KITT 10-K & 10-Q changes, risk factors and insider trading

Our business, financial condition, results of operations, cashflows,cash flows, reputation and prospects are affected by a number of factors, whether currently known or unknown, including risks specific to us or the robotics industry, as well as risks that affect businesses in general. The risks disclosed in this Annual Report on Form 10-K, including but not limited to those described below, could materially adversely affect our business, financial condition, results of operations, cash flows, reputation and prospects and thus our stock price. These risk factors may be important to understanding other statements in this Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements and related notes in Part I,II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part I,II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Because of such risk factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

•We identified a material weaknessesweakness in our internal control over financial reporting which we are working to remediate. TheseThis material weaknessesweakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

•We incur significant expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition, resultresults of operations, cash flows, reputation and prospects.

•We may issue a significant number of shares or equity-linked securities in the future in connection with investments or acquisitions or other efforts to raise capital.capital, which may cause dilution to, or otherwise adversely affect, our stockholders

•We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to investors, thereby making Public Warrants worthless. We may redeem outstanding Series AA, B and C Preferred Stock and the November 2024 Debentures.

•Currently outstanding Public Warrants, Private Warrants, SPA Warrants and New SPA Warrants are exercisable for shares of Common Stock. Additionally, theour Series AA, Series B and Series C Preferred SharesStock and the November 2024 Debentures are convertible. Any future exercise of such warrants or conversion of the Series AA, Series B and Series C Preferred SharesStock or the November 2024 Debentures would increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our stockholders.

We incurred a net loss of $134.9$40.8 million and $50.7$134.9 million for the years ended December 31, 20242025 and 2023,2024, respectively. We believe that we will continue to incur operating and net losses each quarter until at least the first quarter of 2026. Even though we have commercial traction for platform sales, we may not attract customers for our offering, and our potential profitability is dependent upon the successful adoption on a larger scale of our robotics systems, which may not occur. There can be no assurance that we will be financially successful.

The Company currently funds its operations from cash on hand and other current assets. The Company has a history of losses and negative cash flows from operations. We believe that the Company’s cash and other current assets andassets, forecasted operating cash flows currently expected to be generated from the ongoing activityactivity, borrowings from lenders and funds from At the Market offerings will provide the Company with sufficient financial resources to fund operations and meet our capital and operating requirements and anticipated obligations as they become due in the next twelve months.

Previously, we have restated our unaudited condensed consolidated financial statements as of and for the quarterly period ended March 30, 2023 (the “2023 Restated Period”). In consultation with the Audit Committee and our auditors, we made the determination to restate such financial statements following the identification of an error associated with a failure to timely recognize an accrued liability and expense arising out of the RRA.Registration Rights Agreement ("RRA"). Due to such error, the Company’s management and the Audit Committee concluded that our previously issued financial statements for the 2023 Restated Period should no longer be relied upon. In addition, our management, with the participation and under the supervision of our former Chief Executive Officer and former Chief Financial Officer, performed a re-evaluation of the effectiveness of our disclosure controls and procedures as of the end of the 2023 Restated Period. Based on such re-evaluation, our former Chief Executive Officer and former Chief Financial Officer concluded that, as a result of the continued material weakness, our disclosure controls and procedures were ineffective as of the end of the 2023 Restated Period.

We previously identified material weaknesses in our internal control over financial reportingreporting, which we are working to remediate. ThisThese material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

The Company previously identified deficiencies in its internal control over financial reporting that represented material weaknesses. Specifically, the Company’s management determined that the Company did not, as of December 31, 2024, design and maintain effective internal controls over financial reporting related to: (1) ineffective design and operation of controls over significant complex transactions, which resulted in restatements of all interim periods of 2024,2024. (2)As failureof toDecember remediate31, previously2025, reportedthe material weakness overrelated ineffectiveto the design and operation of usercontrols accessover controls.significant complex transactions had not yet been remediated.

