Company: KITTW
Filing Date: 2025-04-15
Form Type: 10-Q/A
Source: 0001849820-25-000099
Chunk: 16

Company: Nauticus Robotics, Inc.
Filing Date: 2025-04-15
Form: 10-Q/A
Chunk 16
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 new 5% Original Issue Discount Senior Secured Convertible Debentures (the "New Convertible Debentures") at fair value under the fair value option in accordance with ASC 825-10, Financial Instruments – Fair Value Option . This election was made to provide greater transparency and to more accurately reflect the economic value of the new convertible debentures in the Company's financial statements.

Under the fair value option, the new convertible debentures are recorded at its estimated fair value at each reporting date, with changes in fair value recognized in earnings within Other income (expense) in the Condensed Consolidated Statements of Operations. The fair value of the new convertible debentures are determined using a Monte Carlo simulation model that uses inputs such as the Company’s stock price (KITT), stock price volatility, risk-free interest rate and expected term to maturity.

As of June 30, 2024, the fair value of the new convertible debentures was estimated to be $ 83,797,224, compared to an initial fair value of $ 99,195,791as of January 30, 2024. The change in fair value reflects movements in stock price and market volatility.

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#### NAUTICUS ROBOTICS, INC.

### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<div align='center'>(UNAUDITED)</div>

The fair value option eliminates the requirement to separately account for embedded conversion features that would otherwise be bifurcated under ASC 815-15, Derivatives and Hedging – Embedded Derivatives . Instead, all economic impacts of the new convertible debentures—including interest, conversion features, and market fluctuations—are captured in the fair value measurement.

The Company believes that the fair value measurement provides a more relevant representation of the liability’s impact on financial position and performance, as it reflects the new convertible debentures’ current economic value and reduces potential measurement inconsistencies.

Earnout Shares – Following the closing of the Merger between CleanTech, Merger Sub and Nauticus Robotics Holdings on September 9, 2022, former holders of shares of Nauticus Robotics Holdings Inc.’s Common Stock are entitled to received their pro-rata share of Earnout Shares which are held in escrow. The Earnout Shares will be released upon the occurrence of a triggering event within 5years of the issue date (see Note 12, "Equity"). The Earnout Shares are considered legally issued