kitt-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-40611

NAUTICUS ROBOTICS, INC.

(Exact name of registrant as specified in its charter)


Delaware						85-1699753
(State or other jurisdiction of incorporation)						(IRS Employer Identification No.)

17146 FEATHERCRAFT LANE, SUITE 450,

WEBSTER, TEXAS 77598

(Address of principal executive offices and zip code)

(281) 942-9069

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock

KITT

The Nasdaq Stock Market LLC

Redeemable Warrants

KITTW

The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o No x

As of August 9, 2024, the registrant had 4,649,630 shares of common stock outstanding.

Table of Contents

TABLE OF CONTENTS


Cautionary Note Regarding Forward-Looking Statements		ii

Part I — Financial Information
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

Part II — Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form 10-Q”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements appear in a number of places in this Form 10-Q including, without limitation, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of our management and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date such statements are made. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those described in “Item 1A. Risk Factors” and other sections in the Annual Report on Form 10-K filed by us on April 9, 2024, ,in our Quarterly Reports on Form 10-Q filed subsequent to the Annual Report on Form 10-K, and in our prospectus or any prospectus supplement which are on file with the Securities and Exchange Commission.

These and other factors could cause actual results to differ from those implied by the forward-looking statements. Forward-looking statements are not guarantees of performance and speak only as of the date hereof. There can be no assurance that future developments will be those that have been anticipated or that we will achieve or realize these plans, intentions, or expectations.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements of belief and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date they are made, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NAUTICUS ROBOTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	June 30, 2024		December 31, 2023
	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	8,122,943	$	753,398
Restricted certificate of deposit	51,223		201,822
Accounts receivable, net	176,458		212,428
Inventories	2,217,507		2,198,797
Contract assets	482,576		-
Prepaid expenses	1,283,088		1,889,218
Other current assets	490,419		1,025,214
Assets held for sale	289,430		2,940,254
Total Current Assets	13,113,644		9,221,131

Property and equipment, net	16,500,849		15,904,845
Operating lease right-of-use assets	1,380,434		834,972
Other assets	204,296		187,527
Total Assets	$	31,199,223	$	26,148,475

Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable	$	5,594,270	$	7,035,450
Accrued liabilities	5,212,935		7,339,099
Contract liability	457,872		2,767,913
Operating lease liabilities - current	420,910		244,774
Total Current Liabilities	11,685,987		17,387,236
Warrant liabilities	1,192,693		18,376,180
Operating lease liabilities - long-term	1,035,713		574,260
Notes payable - long-term, net of discount (related party)	46,644,908		31,597,649
Total Liabilities	$	60,559,301	$	67,935,325

Commitments and Contingencies

Stockholders’ Deficit:
Common stock, $0.0001 par value; 625,000,000 shares authorized, 4,131,426 and 1,389,884 shares issued, respectively, and 4,131,426 and 1,389,884 shares outstanding, respectively (As adjusted, see Note 11)	$	413	$	139
Additional paid-in capital (As adjusted, see Note 11)	94,390,920		77,004,714
Accumulated deficit	(123,751,411)		(118,791,703)
Total Stockholders’ Deficit	(29,360,078)		(41,786,850)
Total Liabilities and Stockholders’ Deficit	$	31,199,223	$	26,148,475

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NAUTICUS ROBOTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023

Revenue:
Service	$	501,708	$	1,128,115	$	966,062	$	3,948,395
Service - related party	-		-		-		500
Total revenue	501,708		1,128,115		966,062		3,948,895

Costs and expenses:
Cost of revenue (exclusive of items shown separately below)	2,875,394		1,900,602		4,969,349		4,832,869
Depreciation	411,586		53,209		837,771		326,308
Research and development	-		482,761		63,534		709,728
General and administrative	3,227,288		5,560,565		6,657,298		10,773,209
Total costs and expenses	6,514,268		7,997,137		12,527,952		16,642,114

Operating loss	(6,012,560)		(6,869,022)		(11,561,890)		(12,693,219)

Other (income) expense:
Other (income) expense, net	118,274		(3,162)		21,801		1,149,219

Gain on lease termination	(8,532)		-		(23,897)		-
Foreign currency transaction loss (gain)	4,296		(17,709)		9,443		(27,593)
Loss on exchange of warrants	-		590,266		-		590,266
Change in fair value of warrant liabilities	(4,422,701)		(29,668,454)		(12,732,324)		(27,431,550)
Interest expense, net	3,669,423		1,556,597		6,122,795		6,491,664
Total other income, net	(639,240)		(27,542,462)		(6,602,182)		(19,227,994)

Net income (loss)	$	(5,373,320)	$	20,673,440	$	(4,959,708)	$	6,534,775

Basic earnings (loss) per share (As adjusted, see Note 16)	$	(2.75)	$	18.62	$	(2.97)	$	5.90
Diluted earnings (loss) per share (As adjusted, see Note 16)	$	(2.75)	$	17.70	$	(2.97)	$	5.79

Basic weighted average shares outstanding (As adjusted, see Note 16)	1,950,563		1,110,091		1,667,187		1,107,580
Diluted weighted average shares outstanding (As adjusted, see Note 16)	1,950,563		1,231,814		1,667,187		1,127,853