The Company continuesis toimplementing implementand certaintesting remediation actions andincluding continuesthese to test and evaluate thespecific elements of the remediation plan. These elements include:

•DesignDesigning and implementation ofimplementing a Significant Complex Transaction policy which identifies transactions that should be evaluated for additional 3rd party expert evaluation forto ensure proper accounting treatment;

The Company believes that the actions listed above will provide appropriate remediation of the material weaknesses;weakness however, the testing of the effectiveness of the controls has not been completed by the Company. Due to the nature of the remediation process and the need for sufficient time after implementation to evaluate and test the effectiveness of the controls, no assurance can be given as to the timing for completion of remediation. The material weaknesses will be fully remediated when the Company concludes that the controls have been operating for sufficient time and independently validated by management.

We are an ocean robotics and services company, with limited experience commercializing our products and services. The projected financial and operating information appearing elsewhere in this Annual Report on Form 10-K reflect estimates of future performance and is based on multiple financial, technical, and operational assumptions, including hiring of additional skilled personnel in a timely manner to support continued development and commercialization of the core products; the level of demand for our ocean robotic systems; the performance of our ocean robotic systems; the utilization of the ocean robot fleet; the useableusable life of the ocean robotic systems; the cost of manufacturing; the cost and availability of adequate supply of components; the nature and length of the sales cycle; and the costs of, maintenance and servicing and refurbishing of our ocean robotic systems. However, given our limited commercial experience, it is likely that many of these assumptions will prove incorrect. The projections are forward-looking statements that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. See “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Cautionary Note Regarding Forward-Looking Statements.” Whether actual operating and financial results and business developments will be consistent with our expectations and assumptions as reflected in our forecast depends on a number of other factors, many of which are outside our control, including, but not limited to:

We rely on third-party manufacturers/suppliers.suppliers to manufacture our products, and we have outsourced the manufacturing and distribution of our Olympic Arm manipulator system to a third party. This reliance on third-party manufacturers/suppliers increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. Additionally, we may be unable to establish or continue any agreements with third-party manufacturers/suppliers, on acceptable terms or at all. Even if we are able to establish agreements with third-party manufacturers/suppliers, reliance on third-party manufacturers/suppliers entails additional risks, including:

We will require significant capital to operate our business and fund our capital expenditures for the next several years. While we expect that we will have sufficient capital to fund our currently planned operations, itIt is possiblelikely that we will need to raise additional capital to fund our business, including to finance ongoing research and development costs, manufacturing, any significant unplanned or accelerated expenses, and new strategic alliances or acquisitions. The fact that we have limited experience commercializing our ocean robotic systems on a large scale, coupled with the fact that our products represent a new product category in the commercial and industrial ocean robotic market, means we have limited historical data on the demand for our robotic systems. In addition, we expect our capital expenditures to continue to be significant in the foreseeable future as we continue generational improvements for our commercial products, and that our level of capital expenditures will be significantly affected by customer demand for our ocean robotic systems. As a result, our future capital requirements may be uncertain and actual capital requirements may be different from those we currently anticipate. We may need to seek equity or debt financing to finance a portion of our capital expenditures. Such financing might not be available to us in a timely manner or on terms that are acceptable, or at all.

In addition, our future capital needs and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could dilute our stockholders and the terms of any such financing may be materially adverse to the interests of our common stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and/or our ability to pay dividends.

If we are successful in commercializing our products and services, our revenue will be concentrated in a limited number of models for the foreseeable future. Further, we have only a very limited number of robotic systems in operation, and significant time and capital resources will be required to manufacture additional systems. We launched commercial services utilizing the Aquanaut robotic system in 2024, and expect to launchlaunched a commercial version of ToolKITT software in 2025. SuchFuture timelineplans for commercialization may be delayed, including due to challenges in recruiting skilled employees, difficulties in securing components and materials, development delays, difficulties relating to manufacturing of the units, and other factors. Such challenges may result in the delay of the anticipated commercial launch or continued growth of one or more of the products and services, which would adversely affect our financial and operating results. To the extent our products and services do not meet customer expectations, or cannot be completed or manufactured or delivered on their projected timelines and in line with cost and volume targets, our future sales and operating results may be adversely affected. Given that for the foreseeable future our business will depend on a limited number of robotic systems in service, to the extent the operation of a particular robotic system is disrupted due to damage or defect or any other reason, our revenue could be materially and adversely affected. This could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.

