Nauticus Robotics(US:KITT)2024-05-13 23:30Part I — Financial Information Financial Statements Nauticus Robotics reported a significant revenue decrease to $0.46 million, yet achieved a net income of $0.41 million due to a non-cash gain on warrant liabilities Condensed Consolidated Balance Sheets Total assets increased to $29.4 million, while warrant liabilities decreased, improving the stockholders' deficit to ($39.5 million) Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $6,187,307 | $753,398 | | Total Current Assets | $11,816,501 | $9,221,131 | | Total Assets | $29,431,488 | $26,148,475 | | Liabilities & Stockholders' Deficit | | | | Total Current Liabilities | $14,028,307 | $17,387,236 | | Warrant liabilities | $8,726,903 | $18,376,180 | | Notes payable - long-term, net | $44,949,988 | $31,597,649 | | Total Liabilities | $68,934,417 | $67,935,325 | | Total Stockholders' Deficit | ($39,502,929) | ($41,786,850) | Condensed Consolidated Statements of Operations Revenue plummeted by 84% to $0.46 million, but a non-cash gain on warrant liabilities led to a net income of $0.41 million Q1 2024 vs Q1 2023 Statement of Operations (Unaudited) | Metric | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Total Revenue | $464,354 | $2,820,780 | | Cost of Revenue | $2,093,955 | $2,932,267 | | Operating Loss | ($5,549,330) | ($5,824,197) | | Change in fair value of warrant liabilities | ($8,309,623) | $2,236,904 | | Net Income (Loss) | $413,612 | ($14,138,665) | | Basic Earnings (Loss) Per Share | $0.01 | ($0.36) | Condensed Consolidated Statements of Cash Flows Operating cash outflow improved to $6.66 million, with financing activities providing $12.03 million, leading to a net cash increase of $5.43 million Q1 2024 vs Q1 2023 Cash Flow Summary (Unaudited) | Cash Flow Activity | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,660,282) | ($8,873,938) | | Net cash from investing activities | $68,482 | $3,506,022 | | Net cash from financing activities | $12,025,709 | $59,190 | | Net change in cash and cash equivalents | $5,433,909 | ($5,308,726) | | Cash and cash equivalents, end of period | $6,187,307 | $12,478,433 | Notes to Condensed Consolidated Financial Statements Notes highlight going concern reliance on investor support, high customer concentration, significant debt financing, and ongoing material weakness in internal controls - The company does not generate sufficient revenue to cover operating expenses and may require additional liquidity over the next twelve months, which a current investor has committed to provide. This support is crucial for the company to continue as a going concern27 - In Q1 2024, 100% of total revenue came from two customers. In Q1 2023, two customers accounted for 99% of revenue, indicating significant customer concentration risk63 - In January 2024, the company entered into multiple debt agreements, including a new Senior Secured Term Loan for $9.55 million and an incremental loan of $3.75 million, to fund operations103104105 - The fair value of warrant liabilities decreased significantly, resulting in a non-cash gain of $8.31 million for the quarter, which was the primary driver of the company's net income168 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses an 84% revenue decrease, 30% operating expense reduction, and a net income of $0.41 million driven by a non-cash gain, confirming reliance on external financing Q1 2024 vs Q1 2023 Operational Performance | Item | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $464,354 | $2,820,780 | ($2,356,426) | -84% | | Cost of revenue | $2,093,955 | $2,932,267 | ($838,312) | -29% | | General and administrative | $3,430,010 | $5,212,644 | ($1,782,634) | -34% | | Operating loss | ($5,549,330) | ($5,824,197) | ($274,867) | 5% | | Net income (loss) | $413,612 | ($14,138,665) | $14,552,277 | 103% | - The company acknowledges its current inability to generate sufficient revenue to cover operating expenses and capital expenditures. It has implemented cost-cutting measures and relies on committed investor support for liquidity to continue as a going concern183 - During Q1 2024, the company received net proceeds of $12.03 million from debt financing, which was a significant source of cash. This was used to fund operating activities, which consumed $6.66 million185 Quantitative and Qualitative Disclosures About Market Risk Disclosure is not required for smaller reporting companies - Disclosure is not required for smaller reporting companies186 Controls and Procedures Disclosure controls were ineffective due to an ongoing material weakness in internal control over financial reporting, with a remediation plan underway - The CEO and Interim CFO concluded that disclosure controls and procedures were not effective as of March 31, 2024, due to a continuing material weakness in internal control over financial reporting188 - The material weakness, first identified in 2021, relates to a lack of qualified accounting personnel and inadequate procedures for the accounting close process. Remediation efforts were gapped by significant turnover of key finance personnel at the end of 2023190191 - The remediation plan involves formally documenting system controls, segregation of duties, and implementing a quarterly review and testing plan for all internal controls, with completion expected by the end of Q2 2024192 Part II — Other Information Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceeding196 Risk Factors No material changes to previously disclosed risk factors were reported - No material changes in risk factors were reported for the quarter ended March 31, 2024, compared to the 2023 Form 10-K197 Unregistered Sales of Equity Securities and Use of Proceeds The company entered into a $9.55 million senior secured term loan agreement in January 2024, convertible into common stock at $0.4582 per share - The company entered into the 2024 Term Loan Agreement on January 30, 2024, providing $9,551,856 of secured term loans198199 - The 2024 Loans are convertible at the lender's option into common stock at a conversion price of $0.4582 per share202 Defaults upon Senior Securities The company reported no defaults upon senior securities - None203 Mine Safety Disclosures This item is not applicable to the company - Not applicable204 Other Information No director or Section 16 officer adopted or terminated trading arrangements during the quarter - No director or Section 16 officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter205 Exhibits This section lists all exhibits filed with the Form 10-Q, including debt agreements and officer certifications - A list of exhibits filed with the report is provided, including debt agreements, amendments, and certifications206207