Nauticus Robotics, Inc.KITT
Nauticus Robotics, Inc. Income Taxes Disclosure
Income Taxes
The components of loss from continuing operations before income taxes were as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Domestic operations | $ | (40,506,558) | $(133,802,575) | ||||||||
| Foreign operations | (321,844) | (1,104,074) | |||||||||
| Loss before income taxes | $ | (40,828,402) | $ | (134,906,649) | |||||||
The income tax expense consisted of the following:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Current income taxes: | |||||||||||
| Federal | $ | - | $ | - | |||||||
| State and local | - | - | |||||||||
| Total current tax | - | - | |||||||||
| Deferred income taxes: | |||||||||||
| Federal | - | - | |||||||||
| State and local | - | - | |||||||||
| Total deferred tax | - | - | |||||||||
| Income tax expense | $ | - | $ | - | |||||||
There is no income tax expense recognized for years ended December 31, 2025 and December 31, 2024.
A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows, in accordance with the updated requirements of ASU 2023-09 for the year ended December 31, 2025:
| 2025 | 2024 | ||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||
| Loss before income taxes | (40,828,402) | (134,906,649) | |||||||||||||||||||||
| Income taxes at U.S. federal statutory income tax rate | (8,573,964) | 21.0 | % | (28,330,397) | 21.0 | % | |||||||||||||||||
| State and local income taxes, net | - | - | % | - | - | % | |||||||||||||||||
| Foreign tax effects | - | - | % | ||||||||||||||||||||
| Other foreign jurisdictions | 67,587 | (0.2) | % | - | - | % | |||||||||||||||||
| Change in valuation allowance | 5,317,285 | (13.0) | % | 9,141,378 | (6.8) | % | |||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||
| Debt Extinguishment | 1,338,114 | (3.3) | % | 19,393,825 | (14.4) | % | |||||||||||||||||
| Stock Based Compensation | - | - | % | ||||||||||||||||||||
| Other | 484,272 | (1.2) | % | (137,868) | 0.1 | % | |||||||||||||||||
| Other Adjustments | |||||||||||||||||||||||
| Change in UTP | 1,468,795 | (3.6) | % | - | - | % | |||||||||||||||||
| Other | (102,089) | 0.3 | % | (66,938) | - | % | |||||||||||||||||
| Total tax provision and effective tax rate | - | - | % | - | - | % | |||||||||||||||||
As previously disclosed for the years ended December 31, 2024, and December 31, 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:
| Year Ended December 31, | Year Ended December 31, | |||||||
| 2024 | 2023 | |||||||
| Loss before income taxes | $ | (134,906,649) | $ | (50,686,601) | ||||
| Tax at Federal Statutory Rate | (28,330,397) | (10,644,186) | ||||||
Debt extinguishment | 19,393,825 | - | ||||||
| Nondeductible (add back) expenses | (137,868) | 1,251,583 | ||||||
| Federal return to accrual | (66,938) | (13,141) | ||||||
| Change in valuation allowance | 9,141,378 | 8,895,230 | ||||||
| Deferred tax adjustment | - | 510,514 | ||||||
| Income tax expense | $ | - | $ | - | ||||
The Company’s deferred tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. Significant components of the deferred tax assets and liabilities are as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Fixed assets | $ | 3,193,550 | $ | 3,709,975 | |||||||
| Stock compensation | 174,888 | 192,483 | |||||||||
| Warrant liability gain/loss | 2,369 | 38,202 | |||||||||
| Net operating losses | 33,063,184 | 25,424,520 | |||||||||
| Business credit carryforward | - | 1,441,159 | |||||||||
| Capitalized R&D expenses | 306,914 | 467,113 | |||||||||
| Accrued expenses | 352,206 | 496,060 | |||||||||
| Other assets | 13,621 | 266,367 | |||||||||
| ROU Liability | $ | 133,927 | $ | - | |||||||
| Subtotal | 37,240,659 | 32,035,879 | |||||||||
| Valuation allowance | (37,123,268) | (31,805,983) | |||||||||
| Total deferred tax assets | 117,391 | 229,896 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Other liabilities | (117,391) | (229,896) | |||||||||
| Total deferred tax liabilities | (117,391) | (229,896) | |||||||||
| Net deferred tax assets/(liabilities) | $ | - | $ | - | |||||||
The Company has federal net operating loss carryforwards of approximately $157 million and $121 million for as of December 31, 2025 and December 31, 2024, respectively, Approximately $31,000 begin to expire in 2035 and the remainder have no expiration. The Company has recorded a full valuation allowance against its net deferred tax assets due to recurring net losses.
The Company accounts for uncertain tax positions in accordance with guidance in ASC Topic 740, which prescribes the minimum recognition threshold a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the financial statements. A reconciliation of the beginning and ending amount of uncertain tax positions is as follows:
| 2025 Activity | Amounts | |||||||||||||
| Balance at January 1, 2025 | - | |||||||||||||
| Additional based on tax positions related to prior years | $ | 1,441,159 | ||||||||||||
| Settlements | $ | - | ||||||||||||
| Balance at December 31, 2025 | $ | 1,441,159 | ||||||||||||
The total amount of unrecognized tax benefits at December 31, 2025 was $1.4 million, of which it is reasonably possible that $0 could be settled during the next twelve-month period as a result of the conclusion of various tax audits or due to the expiration of the applicable statute of limitations. We estimate that $0 of the unrecognized tax benefits at December 31, 2025, excluding consideration of valuation allowance, would impact our future effective income tax rate, if recognized.
We recognize interest and penalties related to uncertain tax positions within the provision for income taxes in the consolidated statements of comprehensive loss. As of December 31, 2025, we had accrued approximately $0 in interest and
penalties, respectively. During the year ended December 31, 2025, the change to our uncertain tax positions primarily relates to the recognition of certain tax credits from prior years.
With the adoption of ASU 2023-09, a disclosure of income taxes paid, net of refunds received, to an individual taxing jurisdiction is now required if the net payments exceed a certain threshold. The Company did not have any income tax payments or refunds for both periods ending December 31, 2025 and December 31, 2024.
On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”) was enacted into U.S. law. The OBBBA includes changes to several corporate tax provisions, including tax deductions for qualified research expenditures, changes to business interest expense limitations and bonus depreciation. The OBBBA legislation is not expected to have a material impact on the provision as of YE 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 15, 2026 | Showing above |
| 2024 | Apr 15, 2025 | |
| 2023 | Apr 10, 2024 | |
| 2022 | Mar 28, 2023 | |
| 2021 | Mar 29, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.