In addition, ifin cases where the manufacturing of our products is outsourced, we may not be aware of manufacturing defects that could occur. Such adverse events could lead to unexpected failures in our products and could result, in certain cases, in the removal of our products from the market. A product recall could result in significant costs. To the extent any manufacturing defect occurs, our agreement with the third-party manufacturer may contain a limitation on the third-party manufacturer’s liability, and therefore we could be required to incur the majority of related costs. Product defects or recalls could also result in negative publicity, damage to our reputation or, in the event of regulatory developments, delays in new product acceptance.

Our privacy policy regarding our collection, processing, use and disclosure of personal information and/or other confidential information is published on our website. Although we endeavor to comply with our published policies, we may at times fail to do so or may be perceived to have failed to do so. Moreover, despite our efforts, we may not be successful in achieving compliance, including if our employees, contractors, service providers or vendors fail to comply with our policies and other requirements. Such failures can subject us to potential action by governmental or regulatory authorities if they are found to be deceptive, unfair, or a misrepresentation of our actual practices. Any actual or perceived inability of the Company to adequately address privacy and security concerns or comply with applicable laws, rules and regulations relating to privacy, data protection or data security, or applicable privacy notices, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities. Any such claims or other proceedings could be expensive and time-consuming to defend and could result in adverse publicity. Any of the foregoing may have an adverse effect on our business, financial condition, results of operations, cash flows, reputation and prospects.

Our target markets are largely international and require skills, knowledge and competencies in foreign exchange, taxation, legal, export controls, anti-bribery and other fields. We have only recently added personnel with the necessary skills to oversee these risks and the ability is concentrated in few individuals.

The success of our business depends in part on effectively engineering and implementing technologies related to subsea and surface vessels, (including ROVs), subsea electric robotic manipulators, and AI-based, full-stack vehicle control and manipulation software. These technologies are packaged for commercial and defense customers in products that provide innovative solutions to challenges in a large majority of maritime markets including subsea energy, offshore wind, and defense applications. If for any reason we are unable to continue to design, develop and manufacture our products as planned or provide the services and products that our customers expect from us, this could have a material adverse effect on our business, financial condition, and results of operations. If our current or future product and service offerings do not meet expected performance or quality standards, including with respect to customer satisfaction, this could cause operational delays. In addition, any delay in manufacturing new products as planned could increase costs and cause our products and services to be less attractive to potential new customers. Further, certain governmental bodies may have priority with respect to the use of our products and services for national defense reasons, which may impact our cadence of producing and selling products and offering services to other customers. Any production, operational or manufacturing delays or other unplanned changes to our ability to design, develop and manufacture our products or offer our services could have a material adverse effect on our business, financial condition, and results of operations.

Nauticus Robotics, Inc. (the "Company", "our", "us" or "we") is a technology-driven company specializing in the development of advanced fully electric autonomous robotic solutions for subsea applications. Our portfolio includes fully autonomous underwater vehicles (AUVs), robotic manipulators, an open robotic operating system, and related consulting and prototype services with a strong alignment to offshore energy and national security interests. Our technology solutions enable autonomous operations for both the commercial and defense sectors.

OurThe Company's addressable markets include upstream, midstream, and downstream oil and gas, defense, offshore renewables, seafloor telecommunications, aquaculture, port security, oceanographic research, and subsea mining. Currently, our primary focus is on oil and gas operations and defense applications. The Company remains in the early stages of commercialization and continues to invest in product development, system deployment and market-expansion.

