 | $(15,021,363) | $(68,297,961) | | Basic weighted average shares outstanding | 29,007,029 | 1,950,563 | 28,231,536 | 1,667,187 | | Diluted weighted average shares outstanding | 29,007,029 | 5,364,395 | 28,231,536 | 1,667,187 | | Basic loss per share | $(0.26) | $2.33 | $(0.53) | $(40.97) | | Diluted loss per share | $(0.26) | $(1.12) | $(0.53) | $(40.97) | - Basic and diluted loss per share for the three months ended June 30, 2025, was $(0.26), compared to basic income per share of $2.33 and diluted loss per share of $(1.12) in the prior year[220] - Weighted average shares outstanding for basic EPS increased significantly to 29,007,029 for the three months ended June 30, 2025, from 1,950,563 in the prior year, reflecting equity issuances and conversions[220] - Anti-dilutive securities excluded from shares outstanding as of June 30, 2025, totaled 32,768,470, including warrants, earnout shares, convertible debt, and Series A Convertible Preferred Stock[220] 19. Fair Value Measurements This note describes the company's fair value measurements for financial and non-financial assets and liabilities, categorized by input levels - The company measures certain financial and non-financial assets and liabilities at fair value, categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[222][227] - November 2024 Debentures, Private Warrants, and SPA Warrants are classified as Level 3 measurements due to the use of significant unobservable inputs in their valuation models (e.g., Monte Carlo simulation, Black-Scholes)[223][224] | Financial Liability | Fair Value (Level 3) as of June 30, 2025 | Fair Value (Level 3) as of December 31, 2024 | | :-------------------------- | :--------------------------------------- | :----------------------------------------- | | November 2024 Debentures | $3,119,892 | $2,583,832 | | Private Warrants | $11,682 | $7,884 | | SPA Warrants | $96,322 | $164,949 | | Total Level 3 Liabilities | $3,227,896 | $2,756,665 | - Fair value of earnout shares related to the SeaTrepid acquisition was measured at $6,864,729 using a Monte Carlo simulation model with Level 3 inputs[225][229] 20. Subsequent Events This note discloses significant events that occurred after the reporting period but before the financial statements were issued - As of the filing date, the company issued and sold 2,008,713 shares through an ATM offering, generating net proceeds of $1,941,956[230][232] - On August 8, 2025, the company closed a Securities Purchase Agreement with a related party institutional investor, issuing 3,000 shares of Series B Convertible Preferred Stock for $2,940,000[232] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Nauticus Robotics, Inc.'s financial condition and results of operations for the three and six months ended June 30, 2025, compared to the same periods in 2024. It covers an overview of the business, recent developments, market environment, operational performance, and a detailed analysis of revenue, costs, and liquidity Overview This section provides a high-level summary of Nauticus Robotics' business, core products, and strategic initiatives - Nauticus Robotics develops ocean robots, cloud software, and intelligent services for offshore energy, environmental monitoring, and defense, with a portfolio including AUVs (AQUANAUT®), ROVs, robotic manipulators (Olympic Arm™), and the Nauticus ToolKITT™ software platform[234][235] - The acquisition of SeaTrepid on March 20, 2025, is intended to expand the operational fleet, enhance service capacity, and enable cross-selling by integrating Nauticus ToolKITT™ into SeaTrepid's ROV operations[236] Recent Developments This section highlights key operational and strategic achievements and milestones during the reporting period - Successfully launched the 2025 offshore season with multiple ROV deployments, including a long-term drill support contract and environmental operations - AQUANAUT® is now integrated into commercial operations, marking a critical milestone for scaled revenue - Technology received significant visibility at industry conferences, highlighting growing influence in subsea autonomy - SeaTrepid integration is delivering tangible results, expanding customer base and increasing utilization - Announced collaboration with Open Ocean Robotics to pair AQUANAUT® with solar-powered uncrewed surface vessels for cost-efficient, lower-carbon solutions - Signed a multi-year master services agreement with Advanced Ocean Systems (AOS) to test integrated subsea and surface autonomy solutions[240] Market Environment and Outlook This section discusses the current market conditions and future prospects relevant to the company's operations and growth - The offshore energy market remains robust, with high vessel and subsea asset utilization in the Gulf of