Company: KITTW
Filing Date: 2025-04-15
Form Type: 10-Q/A
Source: 0001849820-25-000106
Chunk: 15

Company: Nauticus Robotics, Inc.
Filing Date: 2025-04-15
Form: 10-Q/A
Chunk 15
---
 results of operations. Where the current estimate of total costs at completion for contracts exceeds the total consideration we expect to receive we recognize the entire expected loss in the period that becomes evident. Estimated contract costs include costs that relate directly to the contract including direct labor, direct materials, and allocations of certain overhead costs.

Firm-fixed price contracts present the risk of unreimbursed cost overruns, potentially resulting in lower-than-expected contract profits and margins. This risk is generally lower for cost plus fixed fee contracts which, consequently, often have a lower margin.

Inventories – The inventories comprise raw materials, work in progress, and finished goods, as applicable, and are valued at the lower of cost or net realizable value. Work in progress and finished goods inventories include raw materials, direct labor and production overhead. The Company periodically reviews inventories on hand and current market conditions to determine if the cost of raw materials, work in progress and finished goods inventories exceed current market prices and impairs the cost basis of the inventory accordingly. The associated impairment is charged as a standalone expense on the condensed consolidated statements of operations. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its net realizable value if those amounts are determined to be less than cost. The associated write-downs or write-offs of inventory are charged to cost of sales.

Inventories consisted of the following:

|                           |     |   | September 30, 
          2024 |     |   | December 31, 
         2023 |
|:--------------------------|:----|:--|--------------:|:----|:--|-------------:|
| Raw material and supplies |     | $ |       897,902 |     | $ |      898,335 |
| Work in progress          |     |   |     1,331,607 |     |   |    1,300,462 |
| Total inventories         |     | $ |     2,229,509 |     | $ |    2,198,797 |

Leases – The Company’s lease arrangements are operating leases which are capitalized on the balance sheet as right-of-use (“ROU”) assets and obligations. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. These are recognized at the lease commencement date based on the present value of payments over the lease term. If leases do not provide for an implicit rate