Liquidity — Total cash and cash equivalents on hand as of December 31, 20242025 was $1,186,047.$7,016,610. 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 developinvest in the development, enhancement, and commercialization of its principalcore productstechnology and conduct research and development activities.platforms. The Company currently funds its operations with cash on hand, availability under the November 2024 Debentures (see Note 78 - Notes Payable), the sale of shares of Common Stock under the Equity Purchase Facility Agreement (see Note 16 - Common Stock) and the offer and sale of additional shares of Common Stock under the At The Market Offering Agreement (see Note 18 - Subsequent Events).Agreement. The Company may require additional liquidity to continue its operations over the next twelve months, which a current investor has committed to support. TheHowever, 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 with thisthe investorCompany's supportability thereto willcontinue beas sufficienta resourcesgoing concern. The Company's ability to continue as a going concern foris atdependent least one year fromupon the dateability thatto generate sufficient revenues and to control operating expenses. Additionally, the consolidatedCompany financialis statementsconsistently containedfocused inon thisraising Formcapital, 10-Kstrategic areacquisitions issued.and alliances and other initiatives to strengthen the Company.

See the sections entitled “Risks Related to Our Business and Industry — A significant amount of our revenues in 2024 and 2023 wasis derived from a limited number of customers. A substantialmaterial portion of our current revenue may be generated by sales to government entities, which are subject to a number of uncertainties, challenges, and risks,” “Risks Related to Our Business and Industry — Our business plans require a significant amount of capital. Our future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders or introduce covenants that may restrict our operations or our ability to pay dividends,” “Risks Related to Our Business and Industry — With our service offering still being commercialized at a large scale, we have limited current customers, and there is no assurance that expected customer demand will result in binding orders or subscriptions,” “Risks Related to Our Business and Industry —Industry. If we are successful in commercializing our products and services, our revenue will be concentrated in a limited number of models for the foreseeable future,” and “Risks Related to Our Business and Industry — We may be unable to adequately control the costs associated with our operations.”

Revenue. For the year ended December 31, 2024,2025, net revenue decreasedincreased by $4,798,880,$3,467,443, or 73%,192%, as compared to 2023.2024. The decreaseincrease in revenue is primarily attributable to the reductionrevenue instream governmentfrom contractsthe inacquisition 2024.of SeaTrepid's ROV fleet.

Cost of revenue. For the year ended December 31, 2024,2025, cost of revenue decreasedincreased by $2,196,726,$2,604,315, or 18%27% as compared to 2023.2024. The decreaseincrease is primarily attributable to the declineincrease in activity partially offset by costs relating to the commercialization of the Aquanaut vehicle. Cost of sales for the year ended December 31, 2025 included inventory write-offs of $500,332 relating to Olympic Arms inventory deemed as obsolete.

Depreciation.Depreciation and amortization. For the year ended December 31, 2024,2025, depreciation and amortization increased by $1,007,416,$607,998, or 138%,35%, as compared to 20232024. The variance is primarily due to the increase in property and equipment.equipment, and amortization of $152,484 relating to intangible assets acquired under the SeaTrepid acquisition.

General and administrative. For the year ended December 31, 2024,2025, total general and administrative expenses decreasedincreased by $4,901,346$750,082 or 27%,6%, as compared to 2023.2024. The decreaseincrease was driven by headcounthigh reductionsprofessional fees related to the SeaTrepid acquisition and aintegration concertedof efforttheir tooverhead reduceinto costs.Nauticus.

Other expense,income, net. For the year ended December 31, 2024,2025, other expense,income, net decreasedincreased by $517,219$63,404 as compared to 2023. The year ended December 31, 2023 included an accrual for a state sales tax assessment of $600,000.2024.

Loss on extinguishments of debt. For the year ended December 31, 2025, a loss on the extinguishment of debt of $6,371,971 was reported relating to the conversion of 2023 Term Loan Notes to Series C Preferred Stock. For the year ended December 31, 2024, loss on the extinguishments of debt of $127,605,940 was reported driven by the Amendment and Exchange Agreement.Agreement, Seesee Note 78, "Notes Payable".