Mexico[237] - Adoption of autonomous subsea robotics is accelerating, driven by customer priorities for safety, efficiency, and data quality, creating tailwinds for AQUANAUT® and Nauticus ToolKITT™[238] - Defense sector engagement is gaining momentum through partnerships, positioning the company for future contracts[239] - The near-term pipeline is strong, supported by active contracts, prospective projects in multiple basins, and international interest[241] Operational Performance and Product Advancement This section reviews the company's operational achievements and progress in product development and commercialization - Service revenue was primarily driven by SeaTrepid's ROV operations, with cross-selling of AQUANAUT®, Olympic Arm™, and Nauticus ToolKITT™ beginning to take hold among SeaTrepid's customers[242] - AQUANAUT® is integrated into commercial environmental contracts, with hardware refinements expected to improve reliability and performance[243] - Nauticus ToolKITT™ is nearing full commercial deployment, with external testing underway and discussions with customers to integrate it into their ROV fleets[243] - Market demand for the compact, fully electric Olympic Arm™ manipulator remains strong as its development matures[244] Conclusion This section summarizes the key achievements and strategic positioning of the company during the reporting period - The first half of 2025 saw decisive execution, including SeaTrepid integration, fleet expansion, advancement of core products (AQUANAUT®, Nauticus ToolKITT™, Olympic Arm™) towards commercialization, and strategic alliances[245] - Nauticus is well-positioned for growth with a strong ROV services pipeline, increasing adoption of autonomous solutions, and anticipated scaling of AQUANAUT® revenue in the second half of the year[246] Results of Operations This section provides a detailed analysis of the company's financial performance, including revenue, cost of revenue, and operating expenses | Metric | 3M Ended Jun 30, 2025 | 3M Ended Jun 30, 2024 | Change ($) | Change (%) | 6M Ended Jun 30, 2025 | 6M Ended Jun 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :--------- | :--------- | :-------------------- | :-------------------- | :--------- | :--------- | | Revenue | $2,075,566 | $501,708 | $1,573,858 | 314% | $2,240,822 | $966,062 | $1,274,760 | 132% | | Cost of revenue | $3,504,043 | $2,875,394 | $628,649 | 22% | $4,743,000 | $4,969,349 | $(226,349) | -5% | | Depreciation | $574,563 | $411,586 | $162,977 | 40% | $1,054,939 | $837,771 | $217,168 | 26% | | R&D | $- | $- | $- | 0% | $- | $63,534 | $(63,534) | -100% | | G&A | $4,368,187 | $3,227,288 | $1,140,899 | 35% | $8,677,873 | $6,657,298 | $2,020,575 | 30% | | Operating loss | $(6,371,227) | $(6,012,560) | $358,667 | 6% | $(12,234,990) | $(11,561,890) | $673,100 | 6% | | Net income (loss) | $(7,454,176) | $4,540,975 | $11,995,151 | -264% | $(15,021,363) | $(68,297,961) | $(53,276,598) | -78% | - Revenue increased significantly by 314% for the three months and 132% for the six months ended June 30, 2025, primarily due to the SeaTrepid acquisition[248] - Research and development costs decreased by 100% for the six months ended June 30, 2025, as the company achieved technological feasibility and focused on product commercialization[251] - General and administrative costs increased by 35% and 30% for the three and six months, respectively, due to SeaTrepid acquisition-related costs and integration[252] - Net loss for the six months ended June 30, 2025, improved to $(15,021,363) from $(68,297,961) in the prior year, largely due to the absence of a large loss on extinguishment of debt seen in 2024[248][255] Liquidity and Capital Resources This section discusses the company's ability to meet its short-term and long-term financial obligations and its sources of funding - The company does not generate sufficient revenue to cover operating expenses and requires additional liquidity, which a current investor has committed to provide, ensuring sufficient resources for at least one year[259] - Cash and cash equivalents stood at $2,663,404 as of June 30, 2025[260] - Sources of cash: $19,403,540 net proceeds from ATM share offering - Uses of cash: $14,006,452 in operating activities (including $2,067,289 for working capital increase), and $3,919,731 in investing activities (primarily SeaTrepid acquisition and capital expenditures)[261][262] Critical Accounting Policies and Estimates This section highlights the accounting policies that require significant management judgment and are crucial to the financial statements - The company's critical accounting estimates involve significant management judgments and assumptions, which are susceptible to material changes based on evolving facts and