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NAUTICUS ROBOTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES OF STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount
	(As adjusted, see Note 11)
Balance at March 31, 2024	1,592,140	$	159	$	78,875,003	$	(118,378,091)	$	(39,502,929)
Stock-based compensation	-	-		809,310		-		809,310
Vesting of RSUs	46,665	5		(5)		-		-
Exercise of warrants	457,255	45		3,111,464		-		3,111,509
Conversion of convertible secured debentures	628,942	63		2,237,335		-		2,237,398
At the Market (ATM) share offering	1,406,424	141		9,357,813		-		9,357,954
Net loss	-	-		-		(5,373,320)		(5,373,320)
Balance at June 30, 2024	4,131,426	$	413	$	94,390,920	$	(123,751,411)	$	(29,360,078)

Balance at March 31, 2023	1,313,369	$	131	$	69,406,842	$	(82,243,767)	$	(12,836,794)
Stock-based compensation	-	-		1,862,164		-		1,862,164
Exercise of stock options	4,131	-		283,390		-		283,390
Vesting of RSUs	4,603	1		(1)		-		-
Exercise of warrants	8,293	-		338,055		-		338,055
Net income	-	-		-		20,673,440		20,673,440
Balance at Jun 30, 2023	1,330,396	$	132	$	71,890,450	$	(61,570,327)	$	10,320,255

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	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount
	(As adjusted, see Note 11)
Balance at December 31, 2023	1,389,884	$	139	$	77,004,714	$	(118,791,703)	$	(41,786,850)
Stock-based compensation	-	-		1,339,965		-		1,339,965
Vesting of RSUs	90,587	9		(9)		-		-
Exercise of warrants	615,589	61		4,451,102		-		4,451,163
Conversion of convertible secured debentures	628,942	63		2,237,335		-		2,237,398
At the Market (ATM) share offering	1,406,424	141		9,357,813		-		9,357,954
Net loss	-	-		-		(4,959,708)		(4,959,708)
Balance at June 30, 2024	4,131,426	$	413	$	94,390,920	$	(123,751,411)	$	(29,360,078)

Balance at December 31, 2022	1,312,521	$	131	$	68,132,790	$	(68,105,102)	$	27,819
Stock-based compensation	-	-		3,077,027		-		3,077,027
Exercise of stock options	4,979	-		342,579		-		342,579
Vesting of RSUs	4,603	1		(1)		-		-
Exercise of warrants	8,293	-		338,055		-		338,055
Net income	-	-		-		6,534,775		6,534,775
Balance at Jun 30, 2023	1,330,396	$	132	$	71,890,450	$	(61,570,327)	$	10,320,255

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NAUTICUS ROBOTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six months ended June 30,
	2024		2023
Cash flows from operating activities:
Net income (loss)	$	(4,959,708)	$	6,534,775
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation	837,771		326,308
Amortization of debt discount	3,242,443		1,878,376
Amortization of debt issuance cost	312,440		-
Accretion of RCB Equities #1, LLC exit fee	48,475		-
Stock-based compensation	1,339,965		3,077,027
Loss on exchange of warrants	-		590,266
Change in fair value of warrant liabilities	(12,732,324)		(27,431,550)
Non-cash impact of lease accounting	171,962		145,253
Gain on disposal of assets	(3,102)		-
Write off of property and equipment	29,350		-
Gain on lease termination	(23,897)		-
Gain on short-term investments	-		(40,737)
Changes in operating assets and liabilities:
Accounts receivable	35,969		319,940
Inventories	(18,710)		(5,869,092)
Contract assets	(482,576)		(37,341)
Other assets	1,232,368		(1,045,514)
Accounts payable and accrued liabilities	(1,715,646)		8,733,185
Contract liabilities	(2,310,041)		-
Operating lease liabilities	(55,937)		(193,257)
Net cash used in operating activities	(15,051,198)		(13,012,361)

Cash flows from investing activities:
Capital expenditures	(351,942)		(6,102,253)
Proceeds from sale of assets held for sale	419,720		-
Proceeds from sale of property and equipment	6,802		-
Proceeds from sale of short-term investments	-		5,000,000
Net cash from (used in) investing activities	74,580		(1,102,253)

Cash flows from financing activities:
Proceeds from notes payable	14,305,000		-
Payment of debt issuance costs on notes payable	(1,316,791)		-
Proceeds from ATM offering	9,857,857		-
Payment of ATM commissions and fees	(499,903)		-
Proceeds from exercise of stock options	-		342,579
Proceeds from exercise of warrants	-		338,055
Net cash from financing activities	22,346,163		680,634

Net change in cash and cash equivalents	7,369,545		(13,433,980)

Cash and cash equivalents, beginning of period	753,398		17,787,159
Cash and cash equivalents, end of period	$	8,122,943	$	4,353,179

Supplemental disclosure of cash flow information:
Cash paid for interest	$	111,875	$	908,184
Cash paid for taxes	$	-	$	-
Non-cash investing and financing activities:
Operating leases at inception	$	1,095,067

SEC Form 10-Q filed by Nauticus Robotics Inc.