Change in fair value of warrant liabilities. For the years ended December 31, 20242025 and 2023,2024, the Company reported a gain in change of fair value of warrant liabilities of $13,559,010$170,632 and $14,902,427$13,559,010, respectively.respectively, driven by fluctuations in the trading price of the Company's Common Stock.

Change in fair value of New Convertible Debentures. For the year ended December 31, 2024, a gain on the fair value of the new convertible debentures of $7,989,948 was reported.reported, driven by fluctuations in the trading price of the Company's Common Stock.

Change in fair value of November 2024 Debentures. For the year ended December 31, 2025, a loss on the fair value of the November 2024 debentures of $2,247,848 was reported. For the year ended December 31, 2024, a loss on the fair value of the November 2024 debentures of $435,864 was reported. Changes in fair value of the November 2024 Debentures are driven by fluctuations in the trading price of the Company's Common Stock.

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. The Company currently funds its operations with cash on hand, availability under the November 2024 Debentures (see Item 8, "Financial Statements - Note 78 - Notes Payable"), the Equity Purchase Facility Agreement (see Item 8, "Financial Statements - Note 16 - Common Stock") and the offer and sale of additional shares of Common Stock under the At The Market Offering Agreement (see Item 8, "Financial Statements - Note 1816 - Common Stock and Note 24 - Subsequent Events"). The Company may require additional liquidity to continue its operations over the next twelve months,months. whichWhile a current investor has committedexpressed an intention to support.provide Thefinancial 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 with thisthe investorCompany's support there will be sufficient resourcesability to continue as a going concern for at least one year from the date that the consolidated financial statements contained in this Form 10-K are issued.concern.

•The Company received net proceeds of $24,496,163$34,716,895 from debt and equity financings comprising of additional convertible secured term loans, convertible debentures and an At The Market Offering and the issuance of Series B Preferred Stock (see Item 8, "Financial Statements - Note 715 - Notes"Preferred PayableStock" and "Note 1116 - Equity"Common Stock").

•Cash used in operating activities was $24,201,567, of which $2,559,532 was used to increase working capital.$23,004,484.

•Cash used in investing activities related to the acquisition of SeaTrepid of $4,371,992 and capital expenditures of $501,600 partially offset by proceeds from the sale of Assets Held For Sale of $676,177.$961,814.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates, assumptions and judgments that can significantly impact the amounts we report as assets, liabilities, revenue, costs and expenses and the related disclosures. We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. Actual results could differ significantly from these estimates under different assumptions and conditions. Significant accounting policies are described in Note 2, "Summary of Significant Accounting Policies", in Item 8 - "Financial Statements and Supplementary Data" of this Annual Report. The accounting policies discussed below are critical to understanding our historical and future performance as these policies involve a greater degree of judgment and complexity.

Nauticus Robotics, Inc. (the “Company,” “our,” “us” or “we”) is a developer of ocean robots, cloud software and intelligent services that transform operations in offshore energy, environmental monitoring, and defense. Our principal corporate offices are located in Webster, Texas. Our portfolio includes fully autonomous underwater vehicles ("AUVs"), remotely operated vehicles (“ROVs”), electric robotic manipulators, and the Nauticus ToolKITT™ software platform. OurWe believe our technology solutions position us at the forefront of the global shift of ocean services vehicles toward autonomy.

Our flagship autonomous vehicle, Aquanaut®, provides advantages over conventionally tethered ROVs and traditional AUVs. 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. Nauticus ToolKITT™ has already been deployed on third-party ROVs and is gaining traction as a transformative solution for inspection, maintenance, and intervention services. The Olympic Arm™ is a fully electric subsea manipulator designed for complex intervention tasks on both work-class ROVs and Aquanaut® . 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. TheseWe believe 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.