circumstances[263] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that quantitative and qualitative disclosures about market risk are not required for smaller reporting companies - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[264] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures, identifying material weaknesses in internal control over financial reporting, and outlining the remediation plan Evaluation of disclosure controls and procedures This section assesses the effectiveness of the company's controls designed to ensure timely and accurate financial reporting - As of June 30, 2025, the company's disclosure controls and procedures were deemed not effective due to previously disclosed material weaknesses[266] - Despite the material weakness, management performed additional analyses and procedures to conclude that the unaudited condensed consolidated financial statements fairly present the financial position, results of operations, and cash flows in conformity with GAAP[266] Previously identified material weakness This section describes the significant deficiencies in internal control over financial reporting identified in prior periods - In 2021, a material weakness was identified due to a lack of qualified accounting and financial reporting personnel and inadequate procedures for the accounting close process - In 2024, additional material weaknesses were identified related to ineffective design and operation of controls over significant complex transactions (leading to restatements) and failure to remediate user access controls[268][270] Remediation Plan This section outlines the steps the company is taking to address and correct the identified material weaknesses in internal control - The company is implementing a formal Significant and Complex Transaction review process, involving third-party experts, to ensure proper accounting treatment - User access controls and segregation of duties for critical accounting systems are being designed and implemented, supported by formal policies and IT personnel training, with full implementation expected by the end of 2025[271] Changes in internal control over financial reporting This section reports on any changes in internal control over financial reporting that occurred during the reporting period - During the fiscal quarter ended June 30, 2025, no other material changes in internal control over financial reporting were identified, apart from the ongoing remediation efforts[271] Inherent limitation on the effectiveness of internal control This section acknowledges that even effective internal control systems have inherent limitations that can prevent them from detecting all misstatements - The effectiveness of any internal control system is subject to inherent limitations, including judgment in design and operation, resource constraints, and the inability to eliminate misconduct completely[272] Part II — Other Information Item 1. Legal Proceedings This section states that the company is not currently involved in any material legal proceedings - The company is not a party to any material legal proceedings in the normal course of business, and no amounts have been accrued in the financial statements for such matters[275] Item 1A. Risk Factors This section confirms that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes occurred in the 'Risk Factors' during the three months ended June 30, 2025, as set forth in the Annual Report on Form 10-K for the year ended December 31, 2024[276] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on unregistered sales of equity securities during the second quarter of 2025 - In the second quarter of 2025, the company issued 1,781,983 shares to ATW and 363,167 shares to SLS upon their conversions of Series A Preference Stock[277] Item 3. Defaults upon Senior Securities This section states that there were no defaults upon senior securities - There were no defaults upon senior securities during the reporting period[278] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to Nauticus Robotics, Inc[279] Item 5. Other Information This section provides information on trading plans of directors and Section 16 officers - No director or Section 16 officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[280] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including certificates of incorporation, bylaws, certifications, and XBRL documents - The exhibits include the Second Amended and Restated Certificate of Incorporation, Certificate of Amendment, Certificate of Designations of Rights and Preferences of Series A Convertible Preferred Stock, Amended and Restated Bylaws, and certifications from the CEO and CFO[282] SIGNATURES This section contains the required signatures of the company's authorized officers, certifying the accuracy of the report