Part I — Financial Information Financial Statements This section presents Nauticus Robotics, Inc.'s unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, and Cash Flows, along with notes detailing accounting policies and significant financial events Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $58,045,623 | $25,167,372 | | Cash and cash equivalents | $35,928,218 | $20,952,867 | | Inventories | $5,558,996 | $0 | | Property and equipment, net | $9,645,735 | $1,437,311 | | Total Liabilities | $29,113,496 | $31,778,829 | | Notes payable - long-term, net | $20,427,812 | $14,708,333 | | Warrant liabilities | $4,148,556 | $0 | | Total Stockholders' Equity (Deficit) | $28,932,127 | ($6,611,457) | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $2,981,610 | $1,973,644 | $8,207,134 | $3,245,713 | | Operating Loss | ($6,045,830) | ($1,073,490) | ($11,256,395) | ($5,104,596) | | Net Loss | ($6,083,670) | ($1,298,122) | ($12,944,628) | ($3,892,715) | | Basic and Diluted EPS | ($0.67) | ($0.13) | ($1.49) | ($0.40) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash from operating activities | ($31,534,543) | ($4,314,491) | | Net cash from investing activities | ($6,805,648) | ($345,904) | | Net cash from financing activities | $53,315,542 | $11,217,264 | | Net change in cash | $14,975,351 | $6,556,869 | Notes to Condensed Consolidated Financial Statements These notes detail the company's accounting policies and significant events, including the September 2022 reverse recapitalization, reliance on financing due to losses, and a significant customer concentration impacting revenue recognition - On September 9, 2022, the company consummated its business combination with CleanTech Acquisition Corp (CLAQ) The transaction was accounted for as a reverse recapitalization, with Nauticus Robotics Holdings Inc. as the accounting acquirer29 - The company received net cash of $14.9 million from the Business Combination, $31 million from a PIPE Investment, and issued convertible debentures for proceeds of $35.8 million323580 - An existing sales contract with Triumph Subsea Construction Limited was amended, shifting milestone payments and delivery dates This will move an estimated $7.7 million of revenue from 2022 into 202339 - The company has a high concentration of credit risk, with two customers accounting for 99% and 96% of total revenue for the three and nine months ended September 30, 2022, respectively65 Expected Revenue from Unfulfilled Performance Obligations by Period (in millions) | Contract | Total | Remainder of 2022 | 2023 | 2024 | 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Triumph Subsea Construction Limited | $54.2 | $0 | $27.1 | $13.6 | $13.5 | | All other performance obligations | $11.5 | $2.4 | $4.0 | $5.1 | $0 | | Total | $65.7 | $2.4 | $31.1 | $18.7 | $13.5 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, noting increased revenue from new contracts offset by higher costs and G&A expenses, leading to continued losses and reliance on external financing Results of Operations Revenue significantly increased for the nine months ended September 30, 2022, driven by new service contracts, though operating and net losses widened substantially due to higher costs of revenue and general and administrative expenses Comparison of Operations for Nine Months Ended September 30 | Account | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $8,207,134 | $3,245,713 | $4,961,421 | 153% | | Cost of revenue | $8,220,447 | $3,609,236 | $4,611,211 | 128% | | Research and development | $2,094,278 | $2,411,100 | ($316,822) | -13% | | General and administrative | $8,778,498 | $2,066,941 | $6,711,557 | 325% | | Operating loss | ($11,256,395) | ($5,104,596) | ($6,151,799) | 121% | | Net loss | ($12,944,628) | ($3,892,715) | ($9,051,913) | 233% | - Revenue for the nine months ended Sep 30, 2022, increased by 153% YoY to $8.2 million, primarily due to the addition of revenue from four service contracts143 - Cost of revenue for the nine months increased 128% YoY, including a one-time bonus of approximately $1.2 million for the successful completion of the Merger145 - General and administrative expenses for the nine months increased 325% YoY, driven by increased headcount, professional fees for the Business Combination, and a one-time bonus of approximately $1.5 million150 Liquidity and Capital Resources As of September 30, 2022, the company had significant cash reserves, primarily from debt and equity financing, but continues to experience negative cash flow from operations and investing activities, indicating potential future funding needs - As of September 30, 2022, the company had $35,928,218 in cash and cash equivalents157 - In the first nine months of 2022, the company received net proceeds of $53.3 million from debt and equity financing, net of issuance costs158 - Key uses of cash in the first nine months of 2022 were $31.5 million for operations, $6.8 million for capital expenditures, and $17.9 million for debt repayment165 - The company does not currently generate sufficient revenue to cover operating expenses and may raise additional funding through debt or equity160 Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide this information - Disclosure is not required for smaller reporting companies162 Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of September 30, 2022, due to an un-remediated material weakness in internal control over financial reporting related to accounting personnel and financial close procedures - Management concluded that disclosure controls and procedures were not effective as of September 30, 2022164 - A material weakness was identified in 2021 related to a lack of qualified accounting and financial reporting personnel and inadequate procedures for the accounting close process165166 - Remediation efforts are ongoing, including hiring additional experienced personnel and implementing additional controls over financial reporting168 Part II — Other Information Legal Proceedings The company may be subject to litigation in the normal course of business, but no amounts have been accrued in the financial statements for any such matters - The company is not currently subject to any material legal proceedings that would require an accrual in the financial statements173 Risk Factors There have been no material changes to the risk factors previously disclosed in the definitive proxy statement/prospectus filed with the SEC on August 15, 2022 - There have been no material changes to the risk factors disclosed in the definitive proxy statement/prospectus filed with the SEC on August 15, 2022174 Unregistered Sales of Equity Securities and Use of Proceeds In connection with the Business Combination, the company issued common stock and convertible debentures with associated warrants in unregistered sales, raising significant capital through a PIPE financing - Issued 3,100,000 shares of Common Stock for a purchase price of $10.00 per share, for an aggregate purchase price of $31 million in an Equity Financing (PIPE)175 - Issued convertible Debentures in the aggregate principal amount of $36,530,320, convertible into 2,922,425 shares of Common Stock, along with associated warrants for an additional 2,922,425 shares176 Defaults upon Senior Securities The company reports no defaults upon senior securities - None178 Mine Safety Disclosures This section is not applicable to the company - Not applicable179 Other Information The company reports no other information for the period - None180 Exhibits This section lists the exhibits filed with the Form 10-Q, which include CEO and CFO certifications under the Sarbanes-Oxley Act and Inline XBRL data files - The exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as well as various Inline XBRL documents181
Nauticus Robotics(KITT) - 2022 Q3 - Quarterly Report