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

•Operational Deployments – During the quarter, our ROV fleet completed multiple projects and continued preparations for upcoming projects. One ROV completed systemmultiple integrationprojects testingoff (SIT)the forUnited anStates' upcomingEast projectCoast and isGulf scheduled to mobilize in May 2026. This unit also has several potential opportunities with windfarm operators during the next quarter.Coast. Our second ROV remained in Louisiana to continuecompleted preparations for work plannedand was deployed in the Gulf of America and already completed one project in the following quarter.region. Aquanaut Vehicle 1 remained in Florida, where it advanced client-driven workflow testing related to vertical inspection capabilities, including autonomous mooring-line behaviors.behaviors and obstacle avoidance. 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,completed in the first quarter of 2026, and the team began sourcing components forcompleted the first prototype.prototype build. 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. The combined ROV and Aquanaut® fleet is enabling us to engage with a broader customer base, increase utilization, and expand into new geographies.

•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 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. Pipeline for our Nauticus ToolKITT™ software offerings is beginning to materialize.

TheWe anticipate the offshore energy market remains robust,stable, with vessel and subsea asset utilization in the Gulf of America nearcontinuing multi-yearhealthy highs.levels although below recent peaks. While customers in the North American offshore wind sector experienced temporary delays in capital expenditures due to policy shifts, we believe recent easing of restrictions has revivedrenewed select opportunities, and we are actively mobilizing for new wind-farm projects.

AdoptionWe anticipate adoption of autonomous subsea robotics is accelerating, driven by customer priorities around safety, efficiency, and data quality. EnergyWe believe energy operators are increasingly leading this innovation push, creating tailwinds for advanced solutions like Aquanaut® and Nauticus ToolKITT™.

DefenseWe anticipate defense sector engagement is also gaining momentum, with increased activity at the prime contractor level. During the second quarter, we commenced work with a leading defense contractor, further validating our technology and capabilities in this market. While awards typically flow first to larger primes,companies, we believe we are strategically positioned through partnerships, such as our alliance with Leidos, to participate in current and future contracts.contract opportunities.

Service revenue in the quarter was mainly fueled by SeaTrepid’s ROV operations. Cross‑selling momentum continues: SeaTrepid’s longstanding customers are expressing interest in our autonomous solutions, while Nauticus’ existing customers are contracting ROV services for both oil‑and‑gas and environmental projects. The integration of the SeaTrepid fleet and workforce has enabled higher utilization and broadened our geographic reach.

Nauticus ToolKITT™ commercialization remains on track. The software was exercised extensively during deepwater tests in 2025, and in testing at our location in Florida in Q4 2025 and Q1H1 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.ROVs through the deployment of Nauticus ToolKITT™ on our own ROV fleet. 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. This includes continued testing at our Houston facility as well as preparations for broader testing by Forum Energy Technologies.

TheWe anticipate 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 of the next-generation manipulator proceeds.

The first quarterhalf 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 we believe our services pipeline is healthy. WithThe aCompany strongbelieves team,that aits differentiatedcurrent workforce, technology suitecapabilities and growingexpanding marketcustomer acceptance,relationships Nauticusposition is poisedit to leadcompete in the next phase ofgrowing subsea autonomy andmarket; createhowever, longthere termcan be no assurance that the Company will achieve its strategic objectives or generate long-term value for ourthe stakeholders.stockholders.

Three and six months ended MarchJune 31,30, 2026, compared to three and six months ended MarchJune 31,30, 2025

Revenue. For the three and six months ended MarchJune 31,30, 2026,2026 , revenue decreased $5,682$1,189,619 or 3%,57% and $1,195,301 or 53%, respectively, as compared to the three and six months ended MarchJune 31,30, 2025, primarily driven by naturala fluctuationsslow start of the first half of the year in our revenue during the off-peakROV quarter.market.

Depreciation.Cost of revenue. For the three and six months ended MarchJune 31,30, 2026, depreciationcost of revenue decreased $636,487 or 18% and increased $144,415$118,449 or 30%2% ,respectively, as compared to the three and six months ended MarchJune 31,30, 2025,2025. dueThe second quarter year-over-year decrease is directly related to the decrease in sales, while the increase in propertythe andfirst equipmenthalf primarilyyear-over-year relatedcan be attributed to the SeaTrepid acquisition at the end of SeaTrepid.Q1 2025.

General and administrative.Depreciation. For the three and six months ended MarchJune 31,30, 2026, generaldepreciation andincreased administrative costs decreased $1,134,779$127,855 or 26%,22% and, $272,271 or 26% respectively, as compared to the three and six months ended MarchJune 31,30, 2025, asdue 2025to includedthe non-recurringincrease expensesin property and equipment and intangibles primarily related to the SeaTrepidacquisition acquisition.of SeaTrepid.

Other (income) expense, net. For the three months ended MarchJune 31,30, 2026, other expense isincreased minimal.$7,680 or 312%. For the threesix months ended MarchJune 31,30, 2025,2026, other incomeexpenses relatedincreased primarily$141,930 toor proceeds105%, received from the sale of expensed equipment.respectively.

Loss on extinguishment of debt. For the three and six months ended MarchJune 31,30, 2026 athe loss on the extinguishment of debt of $929,508$4,629,822 and $5,559,330, respectively, was reporteddriven drivenprimarily by the exchange of November 2024 Debentures and Convertible Senior Secured Term Loan Notes for Series C Preferred Stock. See Note 8 "Notes Payable" and Note 14 " Preferred Stock". Additionally, $201,681 loss was recognized for the SeaTrepid Amendment #2. See Note 7 "Accrued Liabilities".

Change in fair value of derivative. For the three and six months ended MarchJune 31,30, 2026, a lossgain on derivative of $515,827$264,827 and a loss $251,000, respectively, 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 MarchJune 31,30, 2026 and 2025, the Company reported a gain/loss in the fair value of warrant liabilities of $6,325 and $8,757, respectively. For the six months ended June 30, 2026 and 2025, the Company reported a gain in the fair value of warrant liabilities of $3,019$9,344 and $50,888,$42,131, respectively.

Change in fair value of November 2024 Debentures. For the three and six months ended MarchJune 31,30, 2026 ,2026, the Company reported a gain/loss on the fair value of the November 2024 convertible debentures of $1,188,840.$94,728 and $1,094,112 respectively, related to the change in fair value of the debentures.

Interest expense, net. For the three months ended MarchJune 31,30, 2026, interest expense, netexpense decreased $161,433,$382,341 or 14%,32%. For the six months ended June 30, 2026, interest expense decreased $543,773, or 23%, driven by reduced outstanding balances on the convertible senior secured term loans due to conversions in 2025.conversions.

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. The Company currently funds its operations with cash on hand, availability under the November 2024 Debentures (see Note 8 - "Notes Payable" and Note 24 - "Subsequent Events"), the Equity Purchase Facility Agreement (see Note 1517 - "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 MarchJune 31,30, 2026 financial statements were issued.

As of MarchJune 31,30, 2026, the Company had $5,285,230$1,977,048 of cash, cash equivalents and cashrestricted equivalents.cash.

Significant sources and uses of cash during the threesix months ended MarchJune 31,30, 2026 and 2025

•During the threesix months ended MarchJune 31,30, 2026, the Company received net proceeds of $5,276,843$8,548,929 from financing activities attributable to proceeds from November 2024 debentures and the ATM share offering.

•During the threesix months ended MarchJune 31,30, 2025, the Company received net proceeds of $19,438,121 from equity financing attributable to the ATM share offering.

•Cash used in operating activities was $7,005,769$14,125,329 and $6,649,394$14,005,580 during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

•Cash used in investing activities during the threesix months ended MarchJune 31,30, 2026 related to capital expenditure of $14,287. Cash used in investing activities during the six months ended June 30, 2025 related to the acquisition of SeaTrepid of $3,871,992 and capital expenditures of $47,989.$